1917-05-22

VICTORIA DAY ADJOURNMENT.

[Stage Direction]
Sir ROBERT BORDEN moved that when this House adjourns on Wednesday, the 23rd instant, it stands adjourned until Friday the 25th instant.
Motion agreed to.

[Stage Direction]
On the Orders of the Day:
Mr. McCOIG:: May I again call the attention of the Government to a matter which I urged upon them the other evening, and which I consider of grave importance. I refer to the taking over of the cold storage systems of Canada. To substantiate my position, I wish to read the following telegram:
The Davies Company, of which Flavelle is principal stockholder, are trying to cover insurance on food products for two million eight hundred thousand dollars which they hold in cold storage Toronto which can be occupied by any independent insurance company also includes subsidiary company going so far as to try the Perth Mutual, Stratford, for a beggarly two thousand.
[Mi Pugsley.]
I would ask the Government if they have, up to the present time, taken any steps towards taking over these cold storage systems, in order that the consumers of this country may be protected from such companies as are in charge of them.


Sir ROBERT BORDEN:: I did not follow the remarks of my hon. friend, but I shall read them in Hansard and give an answer at a later date.



STEEL RAILS FOR FRANCE.

[Stage Direction]
On the Orders of the D„ay:
Mr. OLIVER:: Is there to be an answer to the question which I raised yesterday in regard to the transfer of rails from the Transcontinental railway to Europe?


Mr. COCHRANE:: Nearly all the first order has gone forward.


Frank Oliver: Do I understand that the first three hundred miles of rails from the Transcontinental have been shipped to France?


Francis Cochrane: Nearly all.



PAY OF MILITARY OFFICERS.

[Stage Direction]
On the Orders of the Day:
Sir EDWARD KEMP (Minister of Militia):: Mr. Speaker, the hon. member for Assini-boia (Mr. Turriff) last evening asked me a question in regard to the pay of colonels. I was out of the House at the time, but I think that, in the interest of the public, I should reply to him. He asked whether or not colonels in Canada were getting $15 to $20 a day, while those at the front were getting only $6. The pay of the officers of the Canadian expeditionary forces is exactly the same in Canada as it is in England or at the front. A lieutenant-colonel gets $5 a day pay and $1.25 field allowance. When he reaches London, and when he is at the front, however, he gets four shillings a day extra. That is the exact position so far as the pay of the Canadian expeditionary forces is concerned, whether in Canada or abroad, with the exception I have mentioned, that if an officer is abroad he gets four shillings a day extra for messing allowance. There is a slight extra pay for officers who are obliged to reside in London because of the extra cost of living in London.



WAYS AND MEANS.

[Stage Direction]
The House again in Committee of Ways and Means, Mr. Blain in the Chair.

On Resolution No. 1.
Resolved, .that it is expedient to amend the Business Profits War Tax Act, 1916, by providing :-
1. That in any business taxable under the Act where the annual profits exceed fifteen per centum per annum the tax shall be increased to fifty per centum with respect to all profits in excess of the said fifteen per centum but not exceeding twenty per centum per annum, and where the profits exceed twenty per centum per annum the tax shall be increased to seventy-five per centum with respect to all profits in excess of the said twenty per centum, and such increases in the 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 sixteen.
['I do not know.\nResolutions reported and read the first time.\nOn motion of Hon. Mr. Hazen, the House adjourned at 10.40 p.m.\nWednesday, May 23, 1917.']
Mr. GRAHAM:: Taxes are usually unwelcome, and we are all more or less willing that our neighbour shall pay his full proportion. I have not yet found a man who is unwilling to pay his full share, but I wish to bring to the attention of the minister some of the conditions connected with this proposed extra imposition. Not a few industries engaged in the manufacture of munitions and other commodities influenced by the war assert that after the war there will be a very critical period of readjustment. Some of them fear that during that period of readjustment they will be able to do nothing more than pay running expenses. The most conservative of these have been preparing for that period by placing to one side each year a reasonable reserve, feeling that when their present large business ceases-as we hope it will very shortly-they. will find themselves, under the new system of taxation, in a serious financial plight. They tell me that during the two or three years succeeding the war these reserves will be used up in their effort to readjust themselves to new conditions and to prepare for a staple business in the future. Some of them, I understand, think that the action of the Government in taking such a large proportion of the amount they now have on hand will cause them to come to a condition of practical bankruptcy during the period of readjustment. I feel confident that the minister, far from having that in mind, would like to protect our industries against this result. To my mind this is the most serious aspect of the matter; the figures that have been presented to me by some concerns lead me to believe that there is a good deal in the contention.
I was struck very forcibly the other night by the remarks of the hon. member for Dauphin. I agree that in order to produce
a revenue in the years to coune, a good many of our former theories will have to go by the board. Methods recognized as proper for the raising of revenue in years gone by will still be used1, but they will have to be supplemented by others. What shall these others be? I think it is the consensus of opinion throughout Canada that these taxes should not be imposed on the producers of agricultural products. In fact, I am strongly of the opinion that we shall have to deal with the tariff from a different angle. The farmer must .be enabled to produce as cheaply and in as large quantities as possible. If his output be restricted, none of the rest of us need look for any great prosperity, because, while industrial development is desirable, it will for a great many years be true of Canada that the basis of our prosperity .must be found in the farms. We shall have to go a long way towards reducing the cost of production and giving the farmer the freest opportunity to sell where he can get the best market and to buy as cheaply as possible all the implements that he uses in production. In a recent trip that I had West, this view was impressed upon me more strongly than ever. Striking instances came to my attention of real hardship to the men who were trying to produce. In the future we shall have to do two things: first, assist the man on the farm so that he can compete with all others the world over who are engaged in the same business; and, second, readjust our tariff with a view to raising as large an amount of money as possible. That, rather than protection, should be the chief object in view. We shall have to go a long way in the scientific arrangement of our tariff in ordbr to raise the greatest amount of money without restricting the ability of the man on the farm to produce. I know the minister will say that it is easy to talk in generalities, but the more we look into the financial situation, the more we are inclined to view it from a different standpoint. The time has arrived when the greatest good to the greatest number .should be the object of the framing of tariffs, and the greatest good will come to the .greatest number only when we enable those engaged in our basic industry, so far as it is possible to do so, unrestrictedly to produce and to sell.
Another remark in that speech which struck me forcibly was in reference to unoccupied lands in the West. I think we are under a kind of delusion as to the amount of good land available for homestead in the West.

1 hear men speaking of the millions and millions of acres of good land remaining available for homesteading, but I believe that the estimate of many men will have to be revised as to the quantity of land still unoccupied. A large quantity of land may yet remain open for homesteading, but there is not so much as people imagine. In the years to come, under new conditions and under new methods, a great deal of this land may be brought under cultivation, but to my mind we have not available for homesteading at the present time such a large quantity of land as some of us think. If it be true, as the hon. member for Dauphin (Mr. Cruise) said the other night, that there are held in the West' many million acres of land from which no revenue is derived, but the value of which is increasing rapidly on account of the improvement of other lands in the West, then under the new conditions we shall have to devise some scheme of dealing with these lands from a revenue point of view and from the point of view of general development. A large quantity of these lands is exempt from provincial taxation; and if normal conditions existed, I would feel it would perhaps be a dangerous thing to suggest that such lands ought to be taxed, when by agreement they are exempt from taxation; but we are at the present moment in a situation in which every man, woman and child in Canada has to submit to taxation to which neither he nor she ever before expected to have to submit, and we shall all willingly and even gladly offer to pay our share in order that there may be no difficulty from a financial point of view as to Canada being able to do her part in bringing the war to a final and conclusive victory. Those who hold these lands ought to bear their share of the burden, and I believe, whichever party may be in power, it is their duty to ascertain without delay some means whereby this land, which is now very valuable, may contribute its share of taxation for the carrying on of this great struggle in which we are engaged. No hardship will be suffered by anybody if we take part of the profits, or what we call the unearned increment.


Mr. JAMESON:: Does the hon. member refer to railway lands as well as to lands held by private individuals?


George Perry Graham: I certainly do; I refer to all lands that are unproductive and that are held for speculative purposes, whether they be owned by railways or by private

individuals. These lands are at present of great value and most of them adjoin railways, whereas a settler coming in ordinarily has to go many miles from a Tailway and at times has to travel over mile after mile of such lands adjoining railways which land he can not secure as a homestead and which he would have to purchase at a very high figure. I know the objections that will be raised, such a violation of agreement and so on; but many years have passed since some of those agreements were made, and we are in a situation now where, while I would not advocate a violation of agreement, I would certainly call in every man interested in these lands and say to him: we propose to devise some means whereby these lands will contribute their share towards the carrying on of this war.
If taxation be imposed on these vacant lands a tendency will be created to dispose of them to men who will cultivate them. If these millions of acres of land in the Great West, now untilled and out of the hands of the Government, were made productive, the railway situation, which is serious, would soon be solved, because in our western country there is a sufficient acreage -to provide for our transportation companies freight which would keep busy, not two railways, but the three transcontinental railways and many more branch lines than we have at present. The railway problem is a serious one and one not easy to solve, but it is worthy of the attention of the Government, and I want to repeat that such taxation would very materially aid our financial situation and would practically solve many of the difficulties that have arisen in connection with our railways, because, while at the present moment we may have in some directions a greater railway mileage than is warranted by the present production of Canada, we have not a greater mileage than is warranted by the developed productiveness of Canada, and if these acres are made productive much of our trouble in connection with the railways would be removed.
There is another point that I wish to urge again upon the attention of the Government. The more I think of it the more I am convinced that there is a source of revenue that we are not touching in this Bill that ought to be touched and touched now, and, if you will allow me, Sir, to say so, touched well. We have in the city of Ottawa and in every other large city in this country men who will not be taxed at all under this Bill, who are not assisting in the employment of men and who are not assisting in the production,

directly at least, of anything connected with this war, while our young men, who, on the farms and in the shops, have been assisting in the productiveness of the country, are at present at the front fighting. The .men who have their money invested in industries are paying liberally and are glad to pay their share into the national coffers for the carrying on of this war, but there are scores of men who have their wealth invested in mortgages and other securities, many of whom are not aiding in the development of any Canadian industry. Some of our wealthiest men have their cash invested in American railway securities and other investments which I could name, and these are not contributing anything, nor will they contribute anything under this measure, and I believe, therefore, that the Government will be justified even now in devising a scheme whereby the wealth of the country, as outlined in the few remarks I have made, will be taxed thoroughly. We speak of conscription of men, but there is another duty whidh the Government ought to undertake, and that is the conscription of wealth, in order that the two may go hand in hand for the carrying on of this great war. The Minister of Finance says rightly that taxation of incomes has been left to the provinces and municipalities. That is true, buit the income tax collected by the municipalities throughout the province of Ontario, for instance, scarcely touches the fringe of what this source of wealth ought to contribute in this time of stress. The province touches this source to a certain extent by adding one mill on the dollar to the assessment throughout Ontario, but that is a mere pittance, and I again urge upon the Government that while nearly all classes are paying taxes, some being taxed very heavily, there is a class that is not touched, and for the duration of the war at least a tax ought to be imposed on this wealth wherever found, and, in particular, a tax ought to be imposed on the incomes of men who have their money invested in mortgages and in securities outside of Canada, on which investments they are taking practically no risk and which are not furnishing employment to a single man, woman or child in this country.
I submit that to the Finance Minister and trust that even at this late stage he will devise some means by which this concentrated wealth that is now untouched may be reached, in order that the burden of taxation may be more evenly distributed among our people. I can assure the minister that I have not met in this Dominion a single
man who is not willing to pay his fair share of taxation in order that we may do our full duty in this war, because as I have said before, and it is worth repeating, if the Allies lose in this war it will in my view not be worth while being a Canadian any longer. We must leave nothing undone, and I again urge that one available source of taxation which should be reached is the incomes of these men of wealth, which under the present taxation are not touched at all.


Sir THOMAS WHITE:: My hon. friend (Mr. Graham) has in a thoughtful speech discussed the question- of the policy of taxation which should be adopted in this country to meet our requirements in connection with the war. The policy of any Government in a situation of this kind must necessarily depend upon the financial situation as it from time to time presents itself. I suppose when this war broke out none of us thought it would last three years. Some of us were of the opinion that it might last one year or perhaps two, but I think no one believed at that time that at the end of three years we should still be looking forward to another year or more of war.


Mr. MACDONALD:: Kitchener said it would last three years.	^


William Thomas White: That is so, but I think that few in this country, and I know that few in England, believed that the war would last for so long a period.
My hen. friend has raised the question of the policy of taxation which should he pursued in connection with the financing of the war. There are two principles which I have endeavoured to follow in the finan- * cial administration of the country. In the first place I have thought it advisable to make long-date loans in order that the country during the progress of the war or in the possibly trying period following the conclusion of the war might not be hampered or embarrassed by short-date maturities falling due. I think that is a sound principle, and that we have been wise in adopting it. The second principle which I have adopted is this: that we should so aim by increasing our revenues and diminishing our expenditures for purposes other than war, to be able during each year to meet not only all current expenditure, including the interest on a rapidly increasing war indebtedness and a large expenditure for pensions, but at the same time be able to pay a substantial portion of the principal of our war expenditure. It strikes me that

those are very sound principles in connection with the financial administration of the country in time of war.
I pointed out in the Budget speech that we had been able out of the revenues of the past year, which had been derived from the various modes of taxation which we have adopted, to pay not only all current and all capital expenditure-and in current expenditure I am including the increased interest amounting to some $20,000,000, on our increased national debt due to the war-Ibut also to pay all pensions and at the same time devote $60,000,000 to the payment of the principal of our war ex' penditure. Now, if we can succeed in doing that, the war expenditure of the Dominion during the war would not be a formidable problem for the Dominion to face, and in that connection we must bear in mind that our expenditures for war are rapidly increasing, that they will be greater for the year 1917 than they were for the year 1916, and that they will he greater for the year 1918 than for the year 1917. I tried to make a perfectly frank statement to the House in my Budget speech. I said we could look forward at the end of next year to a national debt of $1,200,000,000-I think that is an outside figure, rather than attempt to minimize the seriousness of the burden which would be imposed upon us, and which I know we are all glad to bear in connection with the war.
The policy of any Government in war time as to taxation must depend upon the financial situation as it presents itself from time to time. It has appeared to us that the measure of taxation which we have brought down in this Budget is reasonably adequate to cope with the situation as it presents itself at the present time. I said during the debate that it was possible and even probable that we might have to resort to a measure of income taxation as the war developed and our financial requirements became greater. I also stated that we might have to consider, and I repeat it to-day, other sources of taxation different from those which we have adopted up to date. My hon. friend from South Renfrew (Mr. Graham) in his very thoughtful speech has put forward different methods of taxation, some of which he appears to favour, and all of which he desires the House to consider. In his closing remarks he referred especially to income taxation. Now, I have given this matter of income taxation my most careful consideration, and I have reached the conclusion, which I believe is sound, that at present it is not advisable TSir Thomas White.]
to impose an income taxation. I hope the House will pardon me if I develop briefly some of the arguments which have led me to that conclusion; most of which were touched upon in the Budget speech.
Many statements have been made in this House by hon. gentlemen who have not had the opportunity of going into this matter as a Finance Minister is able to go into it, indicating an opinion upon their part that very large sums indeed would be raised by an income taxation measure. For instance, the hon. member for Dauphin, in the course of his speech stated that we should raise $50,000,000 from income taxation. I doubt very much if the hon. member has gone into the matter statistically to see whether any such sum could be realized by income taxation. I have no hesitation in saying myself that no such sum could be realized in this country by a measure of income taxation. You might ask me on what I ground that view. Well, in the United States, for instance, which has 12 or 13 times the population of Canada-and at least 25, and I should not be surprised if it were 40 of 50 times our wealth-they have had income taxation for some years. It is a pretty heavy tax, being 2 per cent upon incomes from $3,000 upwards. As soon as the income reaches $20,000 there is an increase of one per cent; when it reaches $40,000 there is an increase of two per cent, and so on upon a graduated scale running up to thirteen per cent on an income of $2,000,000. That is a fairly heavy income tax.


Mr. PARDEE:: What is the initial rate?
#


William Thomas White: Twenty mills on the dollar or two per cent, which is about the Tate of municipal taxation in Toronto and most of the other cities in Canada. This tax has been in effect in the United States for some years, and consequently the machinery for collecting it-a very important matter has been perfected. Yet, the amount realized from this tax, which is imposed not only upon individuals but upon corporations in respect of their net profits, was, for the year 1915, only $80,000,000, and for the year 1916, $124,000,000. The population of the United1 States is twelve or thirteen times that of Canada, and the wealth of the United States is at least twenty-five times that of Canada, I believe. This matter has been gone into by my department, and we are familiar witli the income tax assessments in the neighbouring republic; and the conclusion- we have reached is that on the scale of income

taxation in force in the United States today the Dominion of Canada could not hope to raise more than $5,000,000 or $6,000,000.


Frederick Forsyth Pardee: Do I understand that the man in the United States with an income of $2,000,000 pays two per cent-


William Thomas White: First, he pays
two per cent, and. then an additional thirteen per cent.


Frederick Forsyth Pardee: That is fifteen per cent
on $2,000,000.


William Thomas White: That is as I understand it. So this income tax proposition is one to raise in the Dominion of Canada not more at the outside than $7,000,000 or $8,000,000.


Mr. TURRIFF:: It is admitted, I believe, that there is greater wealth in the United States than in Great Britain. Why, then, cannot they in the United States collect as much by income tax as is collected by that method in Great Britain? Or why could not we collect as much in proportion to our wealth as Great Britain collects in proportion to hers?


William Thomas White: We have to consider first whether the wealth is concentrated or not. I think we do not realize the enormous amount of concentrated wealth in Great Britain. Well, suppose we should raise $7,000,000 or $8,000,000 by an income tax beginning at two per cent and running up to fifteen per cent-a very heavy tax-or even suppose we managed to increase it and to raise $10,000,000 or $12,000,000, we should even then have slightly less than the amount raised by the excess profits tax in the first year of its operation, which was the least productive year of all. In the first year of that tax we raised $12,500,000; and, as I pointed out in my Budget speech, we expect to raise more the second year, because the second year was on an increased business. So, I ask the House, when considering income taxation in the Dominion of Canada, to have regard to the comparatively small amount-that is small in terms of Dominion finance-that could be raised by this means. Reference has been made to certajn gentlemen in Ottawa, Toronto, Montreal, and other large cities-


Mr. LEMIEUX:: On several occasions the Minister of Finance has said that the cost of collecting an income fax would be very large?


William Thomas White: Yes.


Rodolphe Lemieux: Has the hon. minister made calculations on that subject? Could he tell us about what it will cost?


William Thomas White: I am glad my hon. friend called that to my attention, because I had intended to speak of it. It is not possible to make an estimate as to the cost, but I can say without hesitation that it would be very large in proportion to the amount of revenue that the tax would realize.


Mr. MURPHY:: Has the hon. minister any figures showing the cost in the United States?


William Thomas White: No, I could get that, but I have not it here. This is one of the points that has been raised, and I want to deal with it fairly, and, I hope, in such a way as to afford information which will be available for members in reaching a conclusion. One difficulty in applying a federal income tax in Canada arises from the fact that we have a sparse population scattered over a territory at least as large as Europe. What does that mean? It means that we should have to cover the whole country, geographically speaking, in order to make sure that we were actually assessing the tax on all incomes down to $3,000, or $2,000, or whatever the limit of exemption might be. We should have to have a Civil 'Service, for that is what it would amount to, over the length and breadth of this country. We should have to cover every municipality, rural as well as urban, because in any towilship there might be one or more men with incomes greater than the limit of exemption. I do not mean to say that because the administration would be difficult that this tax should not be resorted 'to at all. But I do say that one test of the advisability of a tax is that the percentage cost of collection should be low. That is an axiom of taxation. But it is easy to see that in this case the cost of collection would be high. All that I say now is subject to this, which I have said before and now repeat: we may find it necessary to resort to an income tax, and if we find it necessary, for my part, I will not hesitate to resort to it.
Reference has been made to gentlemen in Ottawa, Toronto, Montreal, and other cities, who derive large incomes from interest upon mortgages or other sources, and who are exempt from taxation. It must be borne in mind that any tax in the Dominion must be general in character. I cannot bring in a Bill to tax A, or B, or C; the measure must apply to the citizens of
Commons
the country generally, commencing, oi course, at a certain minimum of income, and graduated to the highest income that is derived in Canada. I cannot bring in a Bill to tax a few wealthy men.


Edward Mortimer Macdonald: Why not?


William Thomas White: Well because, for one reason, the cost of administration would probably eat up the amount realized.


Edward Mortimer Macdonald: That is not a reason.


William Thomas White: My hon. friend
from Pictou (Mr. Macdonald) says that is not an answer. Well, I think it is, and we will let it go at that. He will object to anything I say, no matter what, so I hope he will not mind if I simply meet his assertion with counter-assertion.


Edward Mortimer Macdonald: Don't get mad.


William Thomas White: No, certainly not with my hon. friend from Pictou. There is another phase of this matter. People in Canada to-day are giving very large sums to the Canadian Patriotic Fund, to the Red Cross Fund, and to other funds in connection with the war. The people, rich and poor, have been most generous in regard to tnese funds. My own opinion is that if a stiff income tax were added to the other burdens of the war it might result in a considerable dimunition in the amount subscribed to the Patriotic, Red Cross, and other funds. I do not put that forward as a conclusive reason why an income tax should not be adopted, but I do say that when we consider the expediency of an income taxation measure, it is wise to consider how much is being contributed voluntarily by the people, irrespective of class or rank, to the patriotic funds. That is all I purpose saying at the present time upon the question of an income tax.
My hon. friend from South Renfrew (Mr. Graham) has spoken of the tariff. I shall not deal with that at any length in answer to my hon. friend because the hon. member for Edmonton (Mr. Oliver) has given notice of an amendment which he proposes to move on the second reading of the taxation proposals, and I think I shall reserve what I have to say on that head until that amendment is under discussion. But, I should like to say this to my hon. friend from South Renfrew in regard to the tariff, and I am sure the information -will be of interest to the House, that the measures which we have adopted in regard to the
TSir Thomas White.]
tariff have been fruitful to the utmost extent of our expectations. I shall quote just three figures. The House will recall that we increased the tariff by 71 per cent and 5 in the year 1915. Since then the revenue of the Dominion from customs duties has been as follows:
1915		 $ 79,000,000
1916	 103,000,000.
1917	 147,000,000
There was an increase in 1916 over 1915 of $24,000,000 and an increase in 1917 over 1916 of $44,000,000. You must not forget, in considering this question of taxation, that the very backbone of the revenues of the Dominion is and is bound to be the tariff. We must look to the tariff to produce a very large amount indeed in order to meet the requirements of the Dominion for this war and other expenditures. I have a calculation as to the amount derived by the Dominion Government in respect to the 71 and 5 per cent increases made in 1915.


Mr. A. K. MACLEAN:: Does my hon. friend distinguish between the 71 per cent on free goods and the 71 per cent On dutiable goods?	[DOT]


William Thomas White: It is on both. In 1916, under the 5 per cent and the 71 per cent increases, we derived $25,000,000 from the customs duties war tax and in 1917 we derived $37,000,000 from the same taxation.


Alexander Kenneth Maclean: Is that from the tariff on free goods as well as the other?


William Thomas White: On both, because we impose 71 per cent and 5 per cent on all goods.


Alexander Kenneth Maclean: I understand that.


William Thomas White: It is on both.


Alexander Kenneth Maclean: Will the minister state now what proportion of the $37,000,000 of revenue received from the 71 per cent surtax came from free goods, or goods which were formerly free, and what proportion from goods which were dutiable?


William Thomas White: From free goods,

Mr. A* K. MACLEAN: And $17,000,000 from dutiable goods?


William Thomas White: That would follow -$17,000,000 on dutiable goods. But the point I am making is that the increase in the tariff has produced very substantial sums towards the expenditures of the Dominion for war and other purposes.

The hon. member for South Renfrew referred to the business tax that is now before the House .for consideration. He stated that after -the war there would be a period of readjustment and that he shared the apprehension of some business men and friends that this taxation, by reason of it being so expensive, would cause them a great deal of embarrassment and 4 p.m. even might force some of them into bankruptcy. I hardly see how that result could occur. In the first place, there have been three years since the outbreak of the war that the business profits war tax has been applied. In the first place, as I have stated, we realized $12,500,000, notwithstanding that there was a good deal of dislocation of business in that first period. In the second year I should be surprised if we should not realize $20,000,000 or more. The third year will probably be the best of all. It would have been the best of all if we had allowed the taxation which was introduced last year to stand, hut we are increasing that taxation by the provisions of the measure now before the committee, and, therefore, the amount which will be realized from excess profits on business in this country for the last accounting period of the three years will he very large; 'how large I am not prepared to say, because I have not the figures touching this estimate.


Mr. PUGSLEY:: On what does my hon. friend place that estimate of increased revenue? Is it on the prospect of increased business, or increased prices, or both?


William Thomas White: As the taxation is levied in respect of profits, it would be in respect of increased business, but I suppose you could hardly consider business without considering prices in Connection with it.


William Pugsley: If you had the same business with increased prices it would be to the disadvantage of the country.


William Thomas White: I do not quite understand the hon. gentleman's point.


William Pugsley: If the manufacturers
were increasing their prices and if by reason of increased prices they have increased profits, it would not be a very satisfactory condition, because the consumer would have to pay those profits.


William Thomas White: Abnormal profits are being obtained by many businesses in Canada to-day. I have no doubt they are taking substantially as much as the market will afford them. Their profits are abnormal. What the Government are doing is
this: They are saying to them: Your profits are, say, 20, or 30, or 40 per cent; we propose to step in and take a certain amount of those profits, because we regard them as abnormal; they are greater than you would have made had there been no war. Let us see what the extent of this tax is. The measure is limited to three years. I stated last year that it would be limited to three years, and I state so to-day. For the first two years we allow a company 7 per cent and an individual 10 per cent profit. We say to them: We shall not touch your profits up to 7 per cent, or 10 per cent, hut if you make 15 per cent we will take 2 per cent away from you. I am only using the amount of 15 per cent by way of illustration. I shall deal with an incorporated company rather than an individual in giving my illustration. We say to an incorporated company: If you obtain profits of 15 per cent we will leave you 13 and take 2. Under this new measure which we are now proposing we say to them that we will take 2 per cent up to 15 per cent and half of the amount which they make between 15 and 20 per cent, and if they make over 20 per cent we shall take three-quarters of the whole.
I admit that it is a Dretty stiff tax, it is a heavy tax. But I would ask the House to hear in mind (because the tax has been criticised on account of its severity) that capital as defined in the Business Profits War Tax Act includes reserve and undistributed profits, I do not myself believe that the ordinary commercial company has any very serious ground of complaint.


Alexander Kenneth Maclean: Are borrowings treated as capital?


William Thomas White: No. As I said, I do not believe that the ordinary commercial company has any serious ground of complaint if, when it is earning 15 per cent upon capital and reserve, we say: We will allow you 13 per cent and tax 2 per cent; or if they make the additional 5 per cent we say that we will take one-half, or if they make over 20 per cent we .say we will take three-quarters of the excess amount. It is a fact that there are concerns in. this country that have been making 50 per cent, 75 per cent or 100 per cent in the way of profits in the last year, and this taxation is without question severe upon those firms and companies. There is no doubt about that. I pointed out the other day that this question had more than a business aspect, and although I was misunderstood, I was not indulging in rhetoric. I used the argu-

inent because I believed it had a real bearing upon this question of taxation. I stated that the people of this country were bearing great hardships, and making great sacrifices, owing to the war. I said that men were interrupting their employment, giving up their vocations and going to the war; that parents were sending their sons forward; and I said that I thought it was proper under those circumstances that, in the event of excessive profits having been earned owing to the war, a very substantial part of those profits should be taken for the State. I asked the House to believe and I, at all events, believe that it is a relevant argument. I think it is strengthened by the announcement of the Prime Minister the other day that it is proposed to introduce compulsory service into Canada. We must bear in mind that in the event of firms in this country getting abnormal profits, 30 per cent, 40 per cent, 50 per cent, 60 per cent or 100 per cent, the sentiment of the public is apt to be offended, and in that way our effort in the war likely to be diminished, if excess profits so great as that are permitted to private enterprise at a time when these sacrifices are being made by the people. I am the first to say in that connection that the men who have made these profits: have made them under conditions that exist in thi6 country, and that they are just as patriotic as the rest of us. They are among the leading citizens of Canada; they, too, have sent their sons forward and still continue to do everything they can to assist in the war. But the fact remains that very large profits have been made, and, so far as I am concerned, I have been unable to see that the Government would be justified in allowing those abnormal profits to be made without stepping in and taking a substantial part for the State. In other words, I believe that that argument, which might be criticised as a sentimental argument, is a real argument, having regard to the fact that we are carrying on this war and calling upon the people to make sacrifices of every kind in connection with it.
The hon. member for South Renfrew (Mr. Graham) has, as I said, expressed some apprehension lest the tax might be unduly heavy and force some of these firms into bankruptcy. Considering that we have taken only one-quarter of the excess profits in excess of 7 per cent during the years 1915 and 1916, and considering that this increased taxation applies only to the last accounting term of the three year period, I
[Sir Thomas White.1
am of opinion that his apprehensions are not well founded, 'because most of the firms that made large profits last year made much larger profits in the previous year, and many of them made large profits in the year preceding that, which was a period of considerable dislocation of business. As the hon. member for South Renfrew said, we are on common ground in desiring that nothing should be done that would injure the industries of this country; but I am of the view that no such untoward consequences as he apprehends are likely to ensue.


William Pugsley: The minister will remember that, some days ago, he was good enough to tell me that he would be willing to submit a statement of the excess profits of the flour milling companies of last year, from which the tax was taken. I should like very much to have them.


William Thomas White: I stated last year when this matter was under consideration by the House that should returns be called for by the House we should, of course, be glad to bring them down. These returns deal with the private business of individuals and companies throughout Canada. If any member desires information respecting the assessments levied against them, I would suggest that he give his notice on the Order Paper, and it will then be for the House to determine whether, in any particular case, those returns should be brought down. I have no objection personally to bringing them down; I am in the hands of the House. But I think if any hon. member desires information as to the assessment against an industry or an individual firm in an industry, he should move for it in the usual way in the House, and it would then be for the House to discuss the matter and determine whether -they should be brought down or not.


William Pugsley: I am sorry the minister did not say that. I think the minister said that if any member of the House desired the returns they would be brought down.


William Thomas White: I can quote
almost my exact words. I stated to my hon. friend that if the House, as I said last year, adopted a resolution, the returns would be brought down.


William Pugsley: The minister did not
say that the other day.


Sir WILFRID LAURIER:: What would be the advice of my hon. friend to the House when this motion was made?


William Thomas White: I cannot say in advance what my view would be except this, that if it developed that the House desired or the majority of the House desired information as to any particular assessment, or all assessments so far as I am concerned, the House would be entitled to the information because the House having imposed the taxation is entitled to know the result.


William Pugsley: That is the majority of the House.


William Thomas White: I would not say that. I reserve to myself the right to consider what the motion is. If it were aimed at an individual and for some purpose that I considered other than the public interest,
I might give my expression of opinion that while I would be very glad to give to any particular member the information personally, I would hesitate to make it public.


William Pugsley: I will tell the minister what I wanted. I think I explained my own view as being that the people of Canada and this Parliament have a right to know what are the excess 'profits of every manufacturer engaged in producing foodstuffs, such as flour, or other necessaries of life, the price of which has gone up to an inordinate extent, beyond all reason, and that the public have a right to know what are the excess profits out of which the Government is getting its share.


William Thomas White: If my hon. friend desires information along that line, I suggest that he move for it in the House and we will consider what action will be taken.
I will say further that it was agreed last year on the part of almost every member of the House, that information of this character, which touched the business of individual firms and companies throughout the country, should not be made public unless called for by the House. If my hon. friend desires information 'concerning the assessment of any person. industry or group of industries, he shall have it. If any member of the House desired to know in a confidential way, for his own information, what the assessment of any individual was, I should feel that I would give it to him.


Wilfrid Laurier: When my hon/ friend says that he is in the hands of the House in regard to this matter, I think that he evades the question- The House does not give guidance to him; it rather expects guidance from him. I should not say that
hi? advice would be followed in every case, but certainly the Hpuse would not pass in judgment upon a matter of this kind until it had the advice of my hon. friend. A motion made with a view to inquisitiveness or with a desire to inquire into the business of any individual should not, perhaps, be granted without cause shown. No pne desires to have specific information concerning the business of Mr. So-and-So. I make no -insinuation, but it is conceivable that one firm may have obtained advantage at the expense of another, and if information is asked for in that connection, I think my hon. friend will agree that the public have a right to information concerning certain businesses of a general character, such as railways and shipping companies. The flour business is of such a character that I think the information referred to shpuld be given to the committee.


William Thomas White: I think I may substantially agree with what my right hon. friend has said, but it is unusual to ask a minister in advance what attitude he will take with regard to a motion.


Wilfrid Laurier: We have understood ever since this matter came up in the House last session that this information wpuld be given without any question.


William Thomas White: I will take opportunity during the course of this discussion to place before the committee what I did say last year. My recollection of what I said is that if the House desired information respecting- these assessments, it was only reasonable, having regard to the fact that the House had authorized the taxation, that the information should be given. I do. not desire to withhold any information from the House at any time, but I cannot state in advance what action I shall take with regard to any motion which may be put on the Order Paper. I shall have to consider the motion on its merits, and the arguments adduced in support of it.


Wilfrid Laurier: That means that the House is not entitled to the information unless it is moved for.


William Thomas White: My right hon. friend himself said a few moments ago that a request for information for merely inquisitorial purposes -should not be granted.


Wilfrid Laurier: Exactly.


William Thomas White: My right hon. friend says that if a motion asking for information is put forward for inquisitorial



reasons, it should be opposed, but if put forward with the bona fide intention of obtaining information in the public interest, it should be granted.


Wilfrid Laurier: I understood from the discussion which took place last year that the details of the receipts in respect of this taxation would be given. No one expects that the details of every particular assessment will be given. It is not expected that we should have a return showing that Mr. So-and-So paid $500, and somebody else $600; but we do think that we should have information as to the amounts paid into the treasury by different classes of industries. I think that information concerning industries of the character to which reference has just been made [DOT] should be given without motion.


William Thomas White: If my right hon. friend will place on the Order Paper a resolution asking for returns with regard to taxation, I shall have no disposition to withhold any information, because I do not believe that my right hon. friend would bring forward a motion of that kind with any other than a proper intention.


William Pugsley: I hope the minister does not suppose that I would do anything of that kind.


William Thomas White: Not for a moment. The hon, gentleman is the- last person I would think of in that re'gard.


William Pugsley: A few days ago, when
this matter was under consideration, I suggested that the committee was entitled to this information, especially with regard to the flour and the milling industries. I understood the minister to say then that he would bring down the information. If the minister is not prepared to do that, I think he ought to allow the consideration of this resolution to stand until the information is obtained. It is not mere inquisitiveness which prompts members of this Committee to seek information as to the excess profits, running all the way from 20 to 100 per cent, which the manufacturers of flour and the producers of other necessaries of life are obtaining, a portion of which goes into the treasury, and about which the minister boasts so enthusiastically every time he refers to his Budget. The country has a right to know what these enormous excessive profits are which are taken out of the people and what portion of them has gone into the treasury.


William Thomas White: As to what I
stated the other day, I quote from, page 1511 of Hansard:
Mr. Pugsley: Could the minister not furnish to the House a statement of the excess profits which have been made by one industry as an example? Take the flour milling industries of the country.
Sir Thomas White:	I could give them if
they were asked for. As I said last year, if a motion is adopted in the House for returns of the assessment of this business tax, the papers will be laid on the Table.


William Pugsley: Read a little further.


William Thomas White: That is the
answer that 1 made.


William Pugsley: Oh, no.


Wilfrid Laurier: Read a little further.


William Thomas White: I stated the other day that if a motion were adopted, we should be prepared to bring down the papers.


William Pugsley: If my hoe. friend will
read a little further, he will find that, whether he intended to or not, he led us to believe that no formal motion would be necessary.


William Thomas White: I do not think
I could have stated it more clearly than I did; that if the House adopted a motion, I would bring the papers down. In the discussion of this matter last year I said, as reported on page 2637 of Hansard:
I do not think it desirable that publicity should be given in the way that my hon. friend suggests. I have already said that, if Parliament desires a return, such a return shall be brought down. This is a business tax dealing with private affairs of individuals, firms, and companies, engaged in business throughout the country, and while Parliament is entitled to any information as to the results of the tax, I do not believe the details should be advertised any more than is necessary.
That is what I said last year, and I stand by that.


William Pugsley: When this matter was discussed a few days ago, the member for Carleton, N.B., (Mr. Carvell) said:
The big milling companies publish their statements and the companies have a good idea of their profits. But there are hundreds, and I trust thousands of small milling companies and millers all over Canada, and I think the public have a right to know how much they are contributing and how this tax has been levied. That information should be brought down, I think, without Parliament demanding it.
To which the minister replied:
That was discussed last year in the House, and I then made the same statement that I have made to-day.


William Thomas White: What was the
statement that I made to-day? It was that if a resolution was adopted, the papers would be brought down,


William Pugsley: No.


William Thomas White: I have just read what I said.


William Pugsley: Mr. Carvell said:-
Mr. Carvell:	Would there he any objection
to producing statements showing the persons, firms and companies, and the amount paid by them for the first accounting period?
Sir Thomas White:	I would consider that.
I do not know whether we have that information. We received some very large cheques in payment of these taxes.
There is no suggestion there of a formal demand. I said a little later on:-
Mr. Pugsley:	The reason I suggested the
milling industry is because the people are intensely interested in the increasing price of flour, and I think that before we pass the Bill we ought to have a statement from the minister of the excess profits of the milling industry last year. I think the public would like to have that.
Sir Thomas White:	That matter can be
raised at any time.


William Thomas White: I agree entirely with what I said. If my hon. friend desires any information as to this let him put a question on the Order Paper asking for the information and the matter will receive consideration.


William Pugsley: Now is the time, and I may say to the minister that I am asking for the information.


William Thomas White: I am asking that the question be put formally.


William Pugsley: With all deference to the minister, I say that I think the committee ought-to have the information before coming to a decision in regard to this resolution.


William Thomas White: What I say in respect to that is this: the Business Profits War Tax Act imposes a tax of a certain definite proportion of the profits in excess of 7 per cent. The consideration of this measure has no necessary connection with the earnings of any group of companies, because the taxation is imposed having regard to their profits. There is, therefore, in my view, no reason why we should not proceed with the consideration of this measure as we are doing, subject to this, that if my hon. friend desires any information as to the profits of any particular business or industry I would suggest that he place a question upon the Order Paper, and the matter can then be considered by the
104}
Government. That is the position I shall take.


Wilfrid Laurier: My hon. friend has just stated that the object of this tax is to obtain a certain definite proportion of the profits in excess of seven per cent. That is a sufficient answer so far as it goes, but there ds another aspect of the case. The complaint has been raised that certain industries are making undue profits; that they are profiting on the needs of the community, profiting and speculating upon the hunger of the people. That complaint has been asserted and it has been denied, but we have the evidence of its correctness. No one supposes that my hon. friend did not properly discharge his duty; that he did not collect all that was due, but he might furnish the public with information for which they are seeking and which might be of value at the present time in reducing the high cost of bread and other food.


William Thomas White: My right hon.
friend is quite fair in his presentation of his views. He says that this information might be of use at the present time when the price of food is high, but that matter is entirely separable from what we are doing now in considering a taxation principle.


William Pugsley: How is it separable?
SiT THOMAS WHITE: If my hon. friend will put on the Order Paper a question asking for the information he desires, that matter will be considered on its merits, just as this matter is being considered on its merits; but to say:	Will the minister
bring down the information regarding the amount of taxation imposed upon members of a particular industry, and then when the matter comes up again, to ask for similar particulars in connection with another industry, is not a proper method of dealing with this measure, because the two matters are separable. My right hon. friend is quite correct in saying that the people are interested in the profits of these companies from the standpoint of the high cost of food. If he will move on that ground, personally I should be prepared to give quite favourable consideration to his motion, but the matter does not necessarily arise in connection with the consideration of this measure, and therefore, I cannot concur in the suggestion that we should defer consideration of this measure until that and .other information is brought down, because I do not believe it is cognate to this measure.


Mr. ROBB:: It was stated officially about six weeks ago that there were still 102,000,000 bushels of wheat in Canada, and since that time the price of wheat has advanced by one. dollar a bushel, which would mean an advance of $102,000,000. We know that the Minister of Agriculture was compelled to go to an outside purchasing commission to secure wheat for seed and that the price, was fixed at fifty cents a bushel over the price in effect six weeks ago. Will this purchasing commission contribute of its excess profits under the Business Profits War Tax Act?


William Thomas White: I do not understand the question of my hon. friend at all. I know nothing about the purchasing commission he speaks of. The Act is very simple in its application; if any firm engaged in business makes profits beyond a certain percentage, then the tax would apply. I am sorry that I can not answer my hon. friend's question, because I do not understand it.


James Alexander Robb: We are told that the Allied Purchasing Commission controls all the wheat in Canada to-day.


William Thomas White: That is the British Government.


James Alexander Robb: Yes, and Canada through her official representative had to go to this commission to obtain the wheat required for seed purposes.


William Thomas White: I do not know that.


James Alexander Robb: And the price was fixed at fifty cents per bushel over the price in effect six weeks ago. It is apparent, therefore, that some persons have made $50,000,000 on this deal if the price remains at that level until they get rid of that wheat. Will they contribute under the excess profits tax?


William Thomas White: I do not understand the question of my hon. friend, because in the first place I do not know that the Minister of Agriculture did go to the British commission, although he may have gone; nor do I know that he got the wheat and paid for it.. I would be glad to answer my hon. friend's question if I had the information.
The hon. member for South Renfrew (Mr. Graham) referred to the question of conscription of wealth. That is a rather vague term, and I could not help but reflect that his remarks were somewhat inconsistent.
(Sir Thomas White.]
He started out by attacking this tax-and I must say that his criticism was of a moderate and fair character-as being too severe, and then he suggested that the time had come for conscription of wealth. Without using that term, the Government in connection with this excess profits measure, now before the House, is endeavouring to take a substantial portion of profits which might be regarded as abnormal and arising largely from war conditions. That is one of the principles underlying this new taxation.


William Pugsley: With regard to the statement of the minister that he does not think the question of profits, which the milling companies and companies producing other necessaries of life have made, and out of which profits the Government has derived in the past year and expects to derive in the present year large sums, has anything to do with the resolution now before the committee, I respectfully beg to differ from my hon. friend; I think it has a great deal to do with it. The minister has stated that out of these taxes he expects to derive a certain amount of revenue for the purpose of carrying on the services of the country. In that connection, Parliament surely has a right to know as to whether that expected revenue is to be derived from enormously excessive profits or whether it is to be derived from reasonably excessive profits. This Parliament and this country have a right to know that; we have a right to know whether those excess profits out of which the minister expects to derive a proportion *of his revenue, are 50 or 100 or 200 per cent beyond what are fair and reasonable profits. I am surprised that the minister should ask a committee to pass a resolution and at the same time refuse to furnish us with that reasonable information which we have a right to expect. I certainly understood the minister to state a few days ago that if any hon. member asked for this information. it would be brought down.
Now is the time to bring it down before this resolution is further considered by the committee. My views will not be potent with the minister, of course, if he has determined not to bring the information down, but I think the committee ought not to be asked to pass the resolution until we have that information. This is a question in which the people of this country are taking a most vital interest. The poor people of this Dominion are simply being ground to the dust by the high cost of liv-

ing. Think of it, Mr. Chairman! In this country, which is capable of producing not only two or three or five hundred million bushels of wheat, but thousands of millions of bushels, the price of wheat to-day is $3.30 per bushel, and flour has reached the enormous sum of $16 a barrel. It is simply astounding. And yet the Minister of Finance says he will not tell the House what are the excess profits of the flour millers and other producers of necessaries of life. He wants us to put this resolution through in the dark, without any information at all. Surely it is of interest to this Parliament and to the people of this country to know the amount of these excess profits from which the Minister of Finance proposes to take his share and put it into the treasury. I think it is of vital importance that we should know whether these excess profits are such as might reasonably be expected to be made under war conditions, or whether they are exorbitant profits which this Parliament should not recognize at all, and against which we should take effectual steps in order to relieve the conditions from which the people ,of this country are suffering at the present time. Does not the minister think this a reasonable request? Does he not think he should tell us whether the excess profits of the millers last year were $100,000,000 or $200,000,000 or $300,000,000, so that we might know what his percentage was, because the minister is a partner with the millers in the business of boosting the prices. He has made himself a partner with them, and he has taken no steps since the beginning of the war to keep down the prices. From every million dollars of excess profits which the millers take from the consumers of this country the Minister of Finance takes his share and pute it in the Treasury, and, so far as this House and the country knows, neither he nor his colleagues, not even the Minister of Labour, has ever taken one effectual step to keep prices1 within reasonable limits. The Finance Minister has simply winked at the taking of these excess profits out of the people, and now he comes down to Parliament and asks us to authorize him to take a larger share of these excess profits without giving us the slightest information as to whether these profits are enormous, or simply such as might reasonably be expected under the conditions existing to-day. The minister should not treat this Parliament as a machine to do his bidding. It is not fair to the gentlemen who- sit behind
him. He ought to realize that they have judgment, as they undoubtedly have; he ought to realize that they are men of large intelligence, as they are, but he doee not realize this. He treats them as automatons to do his bidding, and gives them not the slightest information upon which they can act intelligently with regard to the proposal now before the committee. If I had the- power, I would not let the minister go one step further with this resolution until he had given the committee that information.


Edward Mortimer Macdonald: I desire to support
what my hon. friend from St. John has said as to the importance of furnishing this House and the country with this information, which certainly is as ordinary a piece of information as the House could ever seek from a minister. A certain measure of taxation ie proposed, and yet the Minister of Finance practicaly declines to give the House and the country the names of the men who have made these excess profits and the amounts. My hon. friend suggests there may be some reason why that information should not be given. For myself, I cannot conceive o.f any such reason. The Minister of Finance, however, asks Parliament to authorize him to increase the taxation along these lines, because he says it is the best method of taxation at the present time to raise money to carry on the war. If excess profits have been made, as the Finance Minister says, why should he decline to give the House the information asked for by my hon. friend?


William Thomas White: I am not declining to give the information. If my hon. friend will move for the information, we will consider his motion. My hon. friend has not yet told us what he wants, whether he wants the assessment of "A" or "B" or "C."


Edward Mortimer Macdonald: The whole of it. The minister should lay on the Table, as every other minister does, a statement of his receipts and expenditures. Why should he not publish a bluebook showing just who are paying these excess profits and the amounts? My hon. friend by innuendo suggests that possibly some business may be injured by giving this information, but this legislation will certainly injure them to a far greater degree if they are making excess profits. Either this additional tax is warranted by some information which the minister has in his possession, and which he has not yet given to the country,

or he has no reason whatever for imposing it. It is certainly not the gentlemen whom the minister proposes to tax that are asking that this information be withheld from the country, because the trade and financial papers throughout the Dominion are simply full of wild denunciations of the Finance Minister for proposing this additional taxation. Their position is that the House ought to know what the facts are, so that the country can see that the Minister of Finance is wrong in proposing this taxation. If this question involved some matter of state policy, or some interest vital to the war would be affected by giving this information, I could well understand the minister following ' the unwritten rule that its publication would not be in the public interest. But as my hon. friend from St. John has so ably pointed out, if there is one thing that strikes at the home of the plain people of this country to-day it is the enormous price which they (have to pay for the right to live. That problem is at the door of every one, but this Government absolutely refuses to deal with the matter in any way. During the time this House has been sitting this session the price of flour has doubled in this country, and so has every other necessary of life. The minister tells this House that there are certain classes in this country who are making excess profits, and he is going to impose additional taxation upon them. The hon. member for St. John argues that if that is the case, the House should be told just who are making excess profits, and what those profits are, because the Minister of Finance is a partner with them in taking this money out of the pockets of the people. We should have that information so that we can tell whether it is wise and practical to extend this taxation on thiB particular class. I think the Finance Minister should give the House without any reservation the amounts he has received from this excess profits tax, and from whom, and then the House will be able to decide whether it is Tight to extend this particular taxation-. I must confess that I was under the impression that my hon. friend would have asked this House to accept ,an amendment to this resolution, but apparently he is going to go on with it regardless of the representations that have been made.
Sir THOtMAS WHITE: I do not quits understsfnd my hon. friend's allusion to an amendment. My hon. friend says that I should have considered an amendment.
fMr. Macdonald.]


Edward Mortimer Macdonald: I said that I was
under the impression that my hon. friend would have proposed an amendment to the resolution in view of the representations that have been made.


William Thomas White: Along what lines?


Edward Mortimer Macdonald: Along lines that will readily occur to my hon. friend. Apparently, it has not occurred to him to propose it. When we point out to him that he is taxing industry, and to that extend checking the demand for labour as well as checking production of articles so essential to the country's welfare, that he is preventing capital from doing all that it might do for the development of the country, and ask why he does not tax accumulated wealth, he gives statements which, I submit, are not adequate reasons for the course he is pursuing. He declines to tax the accumulations of the wealthy men of this country who now escape taxation, who pay nothing to the war except an occasional subscription to the Patriotic Fund.
The fiscal argument of the Minister of Finance in the past has been that we cannot impose an income tax because incomes are the special subject of taxation for both municipal and provincial purposes. Sometime in the dim and distant future we may tax incomes, but in the meantime we cannot do so because the provinces and the municipalities impose these taxes. But he taxes corporations and firms, forsooth, and contends that this is the right way for him to raise revenues. I think he has forgotten that the capital invested in these corporations or firms pays provincial taxes and municipal taxes, just as accumulated wealth pays in the form of an income tax. The hon. minister has departed from the sound principles of taxation in dealing with this whole question. Instead of dealing with the matter so that all classes may be made to pay, he is putting off the evil day. He does not follow the example of Gladstone who, when Chancellor of the Exchequer, declared for the sound policy that Britain should pay as much as possible towards the expenses of the war while the war was going on. On the contrary he practically says:	We will pay as little as possible
while the war is going on, we will collect from capital invested in industry, but we will not touch accumulated wealth; we are going to leave to posterity the task of paying for this war. There has arisen in Canada, by reason of the demand that has come for many industrial products, a prosperity under which wealth is made and the

accumulations of wealth increased. Yet the minister touches only the fringe of taxation, he takes from only one class, and leaves the payment for the war to the future, when the time of reaction comes, when we shall need people to come into this country and develop it, when they will probably be frightened away because of the taxes which it will be necessary to impose at that time. I say that is a wrong policy. The 'minister should be preparing now so that we at this time should all be doing our part, when accumulated wealth especially should be doing its part.
The hon. gentleman tells us that it will cost so much to tax these people with accumulated wealth. Why, he has in his own department machinery that is ample to reach the wealthy men of the country who are investing in his loans in order to escape taxation upon their accumulations. With this organization he has been able to reach firms and corporations from the Atlantic to the Pacific and to collect from them his business tax, and with no greater expense he could meet accumulated wealth in such a way that it will be made to pay its proportion toward the public revenue. He knows that a question of this kind is not settled by simply speaking of the cost. He could fix an amount of income beyond which taxes should be imposed in the most stringent way. This tax ought to be imposed, because, in this war time, when everything is at shake, when everything is in the melting-pot, there is no person who should escape the responsibility of contributing, to the extent of his wealth, toward our needs in this war. Our friends in the United States have not hesitated to strike in the most emphatic way at this class of wealth, and by the methods they have adopted they are raising enormous sums. But the hon. minister prefers to leave the burden to posterity. Nor does he give the House the information which would enable hon. members to form a fair judgment on the question, but he simply imposes a tax on business the result of which, according to those best informed on the subject,- is to prevent the extension of industry in Canada.
The minister should be reminded that, before he taxes at all, he should economize, so as to put himself in a better position to provide more money against the expenses of the war. For instance, in public works, we have spent, since 1914, including capital account and consolidated fund account, no less than $47,000,000-practically fifty millions of dollars. Imagine, Mr. Chairman, our making so huge an expenditure in this
war time. Even last year, according to figures given me from Hansard, no less than $15,000,000 was spent on public works. Why should such an expenditure go on and we leave it to posterity to pay these war bills? Why should the minister imperil the future of the country by failure to economize and by these vast expenditures? Consider how expenditures have increased within the last five yeaTS. In Dominion lands last year we spent about $1,500,000 more than we spent in the same service five years ago.
Is there anybody in this country who supposes that there is immigration cpming into Canada which would warrant or justify in any way an expenditure of $1,500,000? So one goes through the various departments. In the Immigration Branch of the Department of the Interior there was an expenditure of $300,000 more than there was four years ago. Why should such extravagance exist? My hon. friend the Minister of Finance talks to the people of Canada about making sacrifices and says that this tax is justifiable because we are sacrificing our men and boys on the battlefield and that industry should also make sacrifices, but on what principle can he take this position when he and his colleagues in the Government make no sacrifices, but, on the contrary, dissipate the resources of the country without regard to the question as to whether there is a war on or not? My hon. friend last year asked this Parliament to support a proposition to give $8,000,000 out of the treasury when we are spending our blood and treasure in war, in order to get the support of the hon. member for Charlevoix and Saguenay (Sir Rodolphe Forget). Will the hon. gentleman have the temerity and audacity to come to this Parliament and ask us to permit him to take $8,000,000 from the treasury and hand it over to that hon. gentleman? If my hon. friend expects that the people are going to be impressed by the appeals made to them for sacrifice and patriotism in face of an action of that kind and repeated after fair warning was given by one of the judges in the courts of this country, I think he will find that he has misjudged the temper of the people. I could take my hon. fniend through other avenues of expenditure. He has kept on expending. He has spent no less than $17,000,000 on the Hudson Bay enterprise.


William Thomas White: Certainly.


Edward Mortimer Macdonald: Certainly. Why
should my hon. friend increase and not diminish that expenditure at this time?


William Thomas White: It is being decreased.


Edward Mortimer Macdonald: It is being decreased?


William Thomas White: Who started it? Who let the contract?


Edward Mortimer Macdonald: Who started it? Who started the war?-I might as well ask my hon. friend. We are dealing with problems with respect to this year of grace 1917.


William Thomas White: We have reduced the expenditure on the Hudson Bay railway.


Edward Mortimer Macdonald: In the face of a
world war you are going on with that expen,., diture.	.


William Thomas White: We have reduced it.


Edward Mortimer Macdonald: How much has my hon. friend reduced it?


William Thomas White: I understand that practically there is only a handful of men employed on the road to-day.


Edward Mortimer Macdonald: When did my hon. friend take that position in regard to it?


Mr. BEID:: Some time ago. The contractor has reduced to a minimum the work on the Hudson Bay railway.


Edward Mortimer Macdonald: I asked a question in this House not lone aeo. in fact, since we came back, and some one representing some department gave me the statement that $17,000,000 was expended to 1917, and that the expenditure in the last financial year was in the vicinity of $4,000,000.


William Pugsley: I see that they are asking $3,000,000 more for the Hudson' Bay railway this year in the main estimates. There is not much reduction about that?


Edward Mortimer Macdonald: The hon. Minister of Customs (Mr. Reid) had better explain what it is that he proposes to do with this $3,000,000. Is he going to take that out of this new taxation this year?


John Dowsley Reid: It may not be spent.


Wilfrid Laurier: What is the use of asking for it if it is not going to be spent?


John Dowsley Reid: The total amount will not be spent.


Wilfrid Laurier: What is the use of asking for that which it is not prpr posed to spend? How much of the sum that

you are asking Parliament for do you not propose to spend?


Mr PUGSLEY:: He says the total amount will not be spent; there may be $50 left.


Edward Mortimer Macdonald: Apparently we are going to have that same old story which was given to us last year; when items in the estimates came up for consideration we were accustomed to hear hon. gentlemen say that they were not going to spend the money. We accepted the assurances of the Government last year in regard to a very large number of items and it was found that a great deal of the money was spent. We have the statement of the Minister of Customs that the work on the Hudson Bay railway has been stopped, but my hon. friend is an old Parliamentarian and he has the verv ingenious way of 5 p.m. throwing out a little aside like that for the purpose of breaking the force of an argument. But, in the face of the estimates which .show that they are asking for $3,000,000 to spend this year on this road, there is no sense in this Government making appeals to the people to sacrifice themselves in the way of taxation and service. The Minister of Finance tries to justify his excess business profits tax by declaring that his programme is one that ought to appeal to a particular class in war time but while making this appeal my hon. friend displays the most absolute disregard of the economies, and he has failed to appreciate and take home to himself and his colleagues the lesson that he gives to the rest of the people. In view- of that, I say once more that the minister ought to present a well-considered plan of taxation in regard to the people of Canada and not hit at one particular class, especially when he could deal with accumulated wealth. My hon. friend comes along when we are passing through the greatest period of stress in the war, and tells us that posterity will have to pay the bill, but that in the meantime he is going to tax industry and capital to a certain extent and along certain lines. He has no formulated plan, no policy, no organization, no proposal which he can present to this Parliament in a sensible and practical way. Had the hon. gentleman and his colleagues, instead of merely generalising the efforts of the people of this country, assigned to their proper avocations those different forces which the country possesses, they would have done something to make effective the country's efforts in behalf of the great cause in wdiich we are

engaged. The Minister of Finance falls short of his part. He says: Posterity will pay, but we will tax for the moment industry and capital. The Government go on spending just the same as they were doing in the past, and then they come to this Parliament, and when an hon. gentleman asks that Parliament should be given information as to where they got the money out of this tax, from whom they got it, and where excess profits were disclosed by the information collected by the Government, we cannot g'et that information though we desire it for the consideration of this question. It seems to me that the occasion is one that demands from the Finance Minister a reorganization of the whole financial programme and a consideration of the question as to the responsibility for our share of what we ought to pay for the war in this period of prosperity. My hon. friend ought to deal with this question in a systematic and practical way so as to place the burden on the proper shoulders. That broad way would have a better result and a more earnest application of effort upon all lines to the great questions that lie before us.


Mr. LOGGIE:: I would like to point out to the minister what seems to be a hardship. Assuming that a munition man started business, say, last year, and had to invest half a million dollars in plant, and the war did not last more than a year, would the minister allow, in making out the statement, sufficient depreciation on that plant before the profits were declared to enable the proprietor to come out whole at the end of the year? How many years would he consider it fair to apply that depreciation on account of plant, because practically it will be of no value when the making of munitions ceases? If a company started last year with $200,000 or $300,000 capital, invested $500,000 in plant, and made a profit of 75 per cent on the capital invested, would the minister first allow a reasonable depreciation, so that in the event of the business being closed up at the end of the war, the capital would not be taken to make up the loss in depreciation? It seems to me that it is a fair proposition, and that the public and capital should know that from the minister.


William Thomas White: When I use the words " net profits " I mean net profits after taking off a proper amount in respect of depreciation. The question of depreciation is a matter of fact in each ease,
and industry, in making returns, should in connection with its statement, indicate the amount which, having regard to the nature of the business, should be written off, for depreciation. Then we have to consider whether or not that is a proper allowance. Each case must be determined on its own merits. In other words, the question of depreciation is one of fact.


Alexander Kenneth Maclean: A statement was made by the hon. member for Sherbrooke (Mr. McCrea), I think on Tuesday last when the committee were considering the resolution. That hon. gentlemen discussed in a very interesting and forceful manner the action of the Government in fixing the price of paper to the public. It was an interesting statement to me, bcause certain features were disclosed which were before that unknown to me. That hon. gentleman made the statement that paper was being sold to the trade in Canada to-day at a loss. His statement has (been confirmed to-day or yesterday by Mr- J. R. Booth of Ottawa, according to a statement in the press. I say that if that statement is correct, an injustice is being done to one branch of industry in this country, and I should like to have a statement from the Minister of Finance with respect to this matter. At least it would be fair for me to say that if their prices are fixed and it is true that they are selling to the trade at a loss, there should be some compensation to that industry in respect to taxation of their excess profits in other branches of the trade. I think that when the Government undertakes to fix the price of any commodity, that price, so fixed, should be just; if not it will work an injury to that particular trade and cause dissatisfaction. The member for Sherbrooke intimated rather plainly, I think, that the Minister of Finance was a little alarmed at the political influence of the newspapers if he did not succumb to their suggestions to fix the price. We have very excellent authority for that statement from another hon. gentleman. It might be said that the member for (Sherbrooke is somewhat prejudiced in hie statement because he is himself a manufacturer of paper, and that therefore hie statement might not be entitled to very great weight in respect to this particular question. But the late Minister of Militia (Sir Sam Hughes), more than an ordinary individual, has had something to say about this matter, and when I find so disinterested a gentleman expressing the same view, I think it is time for the Minister of Finance candidly

and frankly to explain his position. The late Minister of Militia publicly and in recent days has stated that the Minister of Finance and Sir George Perley, the Minister of Militia overseas, have attempted to create an atmosphere against him for the purpose of driving 'him out of political life; and one of the influences which was used by the Minister of Finance, according to the late Minister of Militia, was the newspapers. The hon. member (Sir Sam Hughes) says that one of the avenues by which the Minister of Finance hoped to secure, this influence with the press was by fixing the price of paper. Perhaps it would be as well that I should give to the House just what the late Minister of Militia did say, because this statement does not come from an ordinary member of Parliament, but from one who has a national reputation in a great many respects. In speaking to his constituents, not very long ago, he said- and I should like to hear from the Minister of Finance as to this:
Another plan or scheme seems to have been the sweetening of the newspapers of Canada by departing from the first principles of the National policy to secure printing paper at fixed price, and incidentally benefit to a considerable extent the Yankee newspapers. The rich advertisements by brokers, by the Government, paid for by the poor people of Canada in connection with loans, also tended to mollify criticism of the press, and secure neutral, if not favourable consideration and comment.
I should hardly like to believe that the Minister of Finance was a party to the dictation of paper prices from the motives designated by the hon. member for Victoria. If that is correct, I say it is unjust. If the Minister of Finance thinks the member for Victoria is incorrect, that this statement is unfair, I should like to have him say so.


William Thomas White: I have too much respect for the press of Canada, both Liberal and Conservative, to seriously argue in this House a question as to whether they would use their great influence to obtain some business advantage for themselves. The representatives of the press of this country, without any distinction of political affiliation, came to me, as they had a perfect right to do, and asked me to consider a matter which was of the utmost importance to them in their business. They pointed out that the prevailing rates for newsprint paper were such that if -they were obliged to pay them their industry would be ruined. That was a proper subject for them to bring to my attention, and it was a proper subject 
for me, as minister, to consider. It was considered, as I said,' in the House the other day, and, after exhausting all the arts of persuasion in endeavouring to get the question between the manufacturers of newsprint paper and the press settled, we took the action that is known to the House. I may say that this action was taken after we had, through our Tariff Board, made as careful an investigation as we could as to the increased cost of manufacture to the newsprint producers. The situation in regard to cost in all manufactures is a changing one from week to week during the progress of the war. A short time ago, in order that we might have full information as to the situation, we appointed Mr. R. A. Pringle, K.C., for the purpose of investigating the cost of production and all the conditions surrounding the manufacture and sale of newsprint paper in Canada. I submit to the House that, in view of the conditions brought to our attention by the press, the action which we have taken was a proper course for any Government to take in the premises. I may say that the investigation which is now proceeding will, I believe, meet the wishes of the manufacturers themselves as well as of the newspapers, because they desired to draw to our attention facts which they regard as of importance in connection with the price which they may be permitted to charge for newsprint paper. A,s to my hon. friend's general statement with regard to myself and the press, I would point out that the ex-Minis

ter of Militia had resigned before the decision as to fixing the cost of newsprint paper had been reached by the Government. There would be no connection, therefore, such as my hon. friend suggests as between cause and effect.


Mr. GLASS:: In discussing the business profits tax, the hon. member for South Renfrew pointed out that the manufacturers who under the present extraordinary conditions were earning large profits could not tell when those profits would be cut off. Many of the factories now engaged in the manufacture of munitions and other war supplies were doing other business previous to the outbreak of war; they simply readapted their machinery and converted their plants in such manner as to make them capable of producing munitions. The amount of depreciation in respect of such industries would not be so great as in the case of those which went into business in the. first instance for the sole purpose of manufacturing munitions and war supplies.
I understood the minister to say that in



[Stage Direction]
submitting their statements to the department, firms were allowed to estimate the amount of depreciation, and it was for the department to determine whether the depreciation estimated was fair and proper.
I was going to ask, before the minister answ'exed the question regarding depreciation, whether a fixed ratio of depreciation was allowed by the department in all cases.
I can conceive that such an arrangement would be hardly fair to such industries and factories as my hon. friend (Mr. Loggie) has referred to.
I suggest, then, that the depreciation in respect of factories which have been equipped for the special purpose of manufacturing munitions or supplies which are peculiarly incidental to the conduct of the war would be larger than that of the factory which simply has to readjust itself to.former conditions after the war is over. My hon. friend referred to the remarks of the hon. member for Pictou concerning the criticisms directed by the press against the tax rate suggested under these proposals. I agree that certain papers, which are behind the interests mostly affected, severely criticise the proposed taxation, but the press at large admit that the principle of the taxation is along the right lines. Whether or not it is excessive is a question for the House to determine. It is Dossible that in view of the increasing demand for the product of these factories, very large extensions to the plants may be necessary. These extensions will involve an investment of capital which will be productive of return only for a short period; consequently a very large amount may have to be written off for depreciation. Moreover, a firm might find itself embarrassed if, in order to pay these taxes, it had to use monev that would otherwise be used for extension of plant. No matter what decision may ultimately be arrived at, it must be evident to all that it would be a very serious thing if, by reason of the imposition of a tax or of any action taken by the Government, any industry should be retarded or embarrassed. I am quite satisfied that the Government has no intention of taking such action, but I submit that this is a matter which should seriously engage its attention before the question is finally disposed of. .
Alexander Kenneth Maclean: When the Minister of Finance put into force the additional 71 per cent duty, he promised us that the statistical departments would disclose in the annual statements just what amount came from free goods and what from application of the 71 per cent to the general tariff. That statement has never very clearly appeared, and I think that it is in the general interest that the information should appear in the Customs and Trade and Commerce returns. I obtained some figures from the Customs returns and used them during the debate upon the Budget. Although they were not later contradicted, at the time I made the statement some hon. gentlemen opposite seemed disposed to question them. For instance I find that the total Customs war tax for the fiscal year 1915-16, as given on page 192 of the Customs return, was $21,814,000. I assume that that was the amount of revenue recovered from the 71 per cent tax on dutiable and free goods. During that year there was an importation of $254,000,000 worth of goods formerly free. If those goods paid an import tax of 71 per cent, the amount paid into the treasury would be $19,000,000. This would further show that the amount of revenue recoverable by the 71 per cent tariff on dutiable goods amounted to only $2,000,000. The minister this afternoon stated that the tptal amount of revenue received from the 71 per cent tariff tax for the year just closed amounted to $37,000,000, $20,000,000 of which was attributable to the tariff on free goods and the balance to the surtax on dutiable goods.
If the figures to which I have referred for the fiscal year 1915-16 are correct, I doubt very much the accuracy of the figures which the minister has given this afternoon. I have always doubted the wisdom of applying the 71 per cent increase to the dutiable list; in fact, I have always protested against it. I have never believed it to be in the commercial interest of the country, and I doubt very much if it gives us any "substantial revenue. The point, however, that I wish to make at the present time is to urge that those figures be carefully kept, and that they appear in a prominent place in our statistical returns, so that we may have an opportunity of knowing just what is the effect of the imposition of the 71 per cent tax on dutiable and non-dutiable goods.


William Thomas White: I have not looked into the matter especially, but it was my intention that the information should appear in the customs returns, and I think I so stated to the House at the time that I introduced the Budget in 1915 or in the discussions in connection with that Budget. Although my hon. friend usually presents his statements as c'early as any other hon.

member, I have never been able to follow him in what I take to be his assertion that we have derived no revenue in respect of the 7i per cent increase in the general tariff. My hon. friend must know that we must get at least 7J per cent upon all the volume of dutiable goods to which the 7J per cent applies, as well as 7i per cent upon the free goods.


Alexander Kenneth Maclean: Of course you get some revenue, but the general effect of the 7J per cent increase is to prohibit importations, and the net result is that you would have secured more revenue if you had not applied the increase at all. That is what I mean.


William Thomas White: I find in the report of the Customs Department for 1916, which is the last report available, that the amount derived from the war tax on the general tariff is there stated to be $21,-
814,000,	and that on the preferential tariff is $3,442,000.


Alexander Kenneth Maclean: Those are the figures 1 quoted.


William Thomas White: In 1917, the total was $37,800,000 or nearly $38,000,000. There is an enormous value of imports which were not free before on which we get 7i per cent, the amount of the increase in the tariff. We also get 7i per cent or 5 per cent, according to whether a commodity is on the general tariff or the preferential tariff, from a large list of free goods. It may be that my hon. friend has overlooked the fact that there is to-day a very considerable list of commodities that are free from the 7J per cent and the 5 per cent tax.


Edward Mortimer Macdonald: Will the minister
tell us how much was collected during the last financial year from all the sources of what is known as war taxation?


William Thomas White: I am afraid that I could not do so offhand except in very general terms. The war taxation under the tariff amounts to $37,000,000; the bank tax upon circulation would yield about $1,000,000; the loan companies and trust companies probably contribute $300,000 or $400,000, and then we have collected $12,500,000 in the first year under the Business Profits War Tax Act, and possibly $20,000,000 in the second year. We are not able to estimate the latter because we have not the figures before us. The total amount would be in the neighbourhood of $50,000,000.
TSir Thomas White.]


William Stewart Loggie: The minister is perhaps hardly accurate in that.


William Thomas White: I do not suggest that I am accurate, because I have not the information.


William Stewart Loggie: The minister has not mentioned the excess amount he gets from spirits and tobacco which would be between $6,000,000 and $7,000,000.


William Thomas White: I am not sure if that amount is correct.


William Stewart Loggie: He also gets about $37,000,000 from customs, about $15,000,000 from the business tax for last year, about $1,000,000 from banks and about $6,000,000 from extra postage, or a total of about $66,000,000.


William Thomas White: I am much obliged to my hon. friend. I think $60,000,000 is nearer the correct amount.


Mr. SCHAFFNER:: Is any separate account kept of what is collected from the banks and railways? Can that information be got in a definite form?


William Thomas White: Yes.


Edward Mortimer Macdonald: Will the minister let us have an estimate as to the actual additional amount he will secure from the business profits war tax this year? I cannot find that information in any statement he has given.


William Thomas White: I am sorry that I am not able to give my hon. friend the information, and that is the reason I did not see the relevancy, if he will pardon me for saying so, of the argument which he put forward. My hon. friend suggested that we should have the information which would enable him to know the amount of taxation which we would take from companies upon excessive revenues or profits. The reason I am unable to give that information is because we have not the returns. Tnis taxation applies only to the last accounting period, and the information as to that accounting period is not before the department and will not be for some considerable time. It will not be before the department in its entirety until July, 1918. I do not desire to withhold from the House any information I have, but it is not possible for me to give the figures to my hon. friend.


Edward Mortimer Macdonald: My hon. friend must have the information for some years. What year is it for which my hon. friend has the information?


William Thomas White: Practically the whole of 1915-two years ago.


Edward Mortimer Macdonald: Is that the financial year which ended in 1916?


William Thomas White: No, the financial year which ended in 1915.


Edward Mortimer Macdonald: Has my hon. friend no data gathered that would enable him to predict how much the application of this extra rate yielded in the financial year 1915-16?


William Thomas White: I am sorry to say to my hon. friend that the data would not be useful to us in reaching the amount, and for this reason: in the first place, there were some concerns that made little or no money during 1914-15, because that was the period of dislocation succeeding the outbreak of the war, but some of those companies, I think, have done very well this last year. I reach that conclusion by reason of the conditions that have prevailed in the country, and I assume that those companies will make large profits. Other concerns that made large profits on the outbreak of war will not make so much during the last accounting period, for the reason that they had large supplies of goods or commodities on hand which appreciated in value when the war broke out. Some grain companies for instance, made large profits in the year succeeding the outbreak of the war, because their commodities appreciated in value very considerably on account of the war. As to how they will have done this year I am unable to say, because I have not the returns.


Edward Mortimer Macdonald: It would be a matter of great importance to the House and to the country if the minister would give an accurate statement of the figures as to which my hon. friend from Northumberland (Mr. Loggie) has made an estimate. I think this committee, dealing with taxation and considering what is the best method by which the finances of the country in connection with the tremendous burdens imposed on account of the war shall be raised, and all the other matters which are germane to that, should know how much money the Minister of Finance has raised out of the extra taxes during the last two years. My hon. friend ought to be able to get that information without much difficulty, and I should like him to give us the assurance that he will place it before the House after dinner, or at some other time.


William Thomas White: It would have to be simply an estimate. In the first place we know that the tariff produced $37,000,000. In the second place we know that the first year of the excess business profits tax produced $12,500,000; I do not know what the figures for the second and last periods will be. My hon. friend also estimates about $66,000,000 from post office and excise returns. 'My own idea would be that from $60,000,000 to $65,000,000 would be a fair estimate, and which my hon. friend will not fail to observe is about the amount we set aside for reducing the principal of our war debt. In addition to that, we paid the increased interest, and the pensions.


[Stage Direction]
Resolution agreed to.
On resolution No. 2:
2. That for the purposes of the said Act, the actual unimpaired reserve, rest or accumulated profits held at the commencement of an accounting period by an incorporated company shall be included as part of its capital as long as it is held and used by the company as capital:
That any enactment founded on this resolution Shall be deemed to have come into force on and from the eighteenth day of May, one thousand nine hundred and sixteen;
Alexander Kenneth Maclean: Why was that
date fixed?	.


William Thomas White: This section is
to Temove any doubt as to the amount accumulated profits which would b.e 'allowed as capital. We allow the amount which has accumulated at the commencement of the accounting period. It was set up by a few firms that we should take accumulated profits into account, say every month or so during the period. That was not the intention when the Bill was introduced, we are allowing now as capital in the ordinary sense, reserve and accumulated profits as at the commencement of the period. The 18th of May i^ the date when the original Act came into force.


Edward Mortimer Macdonald: Is there any change in the interpretation of the word "capital"?


William Thomas White: This is merely
an amendment to the Act. I think my hon. friend was out when I explained why it was necessary to enact this second section. We defined capital last year <as including unimpaired reserve and accumulated profits. We had in mind at the time that that would mean accumulated profits at the commencement of an accounting period, but one or two firms have set up that they should he allowed to take profits every month or so during the term, and compute the

seven per cent on those. A company, let us say, at the commencement of an accounting period has a certain unimpaired reserve, a certain capital and a certain amount of accumulated profits. We claim that in calculating the profits the seven per cent should be upon those three things, capital, unimpaired reserve, and accumulated profits at the commencement of the term, and this amendment is simply to effectuate the intention we had at that time. The Act will be administered accordingly.


Edward Mortimer Macdonald: I am sure that any one who read the debates last year must have got the impression that my hon, friend was proposing taxation which would, last to the end of the three year period. I think if my hoA. friend will read Hansard of last year he will find that he almost expressly said that the taxation he then proposed was final for the three year period. I am very much opposed to retroactive legislation except for the purpose of correcting a manifest mistake, and while it is within the power of Parliament at all times to-pass legislation remedying conditions that may have resulted from previous enactments, I am sure my hon. friend will agree with me that the wisest policy for a prudent minister to follow is to avoid retroactive legislation if at all possible. I think the minister will be bound to admit that, whether intentionally or not-and I think it was with the very best intentions-he gave the impression to the country and to the parties directly affected that the scheme of taxation he proposed last year was a finality for the three year period, so far as this method of taxation is concerned. I will not repeat the arguments I ventured to make earlier in the day, but I think the minister should have presented to Parliament a comprehensive system of taxation dealing with all the necessities of the war at the present time. Retroactive legislation such as my hon. friend proposes is not wise or justifiable legislation, and I think the minister should explain to the House why he proposes retroactive legislation of this character.


William Thomas White: 
Edward Mortimer Macdonald: The minister has
dealt with only one phase of the subject. He has not told us whether I am correct in my statement that he had declared that this class of people would not be called upon for more taxes during the three-year period. Certainly, the impression one gets from reading Hansard of last year, as well as one's recollection of the debate, is that the minister was not coming back to this particular form of taxation during this period. I need not quote what I have under my hand; the minister repeatedly stated that later on the necessities of the country under war conditions might necessitate other forms of taxation, hut he just as clearly indicated that he was pot coming back to this particular class of taxation, that he would not increase the taxes upon these people within the term fixed by this law. I think he will admit that that is the effect of his statement, and I think he should tell us why he comes back to these same people for more money instead of seeking other avenues of taxation.


William Thomas White: The hon. member (Mr. Macdonald) raises a wider question. My statement as I made it, and as it is reported in Hansard, is clear. I stated that this tax would be limited to a period of three years; I did not say that it would not he increased. The action now taken is not inconsistent with my statement of last year. But even suppose-though I do not admit it as a matter of fact-that my statement was as the hon. member understood it, the fact remains that this is a time of war. Governments in war time must, from time to time, take such action as they deem in the public interest. Personally, I should be the first to favour giving force and effect to any undertaking that a minister might

give. I did state that this tax was limited to a period of three years, and I repeat that. The hon. gentleman may ask me: is it your intention to renew it next year? My answer is: No. And for this reason-I did undertake that the tax should he for a three-year term, but I did not undertake that it should not be changed and modified. In the nature of things, at the end of this year, even if the war is not ended, we must be comparatively close to the end of it. I stated when the subject was under discussion before that a tax of this kind, while an eminently proper one for war time, is not a good taxation measure for a peace time. It is not well that there should be fear of a business tax in time of peace, because that is the time when we desire capital to flow into the country and when a severe tax on profits may injure business. That is one reason why I do not share the apprehensions of those who say that this tax is going to do the country considerable damage. No Minister of Finance desires to impose taxation, even excess profits taxation. But an excess profits tax is a very fair tax, and, if limited to a certain period so that business men may know that it is comins to an end, it does no great injustice.
The hon, member for Pietou has contrasted our taxation proposals as to the money invested in business and as to the money invested for income purposes by individuals. But he has overlooked one very important point. So far as I know, there are verv few men in Canada with a capital of, say, $100,000 who derive any more than six per cent by way of income upon that capital. Now, on capital invested in business we exempt the profits up to seven per cent, and from seven to fifteen per cent all we take is one-quarter. So that, logically, there is no discrimination against capital invested in business, because the tax applies only upon excess profits in business. If we were bringing down a taxation measure which took a portion of the capital invested in business, I would be the first to agree with my hon. friend that there >
was a discrimination against business in favour of those who have put their capital into some other investment.


Edward Mortimer Macdonald: But money invested in business emplovs labour and helps on the industries of the coumtrv. while accumulated wealth from which an interest income is derived lies inert.


William Thomas White: I do not agree with my hon. friend there. The revenue
derived from investment bv men who have large incomes does find its way back into productive industry. Very often, these men are holders of bonds and shares in industrial companies. Another thing which I pointed out the other nieht is this: an income tax would fall very heavily upon the men who are immediately affected by it. Suppose that my hon. friend is a majority shareholder in a company subject to this tax. I need not tell him as a lawyer that the amount paid to the Government under the provisions of this Bill could be distributed to the shareholders by the directors. Does it help a company that is subject to this tax if, in addition to taxing their shareholders, I impose an income tax upon those shareholders? This is ground that we have gone over two or three times, and I am sorry to bring it again to the attention of the House, but the statements of my hon. friend from Pietou seem to call for a reply.


Edward Mortimer Macdonald: The fact remains that in all our cities there are men who escape taxation absolutely at present. That is the complaint of the country. What does the minister say to that?


William Thomas White: The capital in industrial companies and in business' of all kinds escapes taxation up to seven per cent, and over seven per cent we take only a percentage. This excess profits tax has been criticised, but we must remember that nearly all nations are resorting to this tax, as a proper one. In England, the excess profits tax is very severe. The principle is that, being excess profits made during the war, the state must take a substantial share of it. As I say, I believe that this is a good measure in time of war, but not in time of peace. I never would think of imposing it in time of peace; let the ordinary law of Supply and demand govern then. In time of peace all the things that influence that law have full force and play; but that is not true in war time, for then industries make abnormal profits; they make, it may be, fifty or even a hundred per cent where formerly they made no more than five or six per cent. It seems to me sound to take the profits of companies which profits are undoubtedly due to war conditions. I think that is a principle recognized by all the belligerent countries.


Edward Mortimer Macdonald: I do not say that
the minister should not have a business profits tax; the point I make is that he

should go further and open up other avenues of taxation. In Britain the business profit taxes are only a modicum of total taxation. Taxation there reaches accumulated wealth. They have reached landed proprietors and the hereditary wealth of the country. The United States scheme of taxation, while it has business profits included in it, does not rest upon that source alone. They deal with income, with accumulated wealth and with a great many new sources of taxation, an example of which my hon. friend would have been wise to have followed this year instead of practically going back upon the position which he took last year, namely, that the proposed taxation would last for three years. He should have gone to other sources this year because the taxation which is paid by the business people of this country is so extraordinary and unusual that it is bound to create an onerous condition of such a character as will impair and interfere with industries. That is the criticism I make in regard to the policy but not in regard to the principle of the Business Profits Tax itself.
At six o'clock the House took recess.
After Recess.
The committee resumed at eight o'clock.


Edward Mortimer Macdonald: I find, on looking into the situation in the United States, that, although they are proposing to raise very much more revenue from the business profits tax, they have not attempted anything like the excessive measure proposed by my hon. friend. In the United States the taxation Bill recognizes the right of the business man, corporation or firm to have S per cent of revenue on the amount invested, and the former business tax involved an imposition of only 8 per cent of the amount over that. Under war conditions this year the -additional taxation imposed is only another 8 per cent, or 16 per cent of the amount, no matter what it may be. That is very much less than my hon. friend proposes. Not only that, but in England the taxation is placed upon the real excess profits. My hon. friend assumes that, in war times and in peace times alike, the manufacturer has no business to earn more than 10 per cent on his investment without giving some of it to the public. In England a comparison is made between the present profit of a company and the profit made by it in peace times, and

the imposition is made upon the excess which comes as a result of the war, what might properly be called war profits. My hon. friend takes no consideration of the fact that there should be a difference between peace times and war times. He taxes without regard to the difference in profits during peace and war. For that reason, I submit that my hon. friend has gone too far in his proposal. A* very wise writer on this question of taxation, particularly war taxation, lays down the principle that tax

ation should be economically wise and should be such taxation as is compatible with the continuance of, active enterprise and is calculated not to slacken the industry or dampen the loyalty or patriotism of the citizen. To that proposition no exception can be taken. But my hon. friend's proposals do not come under that proposition, and the exactions he is taking will slacken the industry, impair the prospect of capital investment, and dampen the patriotic enthusiasm of the party who is being taxed.
In regard to income tax, upon which the minister has shifted his ground several times, it would be interesting to see how the income tax proposals of the United States work out. Under the original law for the taxation of incomes which has been on the statute book for quite a period of years, no income under $5,000 is taxed. An exemption was made of $2,000 for the heads of families. Under the law of last year, September 10, for the first time and in the face of the entrance of the nation into the war, we find provision for the taxation of incomes of $3,000, and from these $20 a year is taken. From the $4,000 man, $40 is taken, and from the $5,000 man, $60 is taken. The $10,000 man practically contributes $200, and then for each amount of $15,000,	$20,000, $25,000, $45,000 and
$50,000 a year the amount of taxation increases gradually until the $50,000 man pays approximately $4,000 a year to the state. As the income increases to $150,000, the tax increases to $24,220 under the new law, and parties in receipt of incomes greater than that amount pay on a very much higher scale, until the man with an income of $1,000,000 pays $380,000 a year to the state. My hon. friend could very well begin taxing people who are in receipt of $20,000 a year and over. My hon. friend has failed to approach the problem of taxation for the war on a scientific basis; he is outlining no definite plan by which all parties in .the state should contribute in accordance with their ability to do so. He

is simply dealing with temporary expedients, the effect of which we have already pointed out. But if my hon. friend is at all prepared to consider this question, there is no reason why an income tax should not be framed for dealing with amounts lower than that if it is to be made a matter of permanent policy, and I reserve all statements in regard to what might be done under a permanent policy. I want to point out to my hon. friend that there are hundreds of men in this country, if not thousands, who are in receipt of incomes of $20,000 a year and more, and there is no reason why my hon. friend should not, through the machinery he has at hand, reach those people and compel them to pay. He could take $1,000 a year from a man earning $20,000 a year or upwards. But my hon. friend has set his face against that for numerous reasons which he has given from time to time, and the only virtue one can have in referring to the matter is to point out what my 'hon. friend might do which he has left undone. There is another question:	My hon. friend seems
to think that he should not lay before Parliament a statement of the amounts he has received from the men who have furnished data in regard to the business tax, that all data in regard to it should be withheld from the consideration of this House and the country. I am at a loss to know why that should be so. Of course, my hon. friend intimates that if we move in the House for that information he will consider what he will do, but I have to point out that in the United States that data is made public. There is no such reservation there. For instance, I find in the papers of the United States information which could only be obtained from the public records dealing with business profits there, that for the year 1915, 366,433 corporations made income returns, of which, however, 172,532 reported operating deficits. The yield of this tax assessed on corporations, on the basis of returns filed, was $51,844,422. It is estimated that the return from the additional taxation would .amount to~ at least $200,000,000 more. If, in the gTeat nation to the south of us, with all its ramifications of corporation work, it is not found that an injury to the public interest is caused by giving to the world a statement of returns furnished by these corporations in answer to a taxing law, on what possible basis can it be urged that we should not have the same information furnished in Canada? The consideration suggested by my hon. friend 105
from St. John (Mr. Pugsley) this afternoon seemed to 'be overpowering. In the United States, the great bulk of extra money required for the war is not expected to be made from the business profits source, as my hon. friend is making it solely in Canada, but from the income 'source, from the .accumulated wealth; whereas they expect to get only $250,000,000 from the business profits source in the United States, the estimates of the income tax run from $500,000,000 to $700,000,000.
Before these resolutions pass, therefore, my hon. friend should consider the advisability of changing his proposal in some way. It is the very reverse of scientific. It is class legislation; it will interfere with industry and with, the investment of capital and leave absolutely untouched the accumulated wealth pf Canada-the source from which the nation should draw in such a time as this. Hundreds of millionaires in Canada ought to be made pay. My hon. friend will have no difficulty in reaching them; the efficient tax collector who had to do with the business profits tax will look after it if my hon. friend will give him the full authority.


William Thomas White: In referring to the proposed United States business profits tax, my hon. friend overlooks the fact that the United States has not been at war for three years. The United States has had three years of prosperity such as she never before experienced in her history. Congress is considering a taxation measure for present needs, but my hon. friend would hesitate to predict what degree of taxation the United States may resort to before the war is over, especially if it lasts another three years. Canada baa organized an expeditionary force of over 400,000 men. If my hon. friend will multiply that number by 13 they having 13 times our population he will find that a corresponding effort on the part of the United States would result in the organization of a military force of 5,000,000 men. So that in criticising the taxation measure which the (Government lays betftone 'the House, the position of the United States in respect to taxation, having Tegard to the stage at which they have arrived in the war, is no criterion by which we should be guided. When this war broke out I did not immediately propose an excess profits tax. In August 1914, we brought down a mild measure of taxation; we raised the excise duties upon liquors, cigars and tobaccos, as well as the duties upon sugar and certain other commodities. Tn 1915



we raised, the tariff to 7J per cent and 5 per cent-the United States proposes to raise the tariff 10 per cent at this stage. Then we introduced the other measures of taxation with which hon. gentlemen are familiar; so that we have been progressive in our taxation measures. The action of Congress at this time, therefore, is not a criterion by which our measure should be judged or upon which we should act. My hon. friend has suggested that we should tax incomes of $20,000 and over. I am positive that if I brought in any such measure my hon. friend would be foremost in criticising it as most unjust to a limited <dass of individuals. He would have the tax limited to incomes of $2,000 or $3,000. My hon. friend would oppose any measure of taxation that we should bring in; it would make no difference what it was. He has one advantage over most of us, whether on this iside or on the other side: he was born a partisan. Any measure of taxation, therefore, proposed by the Government would meet with the opposition of my hon. friend. He complains that we are letting the millionaires off, but his criticism this afternoon has been largely -I will not say at the instance of, but he has had them in mind-in respect of large firms or establishments that can well afford to pay this tax. The Nova Scotia Steel & Coal Company is in my -hon. friend's constituency; I should not be surprised if he had that firm particularly in mind. I know Mr. Cantley well enough to be sure that he does not mind paying taxes for war purposes upon the profits of the company which, I am glad to say, have been considerable since the outbreak of -the war. My hon. friend has been trying to ride two horses this afternoon, and he has not been successful. He has been saying, during the course of this discussion, that he is in favour, of the excess profits tax, but he has been criticising it because he knows that there is some dissatisfaction because it is fairly -severe. Why does my hon. friend not say either that he is in favour of a severe excess profits tax, or that he is not? He will not do that, because he is attempting to ride two -horses at the same time.


Edward Mortimer Macdonald: What kind of horse is my -hon. friend riding?


William Thomas White: The only horse I am trying to ride is the horse that will win this war-a war-horse. That is a pretty good steed to ride.


Edward Mortimer Macdonald: My hon. friend is not riding it very well.


William Thomas White: The hon. member for Pictou is trying to ride an election horse; that is the difference. My hon-. friend referred to the British tax. The British taxation measure on excess profits realized about $800,000,000-and they have six times as many people as we have. The hon. gentleman says that our tax is excessive, yet the hon. member for Dauphin said the other night: why do you not take $200,000,000 out of the manufacturers? Why does my hon. friend from Pictou not criticise the member for DauDhin? On the one hand hon. gentlemen opposite say: you are taxing the manufacturers too much; and on the other: you are not taxing them enough. I will not say that that is the attitude of all hon. gentlemen opposite, because that would be unjust, but it is the attitude of some. In England the excess profits tax is levied, as the member for Pictou has indicated, on the difference between the profits in war time and the profits over a three year period preceding the war. As a result, a number of businesses in England that were making small profits before the war broke out, due to the unsettled conditions-because tight money had prevailed for a considerable period before the war-are bearing an undue proportion of the excess profits tax. Companies that were earning from 25 to 50 per cent before the war are paying nothing or very little, whereas companies which were earning only 5 or 6 per cent and are now earning from 25 to 40 per cent, are paying into the British treasury 80 per cent of the difference.


Mr. NESBITT:: Would it not be reasonable to attribute to the war the excess profits of those companies which were not earning much before the war broke out and, vice versa, to attribute to the adverse effect of the war the decrease in the profits of -many companies which were doing well before the war broke out?


William Thomas White: That is what I think they had in mind, but in the operation of the legislation the greatest injustice results to many businesses. I have been told by business men of the highest standing that the British tax is ineauitable, unjust, and unfair for the reasons given-. Only the other day at Washington , a representative British manufacturer who was carrying on business in a large way said: We had a run of hard luck the year before the war; we are now taxed on a tremendous scale. He complained bitterly of the in-

justice of the British system and said that our taxation was much fairer. I am only giving hon. gentlemen the view of some of the business men of England with respect to the business profits tax over there. My hon. friend snoke of the furnishing of information with regard to the returns. The information in respect of this accounting period will not be available until 1918. With regard to the years 1915, 1916 and 1917, personally, I should favour bringing down a blue book, giving the names of the firms and the amount of their taxation, at the ensuing session of Parliament, but the taxation returns for 1914-15 are fairly complete. If any hon. member desires information with respect to a particular industry or a firm engaged in a particular industry, the proper course is for that member to place upon the Order Paper a request for the information which he desires, and then we can decide whether or not that information should be furnished. So far as I am concerned, I believe in the fullest possible disclosure in regard to any matter in my office unless the public interest stands in the way. In the administration pi any custom tax or any other tax, if this House desires information and it appears that the request on the Order Paper is not contrary to the public interest, so far as I am concerned, I would be prepared to bring down the information.


Edward Walter Nesbitt: Did my hon. friend take into consideration in the excess profits tax that when the war is over and things go back to normal, some of those firms which are at the present time making a large profit might be affected very adversely by the 75 per cent tax in accumulating a reserve that would assist in carrying them over, I shall not say the hard times, but the less remunerative times? It would be advantageous for a good many of those firms to pile up a reasonable reserve to carry them over the dull times that we may be approaching, When the war is over and when many of those firms which are making munitions have to turn their attention once more to their former lines of business, there will be very serious times for themselves and for their employees unless they have sufficient reserves to carry them over the transition pexipd.


William Thomas White: I am sorry my
hon. friend was not in the House this afternoon, because I dealt with that matter very fully in reply to remarks of the hon. member for South Renfrew (Mr. Graham),
but I will briefly rehearse the statement which I made. In the first place the Business Profits War Tax comes to an end at the end of this year, and the present taxation proposals apply only to the last accounting period of the three year period covered by the legislation. Secondly, with regard to many of the businesses in Canada, the last accounting period has already expired, and from this period, pi course, their profits are not subject to the taxation. Thirdly, the tax has been levied for a period of three years. For the first year all we took was one-quarter of the net profits over seven per cent; for the second year, we also took only one-quarter over seven per cent, and the second year was a good year for all businesses in Canada. The third year has also been a good year for nearly all businesses in Canada, and it is from that third year's profits that we are taking this increased amount of taxation. It is not as if we were taking all their excess profits; we are leaving them very substantial sums. My opinion has been that the position of most companies in Canada is pretty liquid. There are many companies, however, which have made betterments and improvements, and a good deal of the profits have gone back into those betterments and improvements and into stock. If it would be proper to consider, in connection with depreciation, a reasonable allowance where plants have been unduly extended during the war period, that might be a fair subject of consideration. I have no particular cases in view. I simply say that if a plant has been built to a great extent over what might be regarded as the normal requirements in order to handle the business of the war, that might be a subject of fair consideration with regard to the amount written off for depreciation.
Then we come to the other aspect of the case as to whether the companies will be able to raise the money to pay the tax. This tax is not due until 1918, and as I say, the Business Tax comes to an end this year, and we are not pressing any firms unduly as to payment. We expect them to pay when the payments are due in accordance with the measure which was passed by the House last year, but the penalty is not a high rate of interest, and I am quite sure there will be no ground for the accusation that the taxation has been harshly enforced upon firms that could not raise the money to pay it. That is only a question of reasonable administration. I think, therefore, on all these grounds there is no

reason for apprehension that firms are going to be forced into bankruptcy. I am sure that I would be the last man to consider favourably a measure that would have that effect.


Edward Walter Nesbitt: I have not the slightest doubt that the minister fully intends that this tax will end in the accounting periods of those firms in this year, and that this later proposed tax will apply only for this year; but my hon. friend, like the rest of us, does not control the war, and there is no doubt that after this year there will have to be revenue derived from some source to pay the expenses of the war. While my hon. friend applies the tax only for this year and while perhaps for the moment he does not intend to apply it for a further period, still he can not cease imposing some excess taxation even if the war should come to an end this year. I do not therefore, see, although he may fully intend that the excess profits tax will cease this year and the payment cease next year, how he can promise that definitely. I do not grasp that .at all, because he is in the hands of powers over which he has no control. Therefore, while he may give the companies an opportunity to pay, at the same time I fear that a great hardship wilt be imposed on some people. Had my hon. friend seen the wisdom of reducing the amount of taxation or of making every one pay their fair share, I would have suggested to him that, if he thought seven per cent was too low an amount for firms with a capital of less than $50,000, he might increase that to a certain extent, that is, he might allow them to earn eight per cent for instance, without imposing taxation. The other night he said in reply to me that the amount that a firm with a capital of $40,000 would earn at seven per cent would not be very great, but in answer to that I would suggest that perhaps he could increase the amount that would be allowed and still at the same time collect a certain amount of taxation from every one in this country who is engaged in business and making a profit. One man has as much right to pay taxes as another. I would suggest to my hon. friend that instead of having the fifty per cent tax apply on earnings of from fifteen to twenty per cent, he should make it apply on earnings of from fifteen to thirty per cent, and make the	higher	rate of taxation	applyon	profits	over	thirty per	cent.At the same time I would advocate that 	.
there be a spread downwards, so as to take in everybody and make the taxation as equitable as possible. I know my hon. friend says that it would cost too much to collect taxes from firms with a lower capitalization than $50,000, but I do not think it would cost a great deal to send notices from the department to people in every line of business asking them to send in a statement of their business affairs. I believe the bulk of the people are perfectly willing to pay their share of taxation, and I think most of them would send in these particulars. I do not see why there should be any excessive cost in taxing firms with a lower capitalization than $50,000.


William Thomas White: As I stated this afternoon, next year we shall in all probability be on the eve of peace. There is this further fact: we shall get the revenue which this measure will produce in the year 1918. I also stated this afternoon that I did not regard this excess profits tax as a good tax in time of peace, though it is a just tax in time of war. It has been adopted, so far as I know, by practically every one of the belligerent nations. It is not the intention to re-enact this measure. Another reason that I think is entitled to some weight is this: when we introduced the measure we set a limit of three years, and that understanding was acted upon by firms and companies establishing themselves here, and I therefore feel we are under an obligation in that respect.


Edward Mortimer Macdonald: I am sorry that the good-natured criticism I ventured to make this afternoon should have provoked so much resentment from the minister. Whenever the Minister of Finance gets into trouble, he does one of two things-he either mounts his aeroplane and soars into the realm of exchange, which he talks about in a mysterious manner as if it were a science that no other member of the House could venture to think about-


William Thomas White: I do not feel quite certain that I understand it myself.


Edward Mortimer Macdonald: When my hon.
friend shrouds himself in the mystery of that science he thinks he has completely escaped from his pursuers. His other course is .to declare that he is winning the war. Let any one criticise the Minister of Finance and if he does not talk about exchange he will at once say that he is winning the war. He was winning the war when he gave Sir Rodolphe Forget $8,000,000 for the Quebec and Saguenay railway. The Min-

ister of Finance pretends to be an economist, but in the last four years he has spent $40,000,000 on public works and he raised the taxes to pay for these works on the pretense that the money was to be devoted to the war. These are facts about which there is no question. Then he spent $17,000,000 on the Hudson Bay railway. When hon. gentlemen on this side of the House discuss the measures of my hon. friend in a reasonable way, without acrimony of any kind, it is somewhat unusual, I think, for the Minister of Finance to attribute personal motives to us. My hon. friend should not be sc thin-skinned. I think he is entirely exceeding the courtesies of debate when he calls people partisan, and suggests that they are discussing his measures for the benefit of some particular industry. The views which I put forward this afternoon were based on arguments which I had a perfect right to present to the House, and there was nothing at all personal in my remarks.
The sum and substance of the whole discussion is this: My hon. friend intends to stand by this excess profits tax. My hon. friend says that the excess profits tax is a good tax in wartime, but not in peace time. Now, if the war stops next year the' tax will come off. We all wish that my hon. friend's prophecy in regard to the conclusion of the war may come true, after these long sad years of waiting, but the present outlook, which ie not altogether rosy, does not give one much hope that my hon. friend has any -sound basis for his conclusion. Does my hon. friend say that if the war is not over next year the tax will be discontinued?


William Thomas White: Yes, I stated that. I also said that if the war went on and our expenditures increased we should have to resort to new modes of taxation. My hon. friend has indulged in a little chiding, and he is the last man in the House who should indulge in that. When he gets up and talks about the expenditures of this country you would think he was a political Sir Galahad. You can almost see the wings sprouting from his shoulders when he gets up and talks about the expenditures this Government has made. My hon. friend knows perfectly well that since the war broke out this Government has gone on with only such public works as were absolutely necessary, and the greater part of our expenditure on public works has been on undertakings initiated in large measure by hon. gentlemen opposite when they were in
power. 1 have no desire to discuss these matters from a political standpoint; I allowed a -question of my hon. friend this afternoon to go unanswered simply because I did not want to get mixed up in a political discussion. When the war broke out there was an enormous amount of unemployment in this country, due to the dislocation of business. Money supplies for carrying on undertakings throughout the country were shut off at their source, and there was consequently a great deal of unemployment. Would it have been good policy for the Government to shut down on all public works at that time? That would have been most unwise. The policy we adopted was to go ahead with isuch public works as were under way; that was good sense; it was the right thing to do, and we did it. Just as soon as business conditions improved and unemployment decreased we adopted the opposite policy.


Edward Mortimer Macdonald: You stated this afternoon in answer to a question that you spent $15,000,000 on public works last year.


William Thomas White: There are works going on in this country which should not be stopped. My hon. friend has referred to the Hudson Bay railway. The hon. member for -South Renfrew, when he was Minister of Railways, let the contract for the building of that road, and I cannot recollect any session since 1911 when hon. gentle- * men opposite have not urged the Government to continue with the building of that road. The road has been gone on with, so far as I know, with the consent of both parties in -this House.
What does the hon. gentleman suggest? Here are terminals on Hudson. Bay half finished and"liable to go to pieces; here are rails lying rusting and a road unfinished and not used. Is the Government to stop work upon it altogether? Is that good common sense? We had to continue the construction of that road or suffer loss. It is wise, when you have an uncompleted undertaking, to go ahead with it at all events to the extent necessary to save wastage and loss. It would have been a most foolish policy to abandon altogether the Hudson Bay road.


Edward Mortimer Macdonald: But the Minister of Railways tells us that he contemplates stopping the construction.


William Thomas White: It is not stopped. True, there are only a comparatively few men on the work, as I have learned from the contractor. We have been carrying on

this enterprise only to the extent necessary to prevent national loss. The ereat part of our public works expenditures to which the hon. member refers are expenditures on ports and harbours. In this House last year request after request was made by hon. members opposite for the construction of this grain elevator, that dock, or the other pier-all necessary public works in their opinion. What we have done is to go ahead "with necessary public works.


Edward Mortimer Macdonald: What about the Quebec and Saguenay?


William Thomas White: Who subsidized the Quebec and Saguenay originally? It was hon. gentlemen opposite. This Government found itself face to face with an uncompleted enterprise, and had to take action. The right hon. leader of the Opposition (Sir Wilfrid Laurier) did not oppose the measure that was passed last year. He knew that the city of Quebec and the district of Quebec were interested in the completion of that road. When we talk about burdens, I will say this-that the heaviest burdens we had were in connection with railways. We had to finish the National Transcontinental and we had to subsidize other roads to carry them on, but these roads were the result of the' policy of the previous Liberal Government. Since the outbreak of this war we have continually reduced the expenditure of the Dominion both on current account and on capital account. So far has that gone that the entire expenditure of the Dominion to-day, outside of the war, is less than it was three years ago, notwithstanding that there are embraced in that expenditure charges of $25,000,000 for interest on increased national debt, and pensions. We have endeavoured in every way to cut down expenditure, but it is not wise to cut down expenditure to such an extent as to impair the efficiency of the public service or cause waste in connection with enterprises already undertaken. Close down the work on the Welland Canal, some have told us. But that is a great public work which has been supported by both sides. I do not desire to enter into political controversy; there is no use in talking of the past, and political recrimination is wholly out of place at a time like this. But I felt I must say something in reply to the strictures passed upon the administration by the hon. member (Mr. Macdonald) this afternoon.


John Gillanders Turriff: The hon. minister talks about cutting down the expenditure by 
$25,000,000 as compared with what it was two years ago; but he did not tell the committee that even when they are cut down by that $25,000,000, our public expenditures are fifty per cent higher now than they were when hon. gentlemen opposite took office five years age. Speaking of the Quebec and Saguenay Railway, he evidently wishes the committee to believe that the Liberal party was responsible for that enterprise. But the Liberal party had nothing to do with the sixty-five miles of the Forget railway for which the Minister of Finance is going to hand out about $8,000,000-for before he is through with it the expenditure will amount to about that. This is to complete a road that never can hope to earn operating expenses. And the expenditure is made in the middle of a war. He tries .to make it appear that this side of the House were responsible. We voted against that last year.


William Thomas White: Some of you.


John Gillanders Turriff: I know that I did; I voted against it because it was an absolutely um called for expenditure, wholly unjustified in any way, except politically-to put millions of dollars into the hands of a few of the minister's political friends who sit behind him, and for nothing else. It could not possibly be for anything else, for the road can not possibly pay. And as to the other two small branches that have been tacked on to the Intercolonial, with the effect of increasing the capital cost of that line, this same request had been made to my hon. friend the former Minister of Railways (Mr. Graham) and refused by him time and again. Talk about economy! When hon. gentlemen opposite were in Opposition, they were never weary of talking about the extravagance of expending $78,000,000 for the Dominion in one year, that being the highest expenditure under the Liberal Government. The Prime Minister (Sir Robert Borden), then leader of the Opposition stated time and again that the mere fact that the Government of that day were spending $78,000,000 was prima facie evidence of extravagance and corruption. In two years under the " economy " of which the minister talks, the expenditure was increased something like fifty per cent. But, because they have cut down the expenditure to $25,000,000 less than the terrible extravagance before the beginning of the war, he would have us believe that this is a very economical Government. I think he will have a good deal of trouble in making the

people believe that the Government is an economical one, or to conceal from them the fact that a great deal pf the present expenditure is absolutely without justification.


William Thomas White: As to our expenditure on ordinary and capital account being fifty peT cent larger than when we came into office, in the first place the statement is not correct; and, in the second place, I would point out to my hon. friend (Mr. Turriff), that which he always overlooks, that, while in 1911 the total trade of the Dominion was about $800,000,000 in two years it rose to $1,200,000,000, and now it is over $2,000,000,000. This, of course, increases very *greatly the work which must be carried on in administering the affairs of the country. I do not think it desirable or necessary to deal with what the hon. member has said with regard to the Quebec and Saguenay railway. I did not suggest that hon. gentlemen opposite were responsible for the measure that was passed last year, but I cited the fact that they subsidized the railway as showing that they were interested in the completion of a road in that district. It was pointed out last year that the roadbed was falling'away and the wastage in connection with it would have amounted to a great deal in terms of money if the Government had not taken over the road. As to paying Sir Rodolphe Forget $8,000,000, my hon. friend knows that statement is not correct


John Gillanders Turriff: I said that the total cost to the Government would be in the vicinity of $8,000,000.


William Thomas White: That statement is not correct. The Government is buying the railway, roadjbed and rails and whatever money the Government pays for that railway in expropriation proceedings will have to go to the parties entitled to it according to law. The statement that the Government is giving $8,000,000 to an individual is absolutely incorrect.


George Perry Graham: I do not wish to discuss the Quebec and Saguenay now. It will come up in time and then I will discuss it very thoroughly. As with scores of other railways, the late Government granted a subsidy under the statute to a company for the building of that road. Although it was approached several times, the Government never contemplated purchasing the road, and When it failed to be a success and went to pieces because there was no traffic on it, it was not necessarily incumbent upon the Government to come to the rescue, as it
was not a Government railway. However, I do not want to go into details, but I will discuss it very plainly from my point of view when the question comes up. In times of peace it would be altogether wrong to invest in it and in time of war it is an outrage.
On resolution 3:
That the tax shall he paid each year within one month from the date of the mailing of the notice of assessment.


William Thomas White: That is a necessary provision. Under the Act as passed last year the assessment can be made up to the first of September and the payment is due on or before the first of November. There is a provision in the Act under'which the time for making the assessment may he extended by the minister, and that has been done frequently, tout there is no provision for extending it from November. Many assessments for the previous year are necessarily made after November because it is not possible to get the information earlier. The result is that the Act is inoperative. As far as the date for payment of the tax is concerned, it is felt that it will make the situation more flexible and more in the interest of the tax-paying community that a period of one month shall be allowed for payment.


John Gillanders Turriff: If the United States Government carry out the proposal to put a war tax on all imports, that will naturally apply to the wheat which was made free a little while ago by the Government and the farmer will be in a good deal worse position than he was before, because 10 per cent on $2 wheat is twenty cents a bushel and on $1.50 wheat, and that is the lowest it will probably be for a year or more, will be 15 cents a bushel. Wheat previously paid a duty of only ten cents a bushel when entering the United States. I would like to ask if the Government has any intention of doing anything to counterbalance that duty on wheat going into the United States.


William Thomas White: I do not understand my hon. friend when he says "counterbalance." What does my hon. friend mean by that?


John Gillanders Turriff: The United States purpose putting a ten per cent duty on all imports. On wheat, that my hon. friend made free, there would be a duty of ten per cent going into the United States. It used to cost ten cents a bushel to get wheat into the United States, while, if they put this duty of ten per cent on, it will cost 15 cents,

20 cents or 25 cents a bushel, and I was asking my hon. friend if the Government proposed to do anything to counteract it.


William Thomas White: I do not know what my hon. friend means by "counterbalance" or "counteract." Does he mean: Arp we going to put duties on wheat and flour on this side to counteract it?


John Gillanders Turriff: No.


William Thomas White: I do,not understand it then.
On resolution 4:	'
That with respect to every business liable to taxation hereunder the period for which the returns shall be made and during which it shall be liable for assessment shall be at least thirty-six months, commencing with the beginning of the first accounting period ending after the thirty-first day of December, 1914, or for such less period as the business may have been carried on from the beginning of the said accounting period to the end of the period for which the said tax may be levied under the said Act.


Edward Walter Nesbitt: Will the minister explain the latter part of that clause, "or for such less period," etc.?


William Thomas White: Firms that have started business since December 31, 1914, would be liable for the three years provided for in the first part of this section if the last part were not added.


Edward Walter Nesbitt: If they started business since that time you do not expect to assess them for the full three years, but you expect their assessment to cease at the same time that the other ceases?


William Thomas White: Yes, that is right, and therefore they would not be liable for three full years.


Alexander Kenneth Maclean: Their assessment would commence in May, 1916?


Edward Walter Nesbitt: No, from the year they commence business.


William Thomas White: Yes, for their accounting period. The reason we find it necessary to put in section 4 is that a company might shorten its last accounting period in order to avoid this tax. Although in business for the last five years, they might not be liable to assessment for the full three years unless we in-
9 p.m. serted this section. They might shorten their last accounting period from a year to six or ten months, and the purpose of putting in this section is to safeguard that.


Air.  A. K. AIACLEAN@: The minister stated that this excess profits tax ceases on the 31st of this calendar year. It has been stated, and I think quite correctly, that the effect of this tax proposed in the resolution has been to discourage the investment of capital in Canada, particularly capital from the United States. That statement has been made by several hon. gentlemen, and to my personal knowledge it is correct. I know of one or two instances in which intended investments have been abandoned. If the minister's statement is correct, might it not be wise to amend the resolution by providing that the tax shall not apply to business commenced this year, or from May, 1917, or perhaps from Alay, 1916, or to capital investment made since that date? It might possibly encourage intended investors to proceed, provided they were assured that they were to be relieved, not from the original 25 per cent tax, but from the taxation under this resolution. The taxation provided for under the resolution is payable in 1918, and it is to be hoped that that year will see the end of the war. I make this suggestion, not with confidence that it is absolutely wise, but in the belief that it is worth considering, and that it will encourage capital investment* and lose nothing to the revenue of the country.
Sir THOMAS.WHITE:	I believe there
are some cases in which extensions were about to be made and the work was interrupted on account of aDnrehension as to the effect of this business profits war taxation; but there was a misunderstanding which, I think, has recently been removed. I have made it clear in the budget speech that this taxation applies only to the last accounting period, the third term provided for in the legislation of last year. I do not think it is necessary to insert a provision such as my hon. friend has in mind for this reason, as I think that has become pretty well known. But, apart from that the liability to taxation under this Act, including of course this amendment which we are considering now, comes to an end on the 31st of December, 1917, by section 21 of the Business Profits War Tax Act which reads:
The provisions of section 3 of this Act shall not continue in force after the 31st of December, 1917.
In other words, we are not extending the term of this Act, and the result is that by the next session of Parliament-that is if it is held after the term of this year-the

operative part of this Act, the taxation section, will have ceased and been determined; and the only operative part of the Act will be that which authorizes the assessment and permits payment in the next year. The reason why I mentioned 1918 in my previous remarks was that I wanted to show that we would have the revenue from this measure in 1918. which we are considering now, and I hoped that that would be a substantial addition to the revenues of the country for that year.


Alexander Kenneth Maclean: I would like a little information with respect to the administration of the Act. In the settlement of accounts with a company liable to taxation under the Act, is an allowance made for a sinking fund where there is an issue of bonds? Supposing that the trust deed provides for a sinking fund and the company pays the sinking fund to the trustee, is that allowed as a charge against the business?


William Thomas White: I think my hon. friend will agree that so far as interest, un-on the bonds is concerned that would be a proper expenditure, but in the other case, the redeeming of bonds, to that extent you add to the eauitv of the company in the security; in other words you add -to the capital of the company.


Alexander Kenneth Maclean: The same thing
would apply to the retirement of. preference shares ?


William Thomas White: Preference shares are in a different class, because they belong to the proprietor.


Edward Walter Nesbitt: I would like to draw
attention to the wording of the last part of clause 4.
[DOT]-shall be at least 36 months, commencing from the beginning of the first accounting period and ending with the 31st day of Decern -' ber, 1918.
Would it not be well to add "and for three accounting periods?" They might not have three accounting periods; they might lengthen their accounting period instead of shortening it.


William Thomas White: There may be
more than three; they may have one every six months. It is better to have 36 months, as that applies to all in business since the 31st of December, 1914; and then to deal with the case of those who have been in business for less than 36 months, the last part of the section has been inserted.


Edward Mortimer Macdonald: Does this resolution cover all that the minister is submitting in the Committee of Ways and Means? Does he expect to move the House into Committee of Ways and Means in reference to any further tariff proposals, or in respect to assisting the construction of ships in this country?


William Thomas White: It is not my intention to bring down, any further tariff proposals at this session. Any policy that the Government may determine upon in connection with shipbuilding can be dealt with without taking up the matter in Committee of Ways and Means. It can he done either by legislation or, if we have power under the War Measures Act, by Order in Council.


Edward Mortimer Macdonald: In connection with
the matter of shipping, a number of the ministers have said that any one desirous of building ships in Canada could have all the orders they could handle by applying to the Imperial Munitions Board, which was acting in conjunction with and for the British Government. I should like to have it clear whether contracts for ships given by the Imperial Munitions Board are financed by the Canadian Government, or whether the Imperial Munitions Board is dealing altogether with Imperial funds.


William Thomas White: The Board is an Imperial Board, that is to say, the Government of Canada has no control over its operations. It expends the money of the Imperial Government, and not the money of this Government. If I allowed the matter to rest there, the House would not be in possession of full information. The Imperial Government is interested in the matter of shipping, as, indeed,this and every other Government in the world is to-day, on account of the scarcity of ocean tonnage. The Imperial Munitions Board has, I believe, placed orders for some twenty or twenty-two steel ships in Canada of a total tonnage of 160,000 or more. I am speaking from memory. The result is, so far as I know, that by reason of these orders and the orders given by private enterprise in Canada, the ship-building yards of Canada are full to capacity at the present time; in fact I understand they have orders which will keep them busy until about the middle of 1918. The Imperial Government sent over a representative, Mr. Perry, to work in connection with the Imperial Munitions Board. His mission was to inquire into the possibilities of wooden ship-building in

Canada; that is to say, the building of wooden ships which would be suitable for the purposes of the British Government. As the Minister of Marine and Fisheries pointed out the other night, a certain design of wooden ship had been determined upon as being the proper kind of vessel for the purposes of the British Government. I have been interested in this question of shipbuilding, and when it was brought to my attention that the question of finance lay to some extent at the bottom of activities of the British Government in Canada in the matter of shipbuilding, it occurred to me that we could be of assistance. My bon. friend a little while ago spoke slightingly of exchange.


Edward Mortimer Macdonald: Not at all; rather
laudatory.


William Thomas White: Let me tell my bon. friend that there is more in exchange than was ever dreamed of in his or in my philosophy. I think I can say, without getting my own head or any one else's in the clouds, that the British Government can buy nothing on this continent, on account of exchange conditions, unless they get the credits or the money with which to buy it. In other words, they cannot raise the money by selling in London exchange on America, because exchange has broken down. It occurred to me that the Government of Canada could be of real service to the Imperial Government in connection with its wooden shipbuilding programme in Canada and at the same time do Canada a good turn as well, because it is much to the advantage of Canada to have these wooden ships built here. So I offered the Imperial Munitions Board a credit of $10,000,000 to be availed of as required for the purpose of their shipbuilding programme. That money is to be lent by the Dominion Government to the Imperial Government. When lent to the Imperial Government it will, of course, be money of the Imperial Government -and will constitute a set-off to moneys which the Imperial Government may lend to us in England. In other words, we facilitated the financing of the Imperial Government in connection with its shipbuilding programme in Canada. I received a message from the British Government through the right hon. Mr. Bonar Law, warmly thanking us for our undertaking to finance the British Government in this respect.


Edward Mortimer Macdonald: The Minister of Trade and Commerce, in dealing with this matter,

certainly left it very far up in the air- about as far up as the exchange problem sometimes goes. But from the explanation made by the Minister of Finance, we know that the Dominion Government is not doing anything in the matter of the construction of ships in Canada, and that the Imperial Government, through the Munitions Board, are having ships built in this country. The Dominion Government, on account of the exchange situation, is simply making an advance of $10,000,000 to the Imperial Government and has no responsibility whatever for the doings of the Imperial Munitions Board in the matter of shipbuilding. The Minister of Trade and Commerce a week ago urged the view that the Government were doing something wonderful in the matter of shipbuilding, but the Minister of Finance and his colleague have made it clear that they are not. As to the assertion that the shipyards in Canada are filled, I have knowledge of the circumstances under which a communication was forwarded to the Imperial Munitions Board some four weeks ago by a certain firm which offered to engage in the construction of wooden ships. Reply was made to the effect that all the contracts for wooden ships had been let. In this shipyard and in others which are in the course of preparation in my province, ships of this kind could be built. The province of Nova Scotia appropriated $2,000,000 for the encouragement of shipbuilding and has appointed a commission for the purpose of arranging for the establishment of shipyards capable of constructing steel and wooden ships. Mr. Norcross, who is head of the Canada Steamship Lines, and who was employed by the Imperial Munitions Board or the Government lately in connection with this matter, in an interview which he gave the public press, urged the absolute necessity of the inauguration by the Dominion Government of a policy of assisting the construction and development of a mercantile marine in Canada-leaving entirely aside the question of the building of small naval vessels.


William Thomas White: After the war, or during the war?


Edward Mortimer Macdonald: Now. Mr. Norcross is a gentleman who speaks with authority and with some knowledge of the conditions. What I would like to know is whether the Government of Canada intend to take any step towards encouraging the construction of a merchant marine for Canada. The ships to be constructed by the Imperial Munitions Board will, when they leave our shores, not be under Canadian registry;

they will form no part of our transportation system. Lloyd George declared not very long ago that what the Empire needed was ships, and more ships, and more ships. The United States, while working in conjunction with the British Government along lines similar to those being followed by the Imperial Munitions Board, have inaugurated a programme for the construction of wooden and steel ships in order to increase the mercantile marine of the United States, provide means of transportation for the products of that country across the ocean and obviate the difficulty which has arisen through the destruction of vessels by submarines and the consequent depletion of the world's mercantile marine. Having regard to the suggestion of the Prime Minister of Great Britain as to the necessity of obtaining ships, and of the suggestion of Mr. Norcross as to the desirability of the establishment of a Canadian mercantile marine, may I ask whether the Government purposes doing anything by which encouragement will be given to Canadian builders of steel or wooden ships? Is it the ii tention of the Government to take steps to secure the construction of vessels which will form part of a Canadian mercantile marine which will give Canada a means of transportation on the ocean? We have our three transcontinental railway lines to carry our products to the ocean ports, but we have no means of transportation on the sea. The ships to be built by the Imperial Munitions Board are to be placed at the service of the British authorities. This Government should not stand still and do nothing to encourage the construction of ships in Canada which would form part of our ocean transport system and act in co-operation with our system of transportation by land. Will the minister be good enough to tell me the attitude of the Government in regard to the construction of ships in Canada?


William Thomas White: I do not agree with my hon. friend that in supplying $10,000,000 of Canada's money for the financing by the Imperial Government of its shipbuilding programme in this country, we are doing nothing. That is a very substantial assistance, and it is so recognized by the Imperial Government. I do not see why my hon. friend should minimize the importance of what we have done. It means that the Imperial Government, which is working in co-operation with our Government in the prosecution of the war and to which it is an object of the utmost
importance to provide transportation in order that the people of the United Kingdom may be fed, has proceeded with a large shipbuilding programme in the Dominion of Canada. Therefore, I submit that the Government should be commended and not adversely criticised for what we have done in assisting to finance the Imperial Government. So far as I am concerned, I am usually indifferent as to whether the Government is praised or not; the main thing is to get the work done whatever it may be, and what has been done is that the Imperial Government has already let contracts to the extent of $10,000,000 for wooden ships of the kind which it requires for the purpose of assisting in the transportation problem.
My hon. friend has raised the further question of establishing a shipbuilding industry in Canada and I am very glad to have the benefit of my hon. friend's views except that they are somewhat vague as indeed are the views of most men on this very important question of shipbuilding. I have been giving the matter, although it does not come immediately under my department, such attention as I have been able, and it is very difficult to determine the course which will produce the best results so far as Canadian transportation is concerned. My hon. friend has pointed out that before the war the railways carried our produce to our ports, and he emphasizes-and I think properly-the question of the importance of ocean transportation; but before the war we had Canadian ships; the railway companies had their shipping lines, and the produce of Canada was moved without difficulty to Great Britain and the continent. At the outbreak of war and since, our mercantile fleet has been to a large extent commandeered by the Imperial Government for the purposes of the prosecution of the war, and, of course, this Government .is not to blame for that. If the Imperial Government desired the shipping belonging to Canadian lines, why, they desired it for the purpose of better prosecuting the war, and so far as I know, no exception can be taken to that course. My hon. friend has raised the question of what should be done to assist the industry of shipbuilding and the transportation problems, present and future. So far as shipbuilding is concerned after the war-and that is, to my mind, an exceedingly important subject, from the standpoint not only of that industry itself, but of the collateral enterprises, such as the steel indus-

try and other industries connected with it -I think a shipbuilding industry cannot be built up in Canada except by bounty legislation. So far as concerns the peace period after the war, if bounty legislation or the granting of subsidies of reasonable amounts would facilitate the creation of a shipbuilding industry in Canada, for my part, I would have no hesitation in saying that I would favour that course. If a shipbuilder were considering the question of establishing a large plant in Canada, I do not think he would be very much bothered as to the question of subsidy during the war, because he would know that every ship that he turned out would sell at a very handsome profit. What he would be concerned about would be the period after the war was over, as to how he would get along during that period when with his plant and fixed charges he would have to meet conditions under which his ships would not sell at the prices they would realize to-day. I have had under consideration the matter of the best plan of assisting the shipbuilding industry, but the matter is not urgent so far as concerns the peri.od immediately following the war, for this reason: I do not believe-and I shall be glad to learn' if I am wrong-that private enterprise can establish a great shipbuilding industry in Canada at this time, because of the shortage of steel plate. I read the other day a statement by Mr. Mark Workman, president of the Dominion Steel Company dealing with that phase of the question and he pointed out-I am speaking from memory and I hope I am not misquoting his statement-that it would be a considerable period before the steel plate would be available for shipbuilding in Canada.


Mr. C. A. WILSON:: What about building wooden ships?


William Thomas White: I have pointed out that the British Government is giving orders for some ten million dollars' worth of wooden ships in Canada, and I may say with regard to wooden ships that while they will serve an emergency purpose, and I think may be useful for coastal business, at the same time the transportation of the future looking to a period considerably beyond the war is bound, I think, to be largely with steel vessels.


Charles Avila Wilson: Is not the United States building quite a number of wooden ships for transportation?


William Thomas White: I understand the United States is building certain wooden

vessels, but when I was at Washington I learned that the wooden vessel is regarded as an emergency vessel, and it is to steel vessels that transportation interests must-look after the war is over. My hon. friend raises the question whether it would not be advisable for the Dominion Government to consider the establishment of a shipbuilding industry in Canada. Many considerations arise in connection with that, and I think it is a problem which must engage our attention. There is the shortage of steel plate, as my hon. -friend knows, and there is the further question of whether it would be in the interest of the country for the Government to embark in shipbuilding in competition, say, with an enterprise which is ready to take up that industry as soon as it is practicable to do so. For instance, there are in this country some large steel industries which might consider the question, under proper assistance, of establish-ingv a shipbuilding industry. That might be the best way of dealing with the shipbuilding industry, or i-t might be advisable for the Government to consider the establishment of shipbuilding plants, but on account of the difficulty of getting steel plate it is almost impossible to establish a shipbuilding industry in Canada, and, as I have already pointed out, almost every shipbuilding yard in the Dominion, as far as I know, is engaged in the building of steel ships. I would not controvert what my hon. friend says with regard to yards which might build wooden vessels, but I am speaking now of the steel shipbuilding industry. I have taken the matter up with certain of the best posted men in this country, and I find an extraordinary variety and diversity of views as to the best course for the Government to take to assist the shipbuilding industry. I shall have the matter under further consideration and I am endeavouring to ascertain what is the best policy for the Government to pursue.
I can assure my hon. friend that the Dominion Government is anxious to do what it can to promote the shipbuilding industry in this country. When the Government determines upon the policy which it believes will best effectuate that purpose, the necessary announcement will be made to the House, and if legislation is required it will be brought down. That is all I feel disposed to say on the question to-night.
My hon. friend (Mr. Macdonald) referred to ships built here being retained on the Canadian register. I am sure he will be interested to know that I raised this very question with the manager of one of

the leading industries in this country. I had iif mind that if the Dominion gave assistance in connection with shipbuilding, one of the conditions might be that the ships so built should remain on the Canadian register and be available for purposes of Canadian transportation. I thought that would be a desirable condition, and I was surprised to learn that in the opinion of this gentleman, who is a very outstanding man in the Canadian industrial world, such a condition would effectually nullify the action of the Dominion Government in giving subsidies and bounties, because he said the shipbuilding industry required to be absolutely free to sell ships, no matter where they were to be used, in order to compete in the markets of the world. It would seem, therefore, that if the ships built in Canada are to remain on the Canadian register they would have to be built and operated by the Dominion Government itself. I do not put forward these suggestions as mature views upon the subject, but as my hon. friend has raised the question I just put these observations forward as representing my state of mind regarding the shipbuilding industry at the present time. If my hon. friend has any suggestions to make of a practical character which will help to solve this problem, and will point out the best way of increasing the transportation facilities of Canada or of building up a great shipbuilding industry in this country, we shall be very glad to hear from him. This question has not escaped the attention of the Government. In the meantime all the shipyards in this country, so far as I know, are engaged in building ships.


James Alexander Robb: When the minister speaks of subsidizing the building of ships, does he refer to ocean tonnage only or to tonnage on inland waters?


William Thomas White: I was using the
word "subsidies" generally. We should, of course, have to consider the whole situation with regard to subsidizing or giving grants, and I am not prepared to go into details as to the proper policy to-night.


Mr. MARCIL:: Where are these steel
ships being built at the present time?


Mr. HAZEN:: 
Charles Avila Wilson: What about the
White Star?


John Douglas Hazen: There is the Canadian
White Star and the American White Star. I think I am correct in saying that with the exception of the two Canadian Northern .vessels I have iust mentioned, all the vessels in our transatlantic trade at the outbreak of war were on the British register, and they were nearly all commandeered by the British Government for naval purposes. The Calgarian and the Alsatian of the Allan Line had iust been put on the Atlantic route. They were vessels of the most modern type, and were both commandeered by the British Government. The Calgarian is now doing service as a naval vessel, having been converted into an armed cruiser. I think the same is true of the Alsatian, which is being used somewhere in the east as a flagship for one of the squadrons. I think the_ Empress of Britain was also commandeered for naval purposes. Both the Royal Edward and the Royal George have been used for naval purposes, and one of them was torpedoed and sunk not so very long ago. That was the state of affairs when the war broke out.
I am by no means certain that we shall have the same difficulty in competing with the British shipbuilder after the war. Wages have gone up very much in Great Britain, and I doubt if thev will come down again very rapidly after the war is over. I think even without any form of protection by way of bounty or tariff, our shipbuilders will be able to compete with the

British shipbuilder more easily than before the war. Our shipyards are getting on their feet, so to sneak. Since the formation of the coalition Government by Premier Lloyd George a Department of Shipping has been added to the British Government, and at the head of it is Sir Joseph MacLay, one of the leading shipping men in Great Britain, and a member of one of the leading shipping firms in Glasgow. He has a most intimate knowledge of shipping. I had the opportunity when in England of having many discussions with him and with the members of his staff with regard to this very important question. Hon. gentlemen know of the tremendous shortage in shipping that the British Empire has to face. Many vessels have been torpedoed and many have been mined, and it has been found impossible t;o replace the tonnage from British shipyards as fast as it is destroyed. Great Britain has also been supplying tonnage to our Allies for the transport of troops and munitions. I understand that in connection with the operations at Saloniki alone, several hundred British ships are employed all the time. The result is that there is a great shortage of tonnage for carrying to Great Britain the products from overseas which are so essential not only to the comfort but to the absolute existence of the people of the British Isles at the present time. The Shipping Board under the direction of Sir Joseph MacLay are doing all they can to meet that difficulty. All the shipyards in the United Kingdom are working at high pressure, but many of them are turning out naval vessels entirely. The result is that the merchant shipping which is being turned out is not as great as the shipping which is being destroyed by submarines and mines from week to week. In discussing the matter with Sir Joseph MacLay, I expressed the belief that a considerable amount of work might be done in Canada in building ships to take the place of those that are being lost to Great Britain at the present time.


Charles Avila Wilson: Are we building any?


John Douglas Hazen: At present ships aTe being built in Canada for the British Government, under the direction of the Department of the Controller of Shipping and under the management of the Imperial Munitions Board which, in Canada, is acting for the Shipping Department of Great Britain. At present the shipyards in Canada are doing a very great deal of work building ships for the British- Government, for British

trade, and for certain other purposes which I cannot mention to the House at this time. This is true of the shipyard at Quebec which is controlled by Mr. George Davie, the shipyard at Montreal belonging to the Canadian Vickers, the shipyard at Collingwoo-d, the Poison yard at Toronto-, the Thor Iron Works of Toronto, the shipyard at Port Arthur, the shipyard of Messrs. Coghlan and the Wallace shipyard in the province of British Columbia, and also the shipyard at New Glasgow, Nova Scotia, of the Nova Scotia Steel Company.


Charles Avila Wilson: What is the highest tonnage?


John Douglas Hazen: -Ships are being built in
Canada to-day up to 8,000 tons. But, if my information is correct, the Imperial Munitions Board, acting for the Controller of Shipping, is desirous that the ships they shall make contracts for at present shall not be as large as that, but shall be, at the largest, in the neighbourhood of 3,000 tons.


Charles Avila Wilson: What is the minimum tonnage?


John Douglas Hazen: Wooden ships are being
built in Canada for the British Government and -under the Munitions Board. The instructions that the Munitions Board -have from the British Government is, that they shall not enter into -a contract for *wooden ships of less than 2,500 tons. The [DOT]reason for that condition I do not quite understand. I took the opportunity of making representations on the -subject to the Controller of Shipping and also to the Colonial Secretary, Right Hon. Walter Long. I pointed out that there were yards in -Canada that could build wooden ships of a less tonnage than 2,500 tons, but that [DOT]with their equipment and in view of the difficulty of procuring material and finding men to- do the work, it would be impossible in the case of many of them to -build ships as large as 2,500 tons. That is a matter that has to be decided by the British Government and the Controller of Shipping, as -they aTe the ones for whom ships are being -built.
So much for the shipyards that may be called standard or established shipyards, equipped for building steel vessels or equipped for building wooden vessels. There are many other yards in Canada in which wooden- ships could be built. That is particularly true, I think, of the Maritime Provinces. I am told that there are being constructed in Nova Scotia 48 wooden

ships, the largest probably of 1,500 tons and the smallest of 150 tons, or probably less. These are being built by private individuals, and from what I can learn of the conditions to-day, as soon as they are completed their builders will be able to sell them at figures that will be profitable, or, if they operate and manage these ships themselves, at the present rates of freight prevailing in the world, if the ships have the luck to escape being torpedoed or submarined, they will, in a few voyages, earn enough to pay for the entire cost of construction. With the impetus given to the building of ships in Canada by the conditions arising from the war, I believe that after the war is over our shipbuilding yards and shipbuilders will be in a better position to compete with the British shipbuilder than before the war broke out, and this entirely apart from the fact that I believe that conditions will have so changed, so far as cost is concerned, that the competition will be on more equal terms.
Something has been said this evening about the conditions likely to exist after the war. From what I can learn in talking with shipping men on the other side of the water and on this side also, I believe that, even if the war should come to a close during the present year-a matter about which I entertain very grave doubts indeed -the shortage of shipping will be so great that the shipyards in Canada and Great Britain, as well as in other parts of the world, can continue for a good many years turning out ships at their utmost capacity without overtaking what the normal quantity of ships should be and what it was when the war broke out. After the war an immense deal of shipping will be required for many purposes. Suppose, for instance, that Canada has 400,000 troops overseas at the conclusion of the war, it will take a ship a day for a year carrying
1,000	men each to 'bring these soldiers back to Canada. There are troops from Great Britain in all the theatres of the war who will need to be brought across seas. Then transportation must be provided for all the equipment, the guns' and all varied articles necessary in carrying on the war. Besides, many countries are so depleted in stocks of goods essential for the carrying on of successful business and for comfortable conditions of living that after the war there will be an enormous traffic on the seas. I am assured by shipping men, who know far more about these matters than I do, that for a long time after the war is over freights will be very high, not so high as
to-day, perhaps, but high as compared with what they were at the outbreak of the war and high enough to assure to shipowners a good return on their investment. Shipbuilders in Canada are alive to the conditions that exist and expect that the result will1 be the development of shipbuilding in Canada.
I agree with the hon, member for Pictou (Mr. Macdonald) as to the desirability of having ships registered in Canada. It is most desirable that we should have a large mercantile marine of our own. The position I have taken with regard to commandeering ships is this: as to ships of British register, I have regarded it as quite proper that the British Government should commandeer them for any purpose in connection with the war; but, as to ships of Canadian register, should the British Government require these ships they should ask us for them. An Order in Council to that effect was passed soon after the outbreak of the war, and that is the policy that is being carried into effect to-day.


Alexander Kenneth Maclean: Do I understand the minister to urge as a matter of policy that Canadian shipbuilders be allowed to dispose of the ships they construct to Canadians only?


John Douglas Hazen: Not at all, at the present juncture. I have never urged that, and would not think of putting forward such a proposition. What I did say was that when the British Government requires ships for any purpose in connection with the war, if the vessels are of British register, in my opinion they have the right to commandeer them without regard to us in Canada, even though Canadians may be owners of shares, or even owners of the ships themselves; but if the vessels are of Canadian register, then the British Government, while they may have the legal power, have not the constitutional right, to commandeer those ships, but if they are to be commandeered it should 'be done through the Government of Canada.
That position was adopted by the Government. Soon after the war broke out and before much consideration of the matter, they started commandeering ships of Canadian register. We drew their attention to the matter and put our views clearly before them. They accepted our views in effect. We passed an Order in Council on the subject and now, when Canadian ships are required for naval purposes in connection with the war by the controller of shipping under the British Government, they communicate with usandask us to com-

mandeer those ships and have them placed at their disposal. In connection with the matter very great difficulties arise. We will be informed, for instance, by the British Government that a certain vessel of Canadian register is necessary for the successful carrying on of the war and for the carrying of commodities that are necessary for the life of the British public. We will communicate with the owners of the vessel in Canada where it is registered. We, in many cases, will receive protests from them against the British Government commandeering the vessel, or it will be pointed out that vessel is necessary to Canada, that it may be carrying something that is necessary for the purpose of enabling munitions factories in certain parts to carry out their contracts successfully. From time to time our department is up against questions of that sort that we have to deal with, having on the one hand the desire of every Canadian to win the war and the desire of. every Canadian also to see that Great Britain is not hampered in carrying on the war by getting those products from overseas which are esssential to the people of the Mother Country, and, on the other hand, considering whether any injustice will be done to Canadian interests if we allow the ships to go. These are questions that we are face to face with every day and which cause very great difficulty.
In dealing with that matter and applying our best judgment from the patriotic and practical standpoint, a considerable number of Canadian vessels were commandeered for the service of the Government of Great Britain, and unfortunately a number of these vessels have been torpedoed, as have Canadian vessels that have not been commandeered by the British Government, and the result is that great difficulty exists in obtaining a supply of tonnage sufficient for our own purposes at the present time. There are difficulties in connection with the coalcarrying trade that my hon. friend from Nova Scotia will understand. There is the difficulty of getting sufficient tonnage to bring the coal from the mines of Nova Scotia to the St. Lawrence ports and also to carry it to St. John and Halifax. In some cases that difficulty might be met by railway traffic to a certain extent. There are difficulties also in connection with the oil vessels that are required to bring oil to Canada for the munitions works.


Mr. SINCLAIR:: Will the minister say if the Government have commandeered any

vessels under the Order in Council of which he speaks?


John Douglas Hazen: Yes. we have. At the request of the British Government we have commandeered certain Canadian vessels in order that they might be available for helping in the prosecution of the war and in connection with matters that were represented to us by the British Government as being essential, and in some cases vessels vitally necessary, for the prosecution of the war.


John Howard Sinclair: The commandeering has not then been for the use of the Canadian Government but of the Admiralty?


John Douglas Hazen: For the use of the Imperial Government to carry on the war. That is the position of the matter to-day. The subject is one of tremendous interest and importance. I have not , yet heard any one in this House suggest that we should pay a bounty for the construction of vessels in Canada. I do not think that is suggested at the present time or that we should, under existing circumstances-if we have the power to do it and I think we have-provide protection by means of a tariff so as to protect us against the ship-builders in Great Britain. There is no need of that at present because practically all the yards where steel ships can be built are busy and in addition, many yards where wooden vessels can be built are busy. In Nova Scotia there are forty-eight wooden ships building.
What we are more concerned with is the auestion as to what the condi-
10 p.m. tion of shipbuilding will be after the war. The matter is deserving of the greatest possible consideration and it is receiving that consideration. Although the war is costing us a tremendous sum of money, and although I know that my hon. friend the Minister of Finance has no easy task in financing the war at the present time and has tremendous responsibilities resting upon his shoulders, yet it is a subject worthy of consideration whether or not this country should not build ships to be owned by the Government of Canada and to be operated in connection with Canadian railways across the water even though it will involve a very large expenditure and an expenditure which might be difficult to finance at the present time. These are considerations to which the Government is giving consideration at the present time and I may say that if any hon. gentleman, on this or the other side of the House, has any suggestion to make about the matter, we

will be only too delighted to receive his suggestion and give it our very best consideration.


Alexander Kenneth Maclean: Mr. Chairman, the matter of shipbuilding in Canada is one of great interest to all who would desire to see the establishment of an industry of this character. As far as wooden shipbuilding in Nova Scotia is concerned, I think it is about in the same position that it was in three or four years ago. I would assume that in normal times about the number of wooden ships mentioned by my -hon. friend the Minister of Marine (Mr. Hazen) are under construction as are being built today.


John Douglas Hazen: Forty-eight.


Alexander Kenneth Maclean: The minister
states that there are only forty-eight new ships under construction in Nova Scotia and I would say that in normal times there would be nearly that number under construction. I would hardly say that he was correctly advised in saying that there were ships being built of 1,500 tons. I would imagine that the largest tonnage would be somewhere in the vicinity of 500 or 600 tons. There are a great many obstacles in the way of building ships of from 1,500 to 2,500 tons in the Maritime Provinces. I doubt if it would be practicable anywhere in the Maritime Provinces. It would be very difficult to obtain timber suitable for the construction of vessels of that size. The minister stated that it was the policy of the British Government to construct wooden ships of 2,500 tons. I think that is an unfortunate policy to adopt and I am very glad that the minister saw fit to question the propriety of a policy of that kind in England. It may be possible to build wooden ships of that size on the Pacific coast but I doubt very much if it is possible to build them in the Maritime Provinces. I speak with some hesitancy in this respect because possibly I may be in error, but I doubt very much if the wood is available. There is also the question of the difficulty of obtaining labour in the Maritime Provinces. It is at the present moment extremely difficult for shipbuilders to obtain anything like the quantity of labour required. This has been aggravated recently by visits to Nova Scotia ports by representatives of American shipbuilding yards to secure labour. I received a letter only to-day from an acquaintance of mine who is engaged in shipbuilding protesting against the fact that representatives of -shipbuilding yards 106
in the state of Maine have recently -been in Nova -Scotia and have been offering wages of from $6 to $12 a day. He asked me to protest to the Government against the invasion of our labour market by people from the United States. My correspondent insisted that this be prevented just as the Dominion Government were asked to refrain from encouraging immigration from the United States into -Canada. Probably thi-s will soon pass away, because I think you will find that the wooden shipbuilding programme outlined recently by the United States is an impossible one, especially on anything like the scale contemplated.


John Douglas Hazen: They have got down now to 250; it was 1,000 before.


Alexander Kenneth Maclean: I do not imagine that they can build even 250. If the British Government are anxious to have wooden ships constructed in Canada their policy should be a practical one, and the tonnage of such vessels should 'be within the capabilities of Canadian shi-p builders. I quite agree with the Minister of Marine and Fisheries in respect to steel shipbuilding in the future. Prior to the war I doubt if anybody could have said that shipbuilding was a practical industry to be contemplated in this country'for a great number of years to come, unless very substantial assistance was granted -by the Government by way of bounty toward that end, and that policy would be a very doubtful one, indeed, for Canada to embark upon. I think the situation has changed entirely. As the minister has said, it is recognized in England that production costs in that country for the future will be greatly in excess of what they were prior to the war. The wages paid to labour for British -shipyards will 'be much greater, probably, than they were in the days prior to the war. Shipbuilding labour was not as strongly organized in Great Britain as was other labour, but, having once become accustomed to a few years of higher wages, the shipbuilding labourers are not likely to permit their wages to fall. That is the history of wages in all countries, namely, when once they have risen from a low rate they -are not likely to fall back again. So it is generally expected that the cost of producing -ships in Great Britain will be much higher in the future than it has been in the past. If we wish to make a start in the construction of steel ships in Canada this is the opportune moment. I doubt if it is a practical way of dealing with the matter to say that -some time after the war we may consider the policy of subsidizing shipbuilding.



I think the subsidizing of shipbuilding by bounty is a very doubtful policy, indeed, and I doubt very much if we should at the present moment commit ourselves to it. At [DOT] any rate, it is not necessary' to pay a bounty to-day to shipbuilders in Canada.


John Douglas Hazen: Hear, hear.


Alexander Kenneth Maclean: They are not asking for it, and they do not deserve it. The obstacles to-day confronting shipbuilders are the cost of purchasing the plant and equipment, and, in fact, the difficulty of obtaining a plant at all. There is a further difficulty in obtaining plates. These obstacles render it almost impossible for private capital to engage in any extensive shipbuilding programme, and it has been suggested-I have heard it discussed by prominent shipbuilders in the United States, and by some Canadians-that if the Governments of this country, provincial or federal, desired to aid shipbuilding, they should do something in the way of advancing capital to competent persons to start shipbuilding yards. A shipbuilding plant costs 100 per cent more to-day than it would in normal times, and the cost of plate is also excessive. Therefore private enterprise could hardly be expected to engage in the commencement of a shipbuilding industry in these circumstances. In respect to the securing of plate, I was advised recently that the Imperial Munitions Board or the Canadian Government had made some arrangement with the United States Government whereby some of the steel plants in the United States would supply Canadian yards with all the shipbuilding plate required for the next two or three years. There may have been no such arrangement made, but if not I think it is an arrangement which very well might be made. I think the United States Government would be quite willing, if requested so to do by the Canadian Government, to make arrangements whereby some of their plants would be at the disposal of Canadian ship. building yards for the purpose of supplying plate. It would not be a very large quantity anyway. If there has been no such arrangement made, and there is any demand on behalf of Canadian shipbuilding yards for plate, I think this matter might very well be taken up. I agree with the Minister of Marine and Fisheries (Mr. Hazen) that this is the opportunity for Canadians to commence steel shipbuilding. If they do not do so now, they are not likely to do so for a great number of years. If a company were ready to construct ships to-day,
f.\Ir. A. K. Maclean.]
I think beyond doubt they could readily secure contracts which would keep them going for "five or ten years.


John Douglas Hazen: Hear, hear.


Alexander Kenneth Maclean: And by that time they might be able to liquidate their capt-tal investment almost entirely, so that long after the war had ended and the demand for shipping had been pretty well supplied, these companies might he able to carry on their business without a subsidy. In substance, what I have to suggest as a proper policy is this: that companies, if properly organized by men who have had experience and are willing to contribute some capital, be assisted in some way by the Government. I do not intend to suggest details of the arrangement; I prefer to simply state it in general terms. I think it would have been better for the British Government to have assisted Canadian yards in this matter in preference to asking Canadian shipbuilding yards to construct wooden ships of 2,500 tons. I think it is quite possible to equip steel shipbuilding plants and turn out 100,000 tons of shipping in a year, and it is quite possible to equip yards for that purpose inside of six months. And if a few shipyards of that capacity were started, the total tonnage they could supply in the next two or three years would be very considerable.


The CHAIRMAN (Mr. BLAIN):: It is my duty to point out that rule 13 of this House provides:
Speeches in Committee of the Whole must he strictly relevant to the item or clause under consideration.
I think the reading of the rule will be quite sufficient.


Mr. EDWARDS:: Mr. Chairman, in view of the fact that two or three weeks ago I ventured to make a suggestion in regard to this matter, I feel disposed to trespass on your time for two or three minutes tonight. I said then that I should like to see this Government or any Government in Canada take from the public treasury of this country $10,000,000 or $15,000,000 if necessary to build ships to carry Canadian flour-I specified that as one article -from Canadian ports free across the ocean. From what has been said in the discussion here to-night, I am more than ever confirmed in my opinion that the Government would be justified in taking that course. Both parties have endeavoured to benefit the whole of Canada by building lines of

railway. It was felt that the Canadian Pacific Railway was not sufficient, that the building of another line would result in competition which would give the lowest possible rates. I believe that our railway lines can compete with those of the United States in the matter of rates for the carrying of grain from the West to ocean ports. Why is it, then, that 60 per cent or more of our grain finds its way over American railway lines to American ports on its way ' across the ocean? The reason is simply that tonnage is more readily found at Boston and New York than at Halifax, Mont-, real and St. John. That condition will be accentuated after the war is over if no steps are taken to remedy it. The time is now opportune for the Canadian Government to embark on a scheme for building ships. We need not be deterred from taking that course because of the existence of privately owned shipyards. There could not be a better time for starting than the present, because the loss of tonnage has been so great that for many years the privately-owned yards will have more than they can do. If we are justified in taking from the public treasury money to build Government lines of railroad for the transportation of produce we are justified also in taking money from the treasury to establish transportation lines across the ocean. Moreover, I believe that the produce of Canada is discriminated against by the carrying of our wheat and flour across the ocean in vessels which represent the investment of British capital. Why should it cost three or four times as much to carry 100 pounds of flour across the ocean as it does to carry 100 pounds of wheat? I believe it is because many of the British millers, who have invested their money in vessels that are carrying our wheat across the ocean, place a high rate on flour in order to discourage the manufacture of flour in Canada and to have wheat carried across for their mills. That is a circumstance which justifies Government action. I need not point out the great advantage it would be to the whole Dominion if the Government would embark on a scheme of building ships to carry flour across the ocean free. Inducement would be held out for the carrying of our wheat over Canadian lines and there would be a corresponding benefit to our Canadian railways. Two of our transcontinental lines are finding it hard to get' along.


John Douglas Hazen: Would my hon. friend have only wheat carried free, or would he have everything the country produces-lumber, cheese and so on-carried free?
106}	]j |


William Cameron Edwards: No, I would have flour carried free, but not wheat. Wheat, however, which had been carried over Canadian lines to Canadian ports,- should be transported at as low a rate as possible; I would suggest that the rate be such as to hold out an inducement for the manufacture of the wheat into flour in Canada. The advantage which would result to the stock raisers and farmers of Canada is obvious. I do not think that lumber or cheese are in the same category as wheat. Reasons might be advanced why other produce might be carried free, but they do not occur to me. This scheme would be an advantage to the stock raisers and farmers generally in Ontario, Quebec and the Maritime Provinces. It would be an advantage to the farmers of the West, for they would obtain, a few cents a bushel more for their wheat. It would be an advantage to the three transcontinental railway lines and to the-men employed ,on them. The advantage-resulting from the impetus to the shipbuilding industry would be more than it is possible to express in words. There will be-a great shortage in tonnage after the war is over and unless a bold and vigorous policy is followed in the matter of building ships and providing shipping we shall have to depend on other more progressive countries for the transportation of our produce across the ocean. I merely wish to emphasize what I said on a former occasion : that I will endorse the policy advanced by any party of taking from the public treasury sufficient money to build Canadian ships under the supervision and control of the Dominion Government.


John Howard Sinclair: I am sorry that I did not hear what the Finance Minister said on this subject, in which everybody is so deeply interested. In listening to the discussion, I was surprised to have the idea forced upon my mind that the Government is still without a shipbuilding policy. We had a discussion a few evenings ago on this subject, and on that occasion the Minister of Trade and Commerce informed us that everything was being done; that the Government had adopted a shipbuilding policy; that it was in operation and working splendidly. It appears, however, that hon. gentlemen opposite are still at sea on this important auestion; that they have no policy in the matter. I am sorry for this, because it is a matter of vital importance to the people that a definite policy of shipbuilding should be inaugurated. We have an example of that in t(he proposal

made by my hon. friend (Mr. Edwards) who suggests that the Government should build ships to carry flour free across the Atlantic. I must enter a Drotest against that proposal. I cannot distinguish between flour and other commodities that we have for sale in so far as they would be affected by my hon. friend's proposal. I see no reason why flour should be carried free. Indeed, I am told that you can buy Canadian flour cheaper in Liverpool than you can in Montreal or Winnipeg. If that is true, it would be more advisable for my hon. friend to advocate that vessels be built to carry flour across from England free, so that Canada could get flour more cheaply. But that is a question which I think we do not need to discuss. I have not a policy ready but I have no doubt that the shipbuilding people of this country would be glad to consult with the minister in regard to this matter if he would call them together. Let me suggest to him that he announce that he is ready to do something in the way of stimulating this industry in Canada and that he is willing to meet the people throughout the country who are interested in shipbuilding, and I venture to say that he will have them call on him readily and give him their views. This I have no doubt will be of some value to him.


John Douglas Hazen: I have met many of them and I have received many different suggestions.


William Thomas White: So have I.


John Howard Sinclair: Are we to hope that any of these suggestions are to be put in force or will they go in at one ear and out at the other and nothing be done?


John Douglas Hazen: My hon. friend is a man
interested in shipping and perhaps he will give us some suggestions.


William Thomas White: He started out to do so.


John Howard Sinclair: As I have stated on
many occasions, all articles entering into the construction of ships should be admitted free of duty.


John Douglas Hazen: They are nearly all admitted free now.


John Howard Sinclair: I beg my hon. friend's pardon. There are scores of things that enter into the construction of ships that are heavily taxed.


John Douglas Hazen: My hon. friend will pardon me. He will find that the plates, the knees,

the machinery, nearly everything that enters into the construction of a steel ship is either admitted free, or entitled to a drawback pf 99 per cent. .


John Howard Sinclair: Everything?


John Douglas Hazen: Practically everything.


John Howard Sinclair: Everything that is imported.


John Douglas Hazen: Yes.


William Cameron Edwards: That would not be
necessary on what is not imported.


John Howard Sinclair: I can mention scores of things that are manufactured in Canada and that enter into the construction of ships and that are heavily taxed, and there is no drawback.


John Douglas Hazen: There is no taxation on the plates.	*


John Howard Sinclair: My hon. friend can
easily turn up the tariff and read a list of things that enter into the construction of ships and which, are taxed.


John Douglas Hazen: I have never yet met a
shipbuilder who thinks that the admittance of such articles free would encourage shipbuilding to any extent. It is a mere drop in the bucket.


John Howard Sinclair: I have never met a shipbuilder who did not hold a view contrary to that expressed by the minister.


John Douglas Hazen: You must have met different ones from those I have met.


John Howard Sinclair: You can allow these
articles that enter into the construction of a ship to enter this country free of duty so that the shipbuilder will have an opportunity of securing cheap material, because at present he cannot successfully compete with the shipbuilder on the other side of the water where the articles do enter free of duty.' A large quantity of paint, for example, is used in the shipbuilding trade. In England, if a shipbuilder wants to buy paint he buys the paint in the cheapest market in the world. A shipbuilder cannot get paint in Canada at the same rate as he could in the old country; he has Ito pay a high duty. If paint is manufactured here, the manufacturer sees that the consumer pays the duty; if it is impbrted, the duty is paid at the customs house. That is only one example. '


William Cameron Edwards: Following out your suggestion, why not build the ships somewhere else entirely? You would argue that the

ships should be built in England or in the United States or anywhere else where they could be built at the cheapest rate.


John Howard Sinclair: We shall never be able to build ships in Canada unless we build them as cheaply as they can be built elsewhere or unless the Government will make up the difference in .the cost. When a ship is built, it has to compete with all the world for business.
If there is a cargo to be carried, that cargo is set up at auction by the brokers in London and the man who gives the lowest bid will get the cargo. If it is a cargo of grain to be carried from the River Plate, to Liverpool, the man who will carry it for one cent per hundred pounds less than the Canadian will get it, and if the Canadian ship costs $10, or $15 a ton more to build than the ship built on the Clyde, the Canadian in ordinary times can not earn the interest on his investment. That is the experience in the past and it will be the experience in the future. This is a vital question. If you give the Canadian builder an opportunity, he will be able to compete with the world. Free material is one of the things he must have if he is going to get along at all. It is a question for the Government to consider as to how that can best be done. The raw material which enters into the building of the ships costs jnore in Canada than in the Old Country.


William Cameron Edwards: How about wages?


John Howard Sinclair: That question has also to be considered. The Government must solve the problem of how the difference in cost is to be made up, if they are going to help out the shipbuilding industry. My hon. friend (Mr. Hazen) has said that he has met many people and that they have given him suggestions. What I would like to see is that he should put some of those suggestions into practice and give us his policy. The fact that freights are high at present and that everything is abnormal does not relieve him from the necessity of doing something. This is the time to prepare for the competition in shipbuilding that is bound to come as soon as the war is over, and the sooner that he sets about doing something, the better. I trust that something	will grow out of this
discussion.	We have already had many
discussions- on this subject, but they have all ended in the same way, that is, there has been no results from all that has been said. I am glad to know that my hon. friend has
adopted the suggestion that I have made to him several times in regard to the commandeering of Canadian ships. Shortly after the war broke out, I brought this matter up in the House, and I took the ground that if ships on the Canadian register were to be commandeered, the commandeering should be done by the Canadian Government. That was not done at the first; it was not done in the year 1915, although I had brought the matter to the attention of the Government on several occasions. I am very much pleased, however, to know that the Government has arrived at that decision, because it is the proper decision: that if Canadian ships are to be used in the war by the Imperial Government, if they are on the Canadian register, they ought to be commandeered by the Canadian Government. In this matter the Government have taken a step in the right direction, and I wish to express my approval. If they will examine into the question they will find it is impossible in normal times for a Canadian shipbuilder to compete with the builder on the other .side under present conditions. Let us hope that the minister will call together the shipbuilders from the different districts in Canada where they are engaged in this industry, and see what can be done in order to stimulate the industry and in order to start it in places where it has not been started so far. The minister knows very well the difficulty of getting material at the present time. It is almost out of the question to build any large number of steel ships at present, because you cannot secure the material with which to build them. I do not know what the minister's plan is in regard to wooden ships; if it is to build wooden ships with steel frames and wooden planks, I suppose we could do that successfully in eastern Canada. I do not know what the plan is, and I do not think that the offers that have been made by the Imperial Munitions Board are going to help the shipbuilders very much, because, so far as I can learn, they are not as good as the terms that can be obtained from ordinary merchants who want ships for ordinary trade. I am told that the proposal of the Imperial Munitions Board is to give a small percentage of profit to the builder; that the builder who invests his capital in the enterprise and produces the ships will have them purchased from him by the Imperial Munitions Board and a small amount such as eight or ten per cent will be given him as a profit

for building. The ordinary shipbuilder who
. has the ordinary common business ability that these people 'have can make a much better profit by dealing with some merchant who requires a ship.
There is nothing in the proposals of the Munitions Board, so far as I can learn, to stimulate shipbuilding very much in Canada. The fact that freights are high has done something, of course, to stimulate the industry. It is up to the Government to deal with this question themselves, and not leave it to the Munitions Board. Some policy should be framed by the Government without delay, which will establish the shipping industry in places where it does not already exist, and develop it in places where it has already been started.


Edward Mortimer Macdonald: Does the Minister of Marine and Fisheries know where the plates are being obtained for these steel ships?


John Douglas Hazen: I do not know.
Resolutions reported and read the first time.
On motion of Hon. Mr. Hazen, the House adjourned at 10.40 p.m.
Wednesday, May 23, 1917.