1917-05-15

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Bill No. 48, respecting The British Columbia and White River Railway Company.-Mr. Clements.


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Mr. E. LAPOINTE (Kamouraska) moved for leave to introduce Bill No. 49, to amend the Exchequer Court Act. .
Some hon. MEMBERS:: Explain.


Mr. LAPOINTE:: Mr. Speaker, the purpose of this Bill is to amend section 20 of the Exchequer Court Act, which gives jurisdiction to the Exchequer Court to entertain certain claims against the Crown. Subsection (c) of section 20 reads:
Every claim against the Crown arising out of any death or injury to the person or to property on any public work, resulting from the negligence of any officer or servant of the Crown, while acting within the scope of his duties or employment.
As you are aware, Sir, the Crown is not liable for any wrong committed by its servants except when its liability is so provided by statute; and it has been decided by the Supreme Court of Canada, in two or three instances, especially last year in the case of Piggotts vs. the .Crown, that no claim can be entertained for an accident arising on a public work if the property or the person injured were not on the public work itself. For instance, in the case which I have just mentioned, the owner of a dock which had been destroyed through an explosion of dynamite on a Government wharf was denied all claim to compensation because his dock was on an adjoining property instead of being on the Government property itself. Judges of the Supreme Court have stated especially that the section as it stands constitutes a stupid enactment, and that justice has often been denied thereby. The amendment I propose is to insert the words "on any public work" after the words "while acting," so that the subsection will read:
Every claim against the Crown arising out of any death or injury to the person or to property on any public work, resulting from the negligence of any officer or servant of the Crown, while acting on any public work within the scope of his duties or employment.


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Motion agreed to, and Bill read the first time.

Sir THOMAS WHITE moved:: That on Wednesday, the 16th day of May, and subsequent Wednesdays until the end of the session, Government Notices of Motions and Government Orders shall have precedence after Questions and Notices of Motions for production of papers.
When this motion was moved yesterday by the Minister of Trade and Commerce, the leader of the Opposition asked that it be allowed to stand until to-day so that he might make spine inquiries.


Sir WILFRID LAURIER:: Mr. Speaker, the House is aware that many notices of motion from private members have been allowed to stand until the return of the Prime Minister. The Prime Minister has now, I am happy to say, returned safely from his trip, and we may now take up these motions. If my hon. friend will agree to have the date changed to Wednesday, the 23rd of May, I shall have no objection to the motion.


William Thomas White: The original motion was to take Wednesday, the 9th day of May, and now it has stood over until the 15th and we desire to make it apply from to-morrow; but if my right hon. friend is not ready to indicate the motions which have been allowed to stand, I think we shall comply with his request.


Wilfrid Laurier: I will agree that the Government take Wednesday, not of this week, but of the following week. To-morrow we will take up the questions which have stood in the absence of the Prime Minister.


William Thomas White: We will meet the request of my right hon. friend. I ask to be allowed to amend the motion to read: " Wednesday, the 23rd day of May " instead of " Wednesday, the 16th day of May."
Motion as amended agreed to.



CORRECTION.

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On the Orders of the Day:
Mr. PUGSLEY:: I would like to make a correction in Hansard. In a remark that I made yesterday upon the discussion of the resolution moved by the hon. member for East Lambton (Mr. Armstrong), I am reported to have used these words, having reference to the oil shale deposits in New Brunswick.
Experts of the Mines Branch say that these deposits would yield from $40 to $50 per ton of shale.
That conveys the impression that the results would be such as to astonish.the world. What I said was:
Experts of the Mines Branch say that these deposits would yield from forty to fifty gallons of oil per ton of shale.



WESTERN COAL MINING.

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On the Orders of the Day:
Mr. W. A. BUCHANAN (Medicine Hat):: Has the Minister of Labour any information to-day concerning the matter I spoke about yesterday when I intimated that the United Mine Workers of America had called a general strike? I understood the reply of the minister to be that he had no official information to' that effect. I have since seen in the press that the report is correct, that all the mines have been closed; that already there is a shortage of steam coal, and that the Granby smelter has been forced to close down because of want of coal. Has any action been taken by the Government to assist in bringing about a settlement?


Hon. T. W. CROTHERS (Minister of Labour):: Since I replied to my hon.
friend's question yesterday, I have received a message to say that the miners have all ceased work in District No. 18. Beyond the telegrams that have passed between the miners and myself nothing has been done in the matter.



M. VIVIANI'S SPEECH.


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On the Orders of the Day:
William Thomas White: Just before the adjournment last evening the hon. member for South Renfrew (Mr. Graham) requested that a number of additional copies of Hansard containing the speech of M. Viviani should be printed by the Government. I have caused instructions to be issued this morning for 25,000 additional copies to be printed, and these will be available at the Distribution Office for such' members as desire to send them to their constituents. Should a further supply be required I shall be glad to give it my attention.



THE BUDGET.


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On the Order being called for resuming the adjourned debate on the motion of Sir
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Thomas White, that Mr. Speaker do now leave the Chair for the House to go into Committee of Ways and Means.
Hon. FRANK OLIVER (Edmonton):: Mr. Speaker, I desired to move an amendment to the resolution, but as it was ruled out of order by the Deputy Speaker, I beg now to give notice that on the second reading of the resolution I shall make a motion suggesting the desirability of a revision of the tariff downwards.


Mr. J. A. ROBB (Huntingdon):: The amendment which I presented last Friday morning having been ruled out of order, I now beg to give notice that on the second reading of the resolution I shall present a similar motion.


Mr. F. B. CARVELL (Carleton, N.B.):: On behalf of the hon. member for Northumberland (Mr. Loggie), who is unavoidably absent to-day, I beg to give notice that on the second reading of the resolution he will move the amendment regarding the free entry of potatoes into Canada, of which he gave notice last week.



DEBATE ON ANNUAL STATEMENT OF THE MINISTER OF FINANCE.

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The consideration of the proposed motion of Sir Thomas White (Minister of Finance) for the Committee of Ways and Means, and the amendment of Mr. Turriff thereto, was resumed from Thursday, May 10.
Mr.W. F. CARROLL (South Cape Breton): Although the debate on the Budget has been somewhat extended, I desire to make a few remarks on certain features of it. From many standpoints the Budget is very satisfactory, and perhaps the most satisfactory feature in connection with it has been the.splendid response which has been made by the people of Canada to the domestic loans which were floated by the Department of Finance. I think some $350,000,000 was contributed by the people of Canada to these war loans, and that speaks well, I think, not only for the generosity of our people but for their patriotism also, and augurs well for what I conceive to be the policy that should be followed by future governments in this country in placing loans. I believe that we should continue in the future to try and meet our indebtedness by domestic loans, as that will keep the money in this country, and give to those of our people who may have money to loan the advantage of a rate of interest which hitherto has been offered to foreign countries.
Free wheat has been a live issue in this country for very many years. It was a very

live issue during the reciprocity campaign of 1911, and I am happy to say that although on that occasion there was a distinct party cleavage on the question, to-day the people of Canada, irrespective of political creed and affiliations, have come to realize that free wheat is a good thing. To-day it is no longer a matter of theory but an actual fact, and probably the Government's policy in this regard will be perpetuated. The Government are responsible for the statement that free wheat has been brought down as a war measure, but I think the people of this country will be hard to convince that such is the case. If it was a war measure, why was it postponed until the third year of the war? If free wheat were a necessity during war time, it should have been given a little earlier, say two years ago. To my mind it is simply a death-bed repentance on the part of the Government: they are endeavouring to fulfil their obligations to this country, especially to the people of the West.
Another feature of the Budget which has my most hearty approval is the taxation of war profits and other profits. I think this is a step in the right direction. Notwithstanding the fact that we may look for a speedy termination of the war, I trust that this Government or any other Government that may succeed it will continue to raise money by taxation of exorbitant profits arising not only out of war business but in any other business. If I have any criticism to make in regard to that feature of the Budget, it is that the Finance Minister has not gone far enough; he should have made the percentage a little higher. If we may judge from the circumstances and facts surrounding this feature of the Budget, the Government look on taxation of profits as merely a temporary expedient, and when the war is over they will probably resort to the ordinary taxation methods. Personally, I do not think they should do so. I think that we should look for a decrease in the tariff in the future, and if we are to have a low tariff it will be necessary to raise the new revenue by taxation of profits.
I am sure the people of this country will condemn the Minister of Finance for not introducing an income tax. The Finance Minister tells us that an income tax would be unworkable in Canada at the present time, and I have no doubt there would be many difficulties in the way of raising income tax in Canada at the present time. But difficulties will arise in all reforms of this nature. Governments must expect difficulties, and must face them in no cowardly

fashion. They had difficulties in Great Britain, no doubt, when income tax was introduced there years ago, and they had similar difficulties in the United States, and certainly the difficulties the United States had to face about a hundred years ago, when income tax was introduced there, were quite as great if not greater than the difficulties we should have to face at the present time. The Minister of Finance says an income tax should not be resorted to by the Government until the necessity becomes clearly and unmistakably apparent. Well, Sir, if ever there was a time in this country when the necessity for an income tax was unmistakably apparent, it is now when we need such a large revenue to meet our obligations. If I am correct in assuming that taxation of profits is merely a temporary measure, then we must look to some others means of taxation in this country for the future.
And I do not know any more expedient means of taxation than the income tax. Many people say that this system would be unfair to the persons who have small incomes, especially with the prices of necessaries so high as at present. That depends on how the tax is levied. It would be unfair to put a high income tax on the man whose income is only $1,000, but any man who has an income of $3,000 or upwards could well afford to pay an income tax. But these are not the only persons who would be affected. The income tax would raise revenues from the people who now are not touched at all by any form of special war tax, the half-millionaires, millionaires, multi-millionaires, who derive large incomes from money invested in various channels where it is now untaxed. I hope that when the next Budget comes down the foundation will be laid for an income tax system for Canada. Though the people of Canada have contributed $350,000,000 towards war expenditure by domestic loan, and $40,000,000 for patriotic purposes, yet the time is coming when the country will have to face, unaided by these special contributions, very large expenditures, and we who hope for a downward move in the tariff must look for other means .of raising public revenue; and I say that the only legitimate other means in sight is that of an income tax.
Many hon. members who have taken part in this debate have congratulated the Minister of Finance on the large revenues which he was able to report in his Budget. They have congratulated him
also on the fact that the value of our exports is greatly in excess of the value of our imports. Well, this may be a matter of congratulation or it may not. If we were sending $100,000,000 out to pay interest on our public debt, that would appear as an export, but it would not be a matter on which Canada should be congratulated. The system of domestic loans, if it were extended, would mean a smaller amount of interest paid outside our own borders, and this would show in the form of a relatively smaller export of goods. In this sense, a reduction of exports may be a sign of prosperity and of sound finance.
We have been asked to practise thrift and economy. The natural presumption is that those who call upon others to practise thrift are practising it themselves. There is an old saying that charity begins at home, and the Minister of Finance and hon. members of this House may be reminded by those to whom they give such good advice that thrift is like charity in this respect. I am not in a position, I am sorry to say, to declare that the Government has taken the lead in the matter of thrift and economy. Consider, for instance, the increases in expenditures by the Dominion. I have compared the figures for 1911 with those of 1915, and they work out as follows:
Percentage of increase of expenditures, 1915 as compared with 1911.
Per cent.
Justice	 13
Arts, Agriculture and Statistics....	300
Civil Government	 88
Fisheries	 91
Mines and Geological Survey	 92
Immigration	  50
Indians	 65
Lighthouses and Coastal Service.... 30
Miscellaneous	 151
Mounted Police	 32
Public Works (Con. Fund Account).. 233 Public Works (Collection of Revenue) 67
Customs	 72
Yukon	 14
Excise	 18
Post Office	 114
It will be noticed that there is an increase of 50 per cent in the expenses on account of immigration. If there is any one branch of government of which it may be said more than any other that its expenditure should not have increased, it is the Immigration Branch, and, indeed, the whole Department of the Interior. I shall refer later on to the matter of the exodus and shall show by conclusive figures that more people are leaving this country than are coming in. Why the expenditure of the Immigration Branch should increase 50 *
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per cent in four years under such conditions is more than I can understand. As to the increase in expenditure in the Mounted Police, I do not know whether that takes in the police expenditure of the West or not. If not, then as the Mounted Police can hardly be the necessity they have been in the past, the expenditure ought to be going down instead of going up. There is an increase of 12 per cent even in the expenditure on the Yukon. This is another instance which goes to prove that this Government is not practising business economy but is rather taking the other course. For in the Yukon-and I am making no reflection on that country-there should not be the same burden of expense upon the Dominion treasury that there formerly was, because it is well known that the population of the territory has declined very much indeed. Besides the department I have named there are Dominion Lands, Railways and Canals, Weights and Measures. There has been a very great increase in the Militia Department. Of course it has been necessary greatly to increase the number of employees in that department. I shall have something to say about that later on.
But here is a Government that is telling the people that they should practise thrift and economy. Of course, the Minister of Finance is only doing his duty when he gives that advice. I think that the Government which gives that advice-gratuitous advice-should certainly make some attempt to practice the virtue that it commends to the attention of others. But, until the contrary is shown me, I am compelled to believe that the Government is very far from practising thrift. The hon. member for St. Antoine, Montreal (Sir Herbert Ames), I think it was, made the statement in this House that the appointment of additional employees is discouraged, as well as any increase of salaries.
While the appointment of additional employees should be discouraged, nevertheless the appointment of additional employees is going on. I had it a day or two ago, on what I consider to be fairly reliable authority, that the hon. the Minister of the Interior (Mr. Roche) during the present year has appointed 400 new employees in the Forestry Branch of hie department. While the hon. gentleman says new appointments are being discouraged, new appointments, nevertheless are being made. In regard to the statement of the hon. member that the advancement of salaries should be discouraged, I desire to say that if there ever was a time when the salaries of low paid officials,

either in the employment of the Government, or of corporations, or of private concerns, should be advanced, it is the present. I do not think it is necessary to extend that argument farther than to say that the prices of commodities, of the necessities of life, have gone on increasing until in some cases they have advanced 100 per cent, while the average increase is 45 per cent. In view of that fact, if there ever was a time when not only the Government of this country, but all the employers of labour should advance the salaries of their servants, that time is the present. Therefore, I do not agree with the hon. member for Montreal, St. Antoine, when he makes the statement.
As far as the Militia Department is concerned, before the war, that department had 103 employees, and since the war it has 2,078. I would not say that these employees are not necessary. Since the war the Separation Allowance and Assigned Pay Branch has been established and the employees number 604; the Records Office is also a new branch, with 634 employees; the Estates Branch is a new branch with 31 employees; the Paymaster Casualties Branch has 41 employees; the Audit Branch, 5; the Record Branch, 48; and the Deputy Chief Censor's Branch, 8. These are all new branches and there is reason for the appointment of these employees. But in the other departments, where business has not increased, possibly twith the exception of the Customs Department, I can-not see the necessity of the very large number of new employees who have been added to the staffs of these departments.
The hon. the Minister of Finance (Sir Thomas White) and the Government have been congratulated by their friends and others because of the good times which prevail at present. There is i.o doubt that, compared with the years 1912 to 1914, there are good times in this country, but I do not think that the Government of the day should take very much credit to themselves for having brought about these good times. During the years from 1912 to 1914 Canada faced a very serious situation. Factories were closed down and thousands of men and women were out of employment and walking our streets. Then the war came and the munition factories grew up. It is a good thing, and the people are to be congratulated upon the fact that to-day they are able to turn out millions and millions of tons of war munitions with which to fight the common enemy. That is all very well, but the situation, as far as prosperity

is concerned, arises alone and altogether from the fact that these large industries have sprung up. They are a blessing, therefore, but as far as the rest of the country is concerned, as far as our ordinary industries and manufactories are concerned, outside of those which are manufacturing the necessities of war, the country is in no better position, it is not in as good a position as it was in 1910. As a matter of fact, it is in a worse position. The labouring man has a harder time to exist, a harder time to live, a more difficult task not only to provide for himself, but to fulfil his obliga

 lions to his children and those dependent on him. I know that is true in the part of the country from which I come. While it pleases the hon. the Minister of Labour (Mr. Crothers) to say that there is no distress in this country, I say that there is a large measure of distress due to the exorbitant prices which are being asked for the necessities of life. If the Government is to be congratulated on the fact that we have good times, I say that is true to a certain extent, but that it is as false as false can be to a still greater extent. The Minister of Labour the other evening criticised us on this side of the House for daring to say anything which would reflect in any way upon his department, or upon the manner in which he was conducting, or misconducting, that department. We, on this side of the House, as hon. gentlemen on the other side of the House representing constituencies, like to voice the grievance of the people in these constituencies, and the greatest grievance we have to voice in this House at the present time arises from the fact that the prices of foodstuffs have 'been allowed to soar so high that to-day it is practically impossible for the ordinary labourer to provide for the actual and bare necessities of life. That is not an exaggerated yarn. Any hon. gentleman who will take the time to go into this question must come to the same conclusion. The cost of labour has not gone up very much. In our own part of the country it has gone up perhaps fifteen or twenty per cent and I am looking to a still further increa.-o. but when we look around and find that the cost of living has gone up 45 per cent we see that the people are suffering an actual hardship in the effort to sustain themselves and their families. A man who was getting $2 a day two years ago is perhaps getting $2.20 at the present time. How far will that go towards maintaining a large family?
When the Minister of Labour says there . is no distress he does not know this country, he does not take the trouble to know it and I am afraid he does not take the trouble to investigate the facts in connection with the cost of living. He tells us, of course, that he did certain things, that he was responsible for the passing of the Order in Council by which the excessive cost of foodstuffs, and other commodities, could be investigated. He tells us of the sleepless days and nights he has spent over this matter. He makes two speeches in this House in the last two weeks, on this important question, one a. duplicate of the other, but while all this is going on, while the minister is taking credit for having succeeded in passing this Order in Council, and while it takes two speeches to try to satisfy the people that he is doing something, what consequences are flowing from that Order in Council and from what the Minister of Labour has done? The price of foodstuffs is still soaring. Can the Minister of Labour point to one single commodity the price of which has not been raised in the last two years? Can the minister point to one commodity the price of which has been decreased through the Order in Council which he succeeded in passing? That is a fair test. Can the minister show that the price of one of the necessities of life, which an ordinary family has to use, has decreased through his labours -or through his Order in Council?
He cannot, and that is the test of the efficiency of the Order in Council which the Minister of Labour has passed. It reminds me of a friend of mine who was speaking of a neighbour and who said that he had a large supply of very inaccurate knowledge. There may be this difference between my friend's neighbour and the Minister of Labour, that while my friend's neighbour had a large amount of information of a very inaccurate kind, the Minister of Labour apparently has no information at all, and, further than that, hits activities are misdirected, and his labours are useless, because if he is unable to point out any good that has come of these labours, then I say they are misdirected and useless and a waste of time. Two years ago, the hon. member for Brantford (Mr. Cock-shutt), who is a valued member of the other side of the House and who always takes an active interest in public affairs, introduced a resolution in this House warning the Government and calling upon them to give some attention to the price of food-
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stuffs in Canada. Everybody who had anything to do with either the commercial or political life of this country knew that the price of foodstuffs was bound to increase during war time. I had the pleasure at that time of supporting the resolution as warmly as I possibly could. I suggested then, as I think the hon. member for Brantford suggested, that this Government should take certain control of foodstuffs, that they should appoint a food controller who would be keen and alive to his job, who would go about the country investigating, and at whose instance the Government would place certain maximum prices upon foodstuffs. The Government did not heed the warning. I remember quite well that the Prime Minister at that time said it would be an impossibility; it would be running against a rock of Gibralter; it would interfere with the commerce of this country The Australian people did not think so. The result is that to-day, as the hon. member for Brantford foretold, living is almost an impossibility to the ordinary men; and yet the Minister of Labour says there is no distress in this country, and he promulgates an Orderin Council whose affect has been nil

it has accomplished absolutely no good. If I am wrong in this statement, I should like to be put right, and to have it pointed out to me in what direction this Order in Council has made good. Has the work that has been done in connection with this Order in Council reduced 'by one iota the price of any foodstuff or other commodity that it was intended to affect?
The Order in Council is rather extended, and I shall not read it to the House. It provides a method by which certain things may be investigated. For example, it provides a method by which the council of a municipality, a town council for instance, may investigate the prices of commodities in its immediate neighbourhood. I pointed out to the Minister of Labour the other day that this was a most absurd proposal in many instances. In our own province, foT example, we have municipal councils covering in some cases hundreds of miles of territory. They meet once a year, I think in February, in some municipalities twice a year, in February and April. If the people of those municipalities have to wait for a whole year in order to place before the council of the municipality any grievance that they may have as to existing high prices of commodities in their neighbourhood, you can see what the value of the Order in Council is as regards those locali-

ties. In cities and towns that is overcome by the fact that councils meet once a week at least, in some places more frequently. That is one instance. But why did the Minister of Labour, apart from that phase of the question, place the onus upon the councils of municipalities? Why did he not himself tackle this subject? He is not a very busy man; his department are not very busy people. Why did they not tackle this proposal themselves? The retail merchants of this country-and I think I am voicing the sentiment of the great bulk of the people when I say this-are not responsible for the high prices of the commodities which they sell. As a matter of fact, I know of retailers who are selling below the price they are paying to wholesalers in order to accommodate, in some small measure, those who deal with them. In many parts of this country we have no large wholesalers. In the town from which I come, I do not think we have any wholesalers. If then we find that the price of flour is enormously high and we want our town council to investigate, where are they to investigate that question? They know quite well that the retail merchants are not making the profits on flour that they made several years ago, and they are allowed to investigate only those matters within their own jurisdiction. We have no wholesale dealers within our jurisdiction. What is our town council to do? They cannot go to Montreal, they cannot call upon the wholesaler in Montreal, Toronto or Halifax to appear before them and show cause why the price of flour is so high, because these people are outside the jurisdiction of that council. Surely the Minister of Labour and the Government can see that in those cases the Order in Council is absolutely useless. In ordinary times an Order in Council which would require, first, that the Minister should investigate, second, that thd town council or council of the municipality should investigate, and then that the report of this town or municipal council's investigation should be sent back to the Minister who would then confer with the municipalities, and the municipalities would then refer the matter to the Attorney General of the province, surely that would not be the way to deal-I might say dally-with a question of primary importance in this country, as the high price of food has been for the last year, yes for the last two years.
I am not ene of those who think that every other country is better than Canada, or that every other country is better governed than Canada. I believe that we have

the greatest country in the world and one of the best governed, irrespective of what political party controls the political destinies of the country for the time being; but in the matter of controlling food prices, I think we lag behind all our Allies, for every one of them has tackled this subject in a practical way, and has done something to retard what I may call the awful increase in the cost of the commodities of life. This Government is the only one that has failed in this respect, and I think it should be severely criticised and brought to task for its lack of action. I hope the criticism which has been made on this question, if it will not waken up the Minister of Labour, will at least waken up the other members of the Government and make them alive to the fact that they are face to face with a very critical situation in Canada, the most critical in our history since Confederation.
The Minister of Labour, in two speeches of two hours' duration, tells us that through the joint labours of the Labour Department and the labouring people of Canada this Order in Council was drawn up. I repeat that if he or any member of the Government, or any man in this country can show us any good that has come from this Order in Council I shall be the first to bless him. But the good is apparently not there, because, although the Order in Council has been in existence several months, the rise in the price of the necessities of life during that time has been marvellous. Some of the other members of the Government should tackle this question in a live way. If they do they will have the blessing of the people, and I can assure the Minister of Finance that he will have my blessing, however much that may be worth.
The criticism which has been directed against the Government has not all come from this side of the House. The most.cut-ting criticism that I heard in this House against the attitude of the Government on the question of the high cost of living.came from a gentleman who occupies a seat on the other side. The hon. member for Brantford (Mr. Cockshutt) a few nights ago said:-
Every country that professes to have a government has taken steps to control food prices.
No hon. gentleman on this side of the House made any such severe criticism as that.
It is not only the Liberal press which is criticising the Government in this respect. I picked up yesterday the Halifax Herald of May 12, 1917, which is the political organ
of the Conservative party in the province of Nova Scotia. It quotes an advertisement appearing in the Winnipeg Tribune concerning the high price of flour in Winnipeg at that time, $14.50 a barrel, and, in the editorial comment, it says:-
We appreciate the difficulties under which the members of the government have labored, and which still confront them in the prosecution of a great task. It is safe to say that no government in the history of Canada has accomplished more than the present Administration. The magnitude of the task, the well-nigh overwhelming nature of the crisis which suddenly confronted Canada in August, 1914 can scarcely be estimated, and the results achieved are universally recognized as being magnificent.
We have no wish to harass the government, but it is our belief that the time is now fully ripe for the Administration at Ottawa to deal firmly and speedily with the question of the alleged hoarding of food supplies.
In every nation, and every community, there are unfortunately a certain class of individuals who are quick to seize upon any opportunity which a crisis may afford for the sole and selfish purpose of enriching themselves at the expense of their fellows. The present food situation has been readily taken advantage of by unscrupulous food speculators to hold up various food commodities thus artificially inflating the price, the burden of which obviously falls on the masses. Such a course of action is shamefully unpatriotic, and certainly not worthy of any Britisher. Letters of protest in the press, strong invective poured forth in some platform utterance are utterly powerless to touch either the conscience or the manhood of the food-hoarder whose only god is GAIN. The strong arm of the government is alone capable of dealing with this problem in an effective manner.
At this present hour in Halifax the price of flour has soared to over $17 per barrel; potatoes cannot be purchased under 70 cents per peck; it is therefore not to be wondered at that rumours are current to the effect that Nova Scotia itself is not wholly free from the grasping hand of the food speculator. We think it is high time to call-Halt!
This is the opinion of a Conservative organ in the province of Nova Scotia.
The labour organizations of Canada have taken up this question. They have passed resolutions-copies of which, I dare say, are now in the hands of the Government- calling for speedy action. The Halifax District Trades and Labour Council has endorsed a resolution adopted by the Sydney Trades and Labour Council with reference to Government control of food. The latter part of the resolution reads:-
Be it therefore resolved, that the executive council ask for Government control of all foodstuffs until it is positively ascertained that our domestic needs are fully priTvided for and the cost of living reduced to normal conditions.
Perhaps it is rather too much to ask that the cost of food be reduced to that which
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prevails in normal conditions, because we are not now living under normal conditions. I do not think, however, that the ordinary people are asking that the price
4 p.m. of foodstuffs should be brought down to what it is under normal conditions. But what they are asking and what they will continue to -ask is that the cost of the necessities of life should be kept down under an abnormal amount.
I said a few moments ago that there was no apparent reason why the expenditure of the immigration Branch of the Department of the Interior should have increased about 50 per cent during the period from 1912 to 1915. When hon. gentlemen are told that an actual exodus of people is taking place from our country, they have food for reflection, and they are impelled to give some thought to the reasons why the expenditure in connection with immigration should be so large. I shall not go to the political press for the figures which I am going to give. The following paragraph from the April number of the Labour Gazette may very profitably engage t'he attention of the Department of the Interior:
Of persons other than citizens of the United States, 1.043 left the United States in February, 1917, to take up permanent residence in British North America, as compared with 1,206 in January, 1917. On the other hand, 7,304 persons, other than citizens of the United States, departed from British North America in February, 1917, to take up permanent residence in the United States, as compared with 10,557 in January, 1917, indicating for British North America an outward balance of 6,261 in February of this class of persons as compared with an outward balance of 9.351 in January, 1917.
So that during the months of January and February of this year, there was, not taking into account American citizens, an outward balance of 15,612 persons. That does not indicate that there is that condition in this c.ountry which the Minister of Finance would lead us to believe. If the conditions were similar to those which prevailed before 1912, the figures would not be such as they are, because in that year the inward balance was far in the preponderance.
Another thing which the Immigration Branch of the Department of the Interior should take steps to inform itself about is what kind of people are going out, -where the exodus is greatest and what is its cause. Are these people 'going out to escape military service? I do not think that they could be going out at that time to escape military service, because there was no conscription.

Are they going out because of the fear of conscription in the future? I do not think that they are, because in the United States they are nearer to conscription than we are in Canada. The Government should obtain full information concerning this exodus, and should find out what kind of people are coming into the country and replacing those who have gone away. With regard to the Budget, that is all I have to say.
On reading Hansard of May 8, I was personally aggrieved to see some references made by the hon. member for Frontenac (Mr. Edwards) concerning the right hon. gentleman who leads His Majesty's loyal Opposition in this House. Had those words come from the lips of the hon. member for East Simcoe (Mr. W. H. Bennett), I do not think I would pay very much attention to them; but as they come from a gentleman who for half an hour scored hon. members on this side Of the House for their narrowness and their bigotry, I think some attention should be paid to them. This is what the hon. member for Frontenac is reported in Hansard to have said on May 8, page 1269:
I have not great admiration for a leader who posed as a man desiring interprovincial amity and concord, and has encouraged his compatriots to the verge of revolution. Nor do I admire a leader who said that he would not seek to open the doors of office with a bloody key, and has smiled approval on tactics which have encouraged the enemy, retarded enlistment, and were intended solely to serve party ends.
In a time like this, when the people of this whole Empire are doing their utmost to keep the Union Jack floating, and to be in a position in the future to sing that song we are all so fond of-" Britannia Rules the Waves;" when Canadian families have been giving of their resources and of their blood to ensure that in the future the Union Jack shall fly as freely as it has done in the past, it is wrong that a right hon. gentleman who has led a political party successfully for some twenty-one years should be pointed out and painted to this country practically as a rebel, and that the intimation should be thrown out to the people of Canada by an hon. member, that the conduct of my right hon. leader has encouraged the enemy	and retarded	enlistment, and that he has encouraged his compatriots-I	presume that	refers to the French Canadians-to the verge of revolution. Those are generalities and I challenge the hon. member for Frontenac to attempt, in any future utterances which he may care to make in this House, to prove

by one fact o,r by one utterance, the statement that he has made. It is high time that the hon. member (Mr. Edwards) should realize that this Empire is engaged in a serious war; that we are in the greatest crisis in which we have ever found ourselves, and that those sentiments to which he gave utterance the other day are not calculated to heal any sores that at the present time may be running in this country, but are calculated, on the contrary, to mark him as a man of very narrow vision, of very narrow ideals, and as a man who is attempting for political purposes to keep these sores open. We on this side of the House-and I do not think it should be necessary to reiterate this-are as loyal to the cause for which many of our friends have shed their blood as is the hon. member, and with the exception of the hon. member for Frontenac and the hon. member for East Simcoe who charged me with running away in order to escape the bullets of the enemy and with returning to Canada unscarred, there are few on the other side who would give utterance to such sentiments. We want it known in this country that we have a leader who, from the moment the gauntlet was thrown down by Germany -and taken up by Great Britain, has done his utmost to fulfil the duty that is his by virtue of his being leader of the Opposition. Had he not done that and had rve not confidence in him that he was doing his duty, he would not be our leader to-day; we would see to that ourselves. We have every confidence in the loyalty, not to speak of the integrity, of the right hon. gentleman who has successfully led the Liberal party for upwards of twenty-one years. Any man who introduces such questions and who tries to cast aspersions on my right hon. leader is not acting in the interest of this country at this or at any other time. Further on, the hon. member (Mr. Edwards) said:
A minister of the Crown seeks to impress upon the audience the importance of their duty in regard to the war, and he is hooted and jeered at and howled down by young men in that audience who evidently do not wish to listen to any appeals along the lines of recruiting or enlistment.
The hon. gentleman is no doubt referring to the reception which the hon. Mr. Blondin received in Montreal. No man in this House condemns the action of those young irre-sponsibles more than I do myself, and I think the same condemnation will be meted out to them by every hon. member. But he goes on to say:
9ii	: ip*!
The reason for this, Mr. Speaker, is clear. The man who is responsible for the condition of affairs that exists in the province of Quebec is the right hon. gentleman who leads the
Opposition.
I think I am within the truth when I say that the leader of the Opposition was the first public man of note in this country who took the recruiting platform shortly after war broke out in August, 1914. Did the hon. member for Frontenac make any' great efforts towards recruiting?
It is a crying shame, Mr. Speaker, and such tactics as those resorted to by the hon. member for Frontenac should meet with the condemnation of every right-thinking member of this House. I might have something to say, if I were so inclined, as to the cause of the reception that was given to the Hon. Mr. Blondin in Montreal the other day, but I shall say nothing about that now, except that the Militia authorities in this country have allowed a gentleman in the province of Quebec to wear the uniform of a colonel for the past four years notwithstanding the fact that he had the audacity to get up in the legislature of the province of Quebec and use the most seditious language. I understand that that gentleman, Axmand Lavergne, still wears the King's uniform of a colonel, and is now recruiting' for home defence in Canada. I do not know whether that is correct or not.
Wilfrid Laurier: He is not recruiting.


Mr. CARROLL:: He has charge of Home Defence in some way or another. In view of the sentiments he has expressed, I say that the Militia authorities in this country should not allow him to wear the King's uniform, and I would advise my hon. friend from Frontenac to devote his energies to seeing that the King's uniform is not disgraced in that manner. Armand Lavergne was the same gentleman who at a public meeting at St. Stanislaus, Quebec, on November 7, 1915, said:
If I had wanted to be a Cabinet Minister I could have been one four years before Blondin. The late Mr. Monk of Quebec, head of the Borden Government, offered Mr. Bourassa and myself porfolios. We refused, for we wanted to be free men. They wanted to know then in what way they could recompense me, whether with money or with a position, but I told them my reward was to have them keep their word of honour. They have not done so.
There is a long story connected with that, but the present is not a fitting time to go into it. When the hon. member for Frontenac makes such accusations as he did the

other night against the right hon. leader of the Opposition I can tell him that the people of this country know something about a coalition that has existed in this country since 1911. The people are not blind; they have eyes to see, and ears to hear, and are of fairly good judgment and understanding, and when the time comes they will probably show how they resent the utterances of the hon. member for Frontenac and of other hon. gentlemen in regard to the responsibility for the small number of recruits that are being obtained in the province of Quebec, and kindred questions. I would not have referred to this matter at all had it not been for the statements of the hon. member for Frontenac the other day. I think his statements were entirely uncalled for; they were not compatible with truth, and certainly not compatible with British fair-play, and I think such statements should be frowned on by every man who is deserving of the name of Canadian.	[DOT]


Mr. S. FRANCIS GLASS (East Middlesex) :: I have listened with a great deal of interest to my hon. friend (Mr. Carroll) who in the course of his address has laid considerable stress on the rapid increase in the price of foodstuffs in this country, devoting special attention to the price of wheat and flour. I do not wish to continue the debate, but I should like to ask my hon. friend first of all, whether in his opinion the price of wheat bears any relation to the price of flour. Secondly, whether he is of the opinion that the, price of wheat is controlled by any powers in this country. Representing a constituency of agriculturists, I should also like to know whether in his opinion the Government should have taken steps to fix the price which the farmer should receive for his wheat. Without such an arbitrary-price for wheat I am unable to see how the price of flour could be regulated in this country. I should like to be able to tell my constituents just what the attitude of the hen. gentlemen opposite is in regard to these matters, so perhaps my hon. friend wiil answer these questions.


William F. Carroll: 
Samuel Francis Glass: If I understand my hon. friend aright his argument is that the Government should fix the price which the farmer should receive for his product.


William Pugsley: And the miller also.


William F. Carroll: Yes. I do not know
whether it is out of order for me to answer these questions, but the fault is not mine. The British Government wished to buy up the whole wheat supply of this country, and through the Minister of Trade and Commerce offered the Western farmer $1.35 a bushel for the whole year's supply. The farmers were not satisfied with that, but said they wrere willing to sell the year's output at an average of $1.55 per bushel. If our farmers were willing to sell for $1.55, how is it that wheat is selling to-day at $3 per bushel? Why did not the Government step in .and say, we will fix the price at $1.55 on the average?


Samuel Francis Glass: My hon. friend would fix the price at $1.55.


Wilfrid Laurier: All these
questions can come up in committee, not now.


Samuel Francis Glass: I want clearly to understand-


Mr. SPEAKER:: Order.


Mr. ROBERT CRUISE (Dauphin):: Mr. Speaker, I have listened with surprise to hon. gentlemen opposite praising this wonderful Budget of the Minister of Finance. In my humble judgment, the Budget is no compliment to the intelligence of the people of this country. A Budget was brought down in Great Britain a few days ago. They know they are at war in that country, especially do the rich. While the British Chancellor is taking 80 per cent of the gross war profits and raising enormous sumsj the Canadian Minister of Finance runs a small tooth comb through the fringes and raises the paltry sum of $12,500,000. It is time our rich men were making sacrifices commensurate with those of the boys in the trenches. There is a great contrast between that $12,500,000 and the twelve

thousand casualties at Vimy Ridge It is time our manufacturers disgorged. Lloyd George, at the commencement of this war, said that men and money would win the war. Canada has given over 400,000 of her brave sons to fight the battles for freedom and justice in France. And when I think of the hardships that these men have to undergo, in the trenches with water to their knees, and sometimes to theirlhips in mud, sometimes going for days and nights without food and sleep-when I think of the sacrifices these men are making on the fields of France and Flanders, and then think of the paltry sum of only twelve and a half millions taken from the wealth of this country toward the expenses of the war, I think it time that some change were made in the matter of raising money to meet war expenses. As I speak there comes to my memory instances of the sacrifices that have been made. In the principal town of the constituency I have the honour to represent are 'a number of widowed mothers. One of these mothers had two sons; both those sons went to the front and gave their lives cheerfully on behalf of this country. And the widowed mother must put in the rest of her life on $22 a month, the gift of a grateful country. Another woman lost her husband in a Canadian Northern wreck several years ago. She had three or four sons. Of these, two went to fight our battles, and they will never return. Still another woman lost two of her five sons in defence and for the maintenance of the world's freedom. When I think of these sacrifices and then of the fact that the wealthy men of Canada have given only twelve and a half million dollars, I am compelled to say that is not a square deal for the common people. And in my constituency-and I presume that the same is true of every other part of Canada-the noble women lhave worked night and day, sewing, and knitting, and raising money in every way to give to the Patriotic Fund, Red Cross, and Soldier's Aid Society. These people give every dollar in their power, and the wealthy men of Canada have been left practically untouched. In calling for volunteers to fight, we do not take the weak men; if a man is not physically sound, he is turned down. If we want men who are physically strong to fight our battles, surely it is only square to the people that we should look to the men who are strong financially to pay for the war. The Solicitor General (Mr. Meighen) has told the House that the war orders last year amounted to $300,000,000. If our Minister of
Finance had taken: of war profits to anything like the same extent as in Great Britain, he would have had a great deal better showing, to make in taxation. Instead of $12,500,000, he could have shown war profits taxation of $100,000,000. Hon, gentlemen opposite have asked us how we propose to raise revenue if not by tariffs. I have. just, pointed out one way in which a large sum could be raised. Further, there is. no reason why the Finance Minister of Canada should not follow the example of Great Britain and the United States in the matter of income tax. Again, certain calculations have shown that a tax of one per cent on land values in Canada would yield large revenues. Mr. Henry Timmis, of Montreal, in a speech reported in the Montreal Herald and Daily Telegraph of March 28, 1917, estimated that the land values of Canada total $8,000,000,000-five billions; in the towns and cities and three billions in the rural districts. A tax of one per cent on this valuation would bring revenue to the amount of $80,000,000 per annum. I have already shown where the Minister of Finance could have got $100,000,000 in war taxation, and I think that my estimate is a very moderate one, for men who pretend to know say that instead of $100,000,000 he could have taken $200,000,000 from the manufacturers during the last fiscal year. Then, if he had imposed an income tax, I feel satisfied he could have raised at least $50,000,000 by that -means. I am not sure of my ground in this respect, having no means to make more than a rough calculation. The minister has financed the war from the revenues of the year just closed to the extent of $60,000,000. Now, taking all these items together-$100,,000,000	direjct war
taxes, $80,000,000 land value tax, $50,000,000 income tax and $60,000,000 surplus revenues of last year, and we have a total of $290,000,000. I submit in all fairness that if the methods I have -suggested had been adopted, we could have financed the war as we went ialong, which would have been much more -satisfactory to the Canadian -people than to balance our accounts by borrowing money, thus leaving future generations to pay the bill. Had -the Minister of Finance -the courage to follow these methods, he could have accomplished two things. In -the first place, he could have removed some tariff taxation. For instance, he might have taken the tax off agricultural implements, and this would have given a tremendous boost to production. There is no further excuse for this tax, for our manufacturers now have free entry to the United

States, of which they have taken advantage -many agricultural implements made in .Canada are now sold more cheaply in the western States than in our own country. (These patriotic gentlemen are making production easier in the United States by robbing our own farmers. Let me dwell on this point for a moment to show what the western farmer is called upon to endure. When he 'buys agricultural machinery he has to pay a duty of from 25 to 27j per cent. Let me cite my'own specific case. I bought a gasoline tractor and a separator, and, as pearly as I could figure, I paid duties amounting to $500.


Mr. A. K. MACLEAN:: What was the
(price?	.


Robert Cruise: I paid $1,275. I do not
iknow what the valuation is in the United States.


Mr. C. A. WILSON:: An American machine?


Robert Cruise: Yes, if you want to be loyal to your country buy American machinery, because then the revenue goes to the Crown. We have to pay more for every thresher, binder and mower, and yet we get no more for our products than does the American farmer, and so the American farmer is given an advantage over U3 by our own laws. If the Minister of Finance could only see his way clear to adopting this method of raising the revenue, he could remove a burden from the western farmers and put them on a fair competitive basis with the American farmers. In that way he would increase the production of western Canada. Speaking from memory, we produced $600,000,000 worth of grain last year in the three western provinces. That is $600,000,000 of clean, hard-earned money and if the burden were lifted from the farmers' back and markets opened up to them to encourage settlement, there is no doubt in the world that instead of producing $600,000,000 worth of grain we could produce twice that amount in a short time
Before we get away from the war situation, et me say that the most important thing that we have to do at the present time is to wm this war. There are four essentia! things in connection with it that require organization and support. First, there is the question of our men in the trenches next the munition factories, then the farmers and producers, and lastly the transportation question. Our men in the
trenches are no good without munitions
with which to face the Germans. They can not face them for any length of time without food. Food and munitions are no good in Australia or Canada or the United States without means of transportation to get them to the men. I feel as if the Government had risen to the occasion in connection with practically everything but the finding of men to take the places of our brave soldiers who are in France. Our distinguished Prime Minister promised 500,000 men to Great Britain. He has failed so far in getting those men. I think it is up to every man on both sides of this House to do everything in his power to fulfil the Prime Minister's pledge to the British Government.
Another point I want to make while I am on this subject is that it appears to me as if this Government were centralizing the wealth of the country. Before the Prime Minister went to England he made the statement in this House that we were getting $700,000,000 worth of war orders. The Minister of Finance made the statement in Toronto that he believed after the war was over Canada would come out of it in a better financial position than that in which she was when she went into it. I 'would like to ask the Finance Minister and hon. gentlemen on the other side of the House, as well as on this side, who is going to come out of this war in a better position? It is not *the' common people of the country, it is not the men who are fighting our battles, but it is the men who are making millions out of the manufacture of munitions. It has been stated that they are making from 25 to 900 per cent. I do not know what they are making, but they are certainly making large profits, and they are allowed to invest them with the Minister of Finance in the war loans, with the result that they are exempt from taxation. In this way the Government are centralizing the wealth of the country. These men are making large profits, a good deal larger than they should make, and they are investing them in Government bonds, which cannot be taxed, so that, in my judgment, the Government are centralizing the wealth of the country in the hands of probably 3,000 or. 4,000 people, which is a great mistake and a great hindrance to the progress of the country.
There has been a great deal said about the way in which this Government are financing the war. I would like to give a few figures bearing upon that question. The tot-al expenditures, apart from the war, for the last three years, were, as follows:-

Expenditure.
1914-	15	
$182,192,0331915-	16	
170,317,8471916-	17	
173,000,000Total	
$525,509,880
Now we will take the receipts for the corresponding j^ears, and which were as follows :-
Receipts.
1914-	15	
$133,073,4811915-	16	
172,149,3931916-	17	
230,000,000Total	
$535,222,874
If you subtract the total expenditure from the total receipts you get the sum of $10,712,994. If I am correct in my figures, and I think I am-I do not want to mislead this House or the country-all that has been used to finance the war since it was started is $10,712,994. When hon. gentlemen are talking about financing a great part of the war as we go along, it seems to me that they are misleading the House and the country.
I would like to submit a few more figures in connection with the claim that the expenses of Government are not increasing. In the last year of the Liberal Government, 1911-12, the total disbursements were $137,142,082. In 1915-16 the expenditure of the present Government for a full year, apart from the war, was $170,317,847. If you subtract $137,142,082 from $170,317,847, you get $33,175,765 as the sum that it cost this Government during the last fiscal year to carry on the affairs of the country more than it did in 1911-12, the last year that the Liberal party had anything to do with the running of the country.
I come now to free wheat. I do not intend to dwell upon the question of free wheat to any great extent. It has been said that the farmers of western Canada are pleased to have free wheat. We are pleased to have free wheat because we have asked for it and we have fought for it. We have got it from the present Government, and we appreciate it very much. But we regret that when the Government, or the Minister of Finance, were turning a somersault they did not also give us free oats, free flax and free barley.
The Minister of Finance, when he made his last speech, mentioned the Highways Bill, and claimed that hon. gentlemen on this side of the House were against that measure. If I understand the situation, that statement of the minister is unfair. When the Highways Bill was under discussion, an amendment was moved that when any province got its allotment according to population, every other province should get its proportion on the same basis. That amendment was moved to prevent the hon. the Minister of Public Works (Mr. Rogers) from taking power to create an organization in each of the provinces to spend that money. Wherever there was a Liberal Government in power this Government would create another -organization to spend the money, and the people of Manitoba know what the late Roblin Government did in connection with the building of rpads. In some provincial constituencies they spent as much as $90,000 to win a by-election. We do not want that to occur again.
The hon. gentleman also mentioned the extension of the boundaries of Manitoba. We appreciate very much the extension of our boundaries, but every one in western Canada knows that the territory allotted to the province of Manitoba by this Government was the same as that offered by the late Government. The amount of money paid over may have been a little larger, but the territory was the same. In extending the boundaries of Manitoba, this Government gave Ontario a five-mile strip across the northern part of our territory and a strip ten miles down the Nelson river, half a mile wide; so that Ontario owns the townsite and this strip of land across the northern territory. The amendment moved by the right hon. leader of the Opposition (Sir Wilfrid Laurier) was to the effect that while the House favoured the extension of the boundaries of Manitoba the terms proposed were unfair and unjust to the people of Manitoba and the other provinces of the Dominion. That was the amendment moved, and for that I voted. When the Minister of Finance mentions Manitoba and what has been done for western Canada, and when hon. gentlemen cast insinuations across the floor of the House to the effect that the Opposition, when in power, did not carry out their pledges to the people, I would remind hon. gentlemen that when the present Prime Minister (Sir Robert Borden) was in western Canada previous to 1911, he told the people of the three western provinces that one of the first things he would do if he was returned to power would be to restore to the three western provinces their natural resources. I would remind hon. gentlemen that this pledge has never been fulfilled. I hope that it will be fulfilled in the very near future.



WAYS AND MEANS.

[Stage Direction]
Motion of Sir Thomas White agreed to, and House went into Committee of Ways and Means, Mr. Rainville in the Chair.
On resolution No. 1.
RESOLVED, That It Is expedient to amend the Business Profits War Tax Act, 1916, byproviding :-
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 am not advocating the English method; I am advocating a common sense method which will apply to everybody equally and alike and under which the rich man will pay according to his means and the poor man will pay also according to his. If you apply that method I am satisfied the people of Canada will be better pleased than they are now. I do not believe there are any people in the country who want to be slackers with regard to paying their fair and legitimate share of the expense of winning this war, rich and poor alike. But, let me finish this question of newsprint. The price of flour to-day is 816 a barrel, wheat 83 a bushel, potatoes $3 to $4 a bushel and pork 17 to 18 cents .live weight. Then, take half fat cattle;\nI\tsaw some sold a short while ago. A farmer drove in a bunch of ten steers weighing about 1,050 apiece and he got $1,150 for the lot or\nII\tcents a pound live weight. The price of potatoes should only be 75 cents a bushel at the outside; to-day they are $3 to $3.50 a bushel. The price of wheat should not be over 90 cents to $1 a bushel; to-day it is $3 a bushel. The price of flour is $16 a barrel. The minister says that the press of the country must be sustained because it is one of the necessities. If a poor man has a big family and they are crying for bread will they be satisfied with the evening paper? Does it not appeal to the minister that there are other things as well as newsprint that ought to be regulated? The minister says that the winning of the war is the one and the main thing to which we should give our attention but I cannot help thinking that when this delegation from the press came down with their stocking full of printers\' ink and told him that they would knock his political head off if he did not listen to them he said: hold\non, gentlemen, 1 do not want to be disfigured that way, I will listen to you; what will you have-paper at 21 cents a pound?-all right, gentlemen, you shall have it; the manufacturer can squeal all he likes but he has got no printers\' ink and he cannot hurt me very much with his tongue. I am sorry to believe these things but I leave it to the judgment of the House and the people of the country to say if there is any just reason why the price of newsprint should be fixed at 21 cents a pound, which is one cent less than it can be made for when other branches of business are left untouched. I noticed a short time ago in the Financial Times that a company making sulphite pulp were describing the profits they had made during the last year when the average price was so much; they stated what they expected to make next year when the average price was going to be so much and they ended up by saying that " our business is not affected by the price fixed for newsprint." Why should this condition exist? Why should this one branch of the industry be left so that they could boast that they could make such large profits because they were not affected by what affected another branch of the same industry? I am not jealous of other .people. I wish I could say for the minister and for the Government that they had treated the manufacturers of newsprint as they treated other branches of the industry. I think it would be to the advantage of the Government and for the publishers if that were the case. The publishers are going to suffer for it later on, because they have prevented the construction of additional plants which would have afforded the only remedy for their complaint. If they had patience for about twelve months from the time they started to make the kick, the position would have rectified itself, as there would have been such competition that they could have again dictated the prices as they had done for the past ten years. Simply because we reached a period where for a few months they had to pay an additional price, they .had not the \'foresight to see what would .happen in the future. They made their kick at the wrong time, and will be sorry .for it later on. The American publishers are sorry for it now. They started to fix the price, but they saw where they were going, and thought it best to wait and see what would happen. The Canadian Government would do well, even at this late hour, to change their position, and say to the publishers:\tLet supply and demand\ngovern these things, it is the best regulator', "of prices on the face of the earth. And the *minister would be wise to consider well *before imposing additional war taxes on the manufacturers of this country, and see *if he cannot- find some other way of levying taxes so as not to drive capital away *and prevent its investment in Canada. We *who are here will stand it as beet we can, *but the man outside will do as the man to whom you are trying to sell bonds, who *will not buy bonds unless he has some assurance that the bonds will not be loaded down with income tax. The same thing applies to the man with money in his pocket; he will not .invest in a plant in this country unless he has some assurance that it will not be singled out and made to bear the whole burden of the war and other expenses of this country, while other men, equally able to pay, go scot free.\nProgress reported.\nOn motion of Mr. Thomas White, the House adjourned at 10.55 o'clock p.m.\nWednesday, May 16, 1917."]
Mr. NESBITT:: I presume that the reason why my hon. friend the minister made his tax in this way was because it touched the least number of people -and was most convenient.


Wilfrid Laurier: Hear, hear.


Edward Walter Nesbitt: I know that it will be a detriment to the obtaining of capital in this country for industry. I presume it would, perhaps, be unwise and also not in accord with the general feeling of the people of the country if I were to say that it would be unwise taxation to endanger the investment of capital in this country. I do not know what the minister's aim is exactly, whether he aims to make this country a pastoral country altogether, or a farming community altogether, or if his aim is to stop big business in this country. If his aim is to stop big business in this country he is going the right way about it. If it is not to stop large business in Canada he is going the wrong way about it. The financial papers, as the minister knows, are protesting, some of them very strongly, against this taxation. A man named Kelly Dickinson, writing to the Financial Times, quotes three firms which have cancelled important contracts for enlargements of plant, etc. One Montreal company abandoned as contemplated investment of an additional $1,000,000 in their business. An American firm abandoned its intention to establish a Canadian subsidiary company with an initial investment of $2,500,000. Another firm, which had contracted for a number of new lathes to replace worn out lathes, cancelled the order and decided to do the best it could with the impaired and worn out plant. So

far as I am personally concerned, I think there is no one thing that we want in this country more than capital. We cannot possibly develop the natural resources of this country without it. We hear a great many people talking, both after dinner and before, about the wonderful natural resources of Canada, hut we cannot develop them without encouraging capital to develop them. My hon. friend, I think, is discouraging capital by his peculiar legislation here. I appreciate that it is absolutely necessary to get more revenue, but why my hon. friend should relieve all the people of this country who do not have $50,000 invested in their business from paying their proportion of the revenue is more than I can comprehend or could comprehend last year when the original resolution imposing this business tax was passed.
I do not think any of these manufacturers or business men would complain about paying the additional tax if my hon. friend would only make it equitable. But he does not make it equitable; he applies it only to businesses of a certain size, and the others he does not tax at all. Again, many professional men earning very large incomes entirely escape this taxation. I do not think that is fair. Having regard to the seriousness of this war and the absolute necessity of a large revenue, every business should pay its just proportion of taxation. My hon. friend may know of many people who would object to paying the tax, but I think that the great mass of the manufacturers put in honest statements in connection with last year's taxation, and I believe that the great mass of the people carrying on businesses in which less than $50,000 is invested would also submit honest statements. I do not think it would cost the minister very much more to collect the taxes from all of these businesses than it would to collect only from those which have a capital investment of over $50,000. Yet my hon. friend this year increases the taxation on those who are earning the larger profits. As I have said, I am quite sure that if the minister would spread the taxation over a larger area, as it were, and make everybody pay a share of the taxation, there would be no unwillingness on the part of the people to assist in this way to met the huge expenditure that is being made in connection with the war.	[DOT]
I have to find fault with my hon. friends of the Government for not assisting the people during the last year. The Minister of Agriculture and the Minister of Labour

had a golden opportunity, which, perhaps, will never come to them again, of rendering a very important service to the masses of the people. For instance, the Minister of Agriculture allowed it to be stated in the papers without contradiction that he had said that there were 2,000,000 bushels of potatoes in Canada more than were necessary for the ordinary consumption of the people. That was his opportunity to have seen that these potatoes were equitably distributed in those parts of the country in which they were required.


Mr. BURRELL:: My hon. friend's statement is not quite correct. He says that I made a certain statement and allowed it to go uncontradicted; I am prepared to stand by the statement which I made as it is reported in Hansard. What I stated was that early in March, at a conservative estimate, there was' a surplus of a million and a half bushels, and so there was. But I stated that a large number of potatoes had gone out of the country since that time, and I specifically stated the other day that that surplus did not now exist, or at all events, had greatly diminished, and that the provinces had all been advised of the facts and had taken action.


Edward Walter Nesbitt: An hon. gentleman near me says that the million and a half bushels was the amount exported. As a rule, I am opposed to coercive measures on the part of a government, but that was .a time when the Government would have been justified in using coercive measures. In other words, they would have been justified in placing an embargo on the export of potatoes. I am strongly of the view that the law of supply and demand should govern such matters, but conditions arise which justify a government in going to unusual lengths. Under conditions that are exceptional, the people are the first to be considered. In our section of the country-I do not know about other sections- during the last three or four months potatoes have been out of the reach of people who are working with their hands or who are receiving small salaries. My hon. friend says that his statement was that the surplus of potatoes was only a million and a half bushels. There is no reason why he should not have grasped the opportunity of distributing those potatoes in the areas where they were required. That would have been justified, having regard to the interests of the people. If the matter was one which came under the
Labour Department, then the Minister of Labour would have been justified in taking that course. There are many other things that the Government would have been justified in doing during the last few months, but I have no wish to delay the committee;
I simply wish to put my views on record before- this measure is passed without amendment. I hope that the minister will see his way clear to enlarge this proposed legislation so as to make it just and equitable. My hon. friend says that he leaves the income tax to the provinces. He may be justified in that, to some extent; some of the provinces are adopting an income tax. I noticed the other day that the province of British Columbia proposes to have an income tax. In my opinion, this form of taxation is bound to come and we may as well face it first as last.
5 p.m. Certainly the scope of the profits tax legislation should be enlarged, because many men who have less than $50,000 invested in their business are, proportionately speaking, making more money than the men with from $50,000 to $100,000 invested. These men should pay their fair proportion of the unusually heavy expenditures which are being made during this time of war. I congratulate the country on the amount of business which is being carried on; it is an exceptional business, but the export of goods has been at an exceptionally high price. An increase in the value of import's does not necessarily represent an increase in tonnage of imports. In many instances the value of imports has doubled or trebled, whereas the tonnage has not appreciably increased. In a business with which I am connected, the tonnage of imports did not increase, while in the case of some of the imports the value was trebled.
Therefore, you cannot always judge the amount of business actually done by the total in dollars and cents of the imports and exports of this country during the last year or two. Although I have no doubt this item will pass from the committee and will become law, at the same time, I simply enter my protest against its scope not being enlarged.


Alexander Kenneth Maclean: Before the minister answers the hon. member for North Oxford (Mr. Nesbitt) I would like to have the minister give approximately, if he can, the revenue he anticipates from the additional taxation provided for in the resolutions before the committee. In delivering his

Budget speech, the minister, if I remember correctly, did not venture to make any estimate of the amount that would' probably be derived from this taxation, and I should like to have some idea, even if it be a rough one, of the revenue which the minister hopes to secure from this source.


William Thomas White: Listening to my hon. friend from North Oxford, I could not help but reflect upon the Protean character of the Opposition. My hon. friend from Dauphin (Mr. Cruise), just a few minutes before, had been attacking the Government as a whole and myself in particular because we were not taking more money out of the manufacturers. Only the other day, as I saw by the Press, my hon. friend from Sherbrooke (Mr. MeCrea), in my absence, launched a violent .attack against me for taking too much money out of the manufacturers.


Wilfrid Laurier: No, not the manufacturers.	.


William Thomas White: Well, let u.s say the paper manufacturers.


Wilfrid Laurier: Hear, hear.


William Thomas White: My right hon. friend, however, will not fail to have observed that another of his followers, the hon. member for North Oxford (Mr. Nesbitt), whom we are always glad to hear in debates of this kind, has taken the ground that the taxation is so severe that it is likely to drive capital out of the country and prevent new capital from coining in.


Wilfrid Laurier: The taxation is strong all around.


William Thomas White: Does my right hon. friend object that it is strong all around? My right hon. friend is behind his usual lines of Torres Vedras. He has become so accustomed to that position that I rarely, almost never, expect to see him depart from it. He always likes to have a double policy; he likes, as they say, to play both ends against the middle. My hon. friend from North Oxford has said in the course of his remarks that this tax will be a detriment to obtaining further capital for industries, and he has made his own the articles which have appeared in the Financial Times of Montreal, violently denouncing me for introducing this excess profits tax, so that' I find myself in the position of being attacked by some hon. gentlemen opposite for not being severe enough in the taxations and by others for 
being too severe. That is a position to which we are not unaccustomed in the course of debates in this House.
My hon. friend from North Oxford, in developing his argument, stated that there is nothing in Canada we want more than capital. If we wrere in times of peace, I might not be disposed to wholly agree with him, because there might conceivably be things that we require more than capital; but on the whole I think I would have agreed to him, to this extent at all events, that capital is a great desideratum to this country; more than that, it is a necessity for its development. But this is not a time of peace; this is a time of war, and there is at least one thing which is more necessary to Canada at this time than even capital, and that is that we win this war, or do what we can to help to win this war.


Edward Walter Nesbitt: Is capital not required to win this war?


William Thomas White: I submit that what I have stated is correct.


Edward Walter Nesbitt: How are you going to win the war without capital?


William Thomas White: At this time the winning of the war is more important than the attracting of capital. If my hon. friend would like me to develop that argument a little, I am quite prepared to do so.


Wilfrid Laurier: Go on.


William Thomas White: There are in this country some industries which directly and materially assist in the prosecution of the war. They are absolutely necessary and we icould not conceivably carry on the war without them. We have derived and the Empire has derived an enormous advantage from industries in this country which have by their output contributed directly to the winning of this war. In addition to that, there are in this country other industries which contribute indirectly to the winning of the war, and those industries are also valuable to the country. There are others which contribute to the support and maintenance of the people during the war, and Wgain there are other industries which, {neither immediately nor indirectly, contribute towards the winning of the war, but which nevertheless do contribute to the financial strength of the country during [DOT]war time by exporting their products and an that way helping to create a favourable financial balance which is of advantage to the country in the winning of the war. These [DOT]might be classed as industries in a way

assisting in the winning of the war. At this time it is an important thing to Canada to secure capital for the development of industries. It by no means follows-I do n-ot say it is not desirable-that it is the most necessary thing. The most necessary thing in this country to day is to make available the man power of the country for the winning of the war, that is to say, for the replenishing of the ranks .of our expeditionary force, for the production of munitions and other supplies, including of course food-


Edward Walter Nesbitt: If my hon. friend means to say that he does not require capital for that purpose, that is nonsense.


William Thomas White: -in order economically to develop the resources of the country so that we may the more effectually carry on the war. As to the attraction of capital, I would agree at once, that it would be a very desirable thing that capital should flow into this country. Notwithstanding the fact that we have had to impose taxation, it is desirable that capital should flow into this country provided that it 'be used for the development of our resources, for the carrying on of the war or for making us strong financially. But I say this, that if capital is going to be prevented from coming into this country by reason of taxation which is necessary in order that this country may maintain the burden of the war, we might better impose the taxation and not have the capital than have the capital and not impose the taxation. That is the position I take with respect to this matter. It is no pleasure for any Government or for any Minister of Finance to have to impose taxation; but I dp not know of any country that can carry on war without imposing taxation, nor do I know of any country that should attempt to carry on war without imposing taxation.


Alexander Kenneth Maclean: No one takes
exception to that.


William Thomas White: My hon. friend
from North Oxford


Edward Walter Nesbitt: I did not take exception to anything of the kind.


William Thomas White: My hon. friend from North Oxford says that' this taxation will prove a detriment to obtaining capital for industries. I have taken down my hon. friend's words. He produces the Financial Times to support his argument.


Alexander Kenneth Maclean: He did not mean to say that he was opposing the taxation.


William Thomas White: He was opposing the excess profits taxation, which I have submitted to the House. Otherwise his words are meaningless.


Alexander Kenneth Maclean: That may be true; that is another thing.


William Thomas White: Does capital flow into England to-day? England is' taxed to the very bone; every industry in that country is taxed.


Edward Walter Nesbitt: Does the minister think
it would do any harm if capital did flow in?


William Thomas White: The excess profits tax in England raises $800,000,000.


Alexander Kenneth Maclean: 
William Thomas White: $800,000,000. That excess profits tax is severe to the last degree. Only recently has it been increased by the Chancellor of the Exchequer. If my hon. friend is right in his argument that capital will not flow into this country by reason of our excess profits tax, will capital flow into England with their excess profits tax?


Mr. MACDONALD:: They have income tax in England.


William Thomas White: They have both excess profits tax and income tax; I want~ to make that clear, and I am glad my hon. friend has brought the point up. I have seen tax bills both with respect to income and excess profits in Great Britain, and I give you my word that on this continent we do not know what taxation means.


Alexander Kenneth Maclean: Nobody is fighting that.
SiT THOMAS WHITE: My hon. friend from North Oxford has brought up an article in the Financial Times condemning this excess profits tax on the ground that it would be a detriment to obtaining special capital for industry.


Edward Walter Nesbitt: I read what the Financial Times said; I did not say it myself.


William Thomas White: Do you agree with what the Financial Times said?


Edward Walter Nesbitt: Yes, I do.


William Thomas White: My hon. friend agrees with it. He says that the excess profits tax will have the effect of preventing capital coming into Canada, and will be a detriment to obtaining capital for industry, and on that ground he says this taxation is objectionable; in other words,

he is against it. We have at least found out my hon. friend's position on this matter. He is opposing the excess profits tax on the ground that it is too severe, that it will be a detriment to Canada's obtaining capital for industry, and will prevent capital coming into Canada. I submit to this committee that neither of those are good grounds for not imposing an excess profits tax at this time. Let us see what it amounts to. The excess profits tax which I introduced last year was limited to three years, to three yearly accounting periods expiring after December 31, 1914. Reference has beep made here this afternoon to the fact that only $12,500,000 was obtained the first year. But the first year was the year following the outbreak of war, when business was completely dislocated in this country. I stated, when introducing that taxation, that we should derive a much larger amount for the second accounting period. Now, the present taxation applies to the last accounting period; in other words, to the accounting period ending after December 31, 1916.


Edward Mortimer Macdonald: You are making it permanent, whereas last year it was temporary.


William Thomas White: The three-year
term is not interfered with.


Edward Mortimer Macdonald: I was just asking whether my hon. friend intended to make this permanent, or would it cease at the end of the war?
Sir THOMAS W'HITE: This excess profits tax applies to the last accounting period; that is to say, to the accounting period of every company which ends after December 31, 1916. The accounting periods referred to are accounting periods under the excess profits tax which I introduced last year, and which was limited in its operation to December 31, 1917. We are not extending the term.


Edward Mortimer Macdonald: You are not?


William Thomas White: No. Let us see what we are doing. Instead of taking 25 per cent of the profits in excess of 7 per cent, which is the amount allowed incorporated companies, from 15 to 20 per cent we are taking one-half the profits, and from 20 per cent upwards 75 per cent of the profits. Now, that is -a very heavy tax; there is no question about that. It has been brought to my attention that some companies are making from 75 to 100 per cent on their capital, and, of course, the

taxation they will have to pay will be very large, but I submit that that is not the real question before the committee and the House. It is not a question of whether the tax is high, but whether it ought to be paid at this time. This is a time at which the people of this country are making immense sacrifices.


Edward Mortimer Macdonald: It is a time when
you should tax more.


William Thomas White: My hon. friend
suggests that we should tax more. The hon. member for North Oxford (Mr. Nesbitt) did not make that suggestion.


Alexander Kenneth Maclean: Oh yes, he did.


William Thomas White: We will come to that in a moment. The hon. member for North Oxford has distinctly stated that he agrees with the Financial Times that this excess profits tax will be a detriment to obtaining capital for industries in Canada. I would point out to my hon. friend from Pictou that when he suggests this taxation should be more severe, he is not in agreement with my hon. friend from North Oxford, who thinks the tax so heavy as to keep capital from coming into this country. This is a time in which the people of this country are making the greatest possible sacrifices. Men and women are sending their sons to the front. The men who have gone forward have interrupted their careers; they have left their hearth and home and everything they held most dear; they have given up everything and gone to the front, and unless what we have said from the beginning is meaningless these men are fighting for you and for me. Now in a situation such as we and all other belligerent nations are in to-day, mere money, while of great practical importance, is in reality of secondary importance. The making of profits, highly desirable in time of peace, and not undesirable, within bounds, in time of war, must take an entirely secondary place; that is the opinion, I think, of all thoughtful people in this Dominion. A mere money question becomes of secondary importance; it is of paramount importance in time of peace, hut of secondary importance in time of war. The loss of money or the taking of money by taxation is as dust in the balance compared with these other losses that are taking place in the homes of this country. I do not believe myself that a man who is making 100 per cent has any right to complain if the Government steps in and says it must have 50 or 60 per cent of their
MAY Io, 1917
profits, and I believe that public opinion will sustain this taxation measure on these grounds, even if some capital that might have come into Canada does not come in by reason of the imposition of this tax.
Let me say another thing. There is no reason *why capital seeking investment should not flow into this country to-day notwithstanding the taxation. Look at the taxation of the United States, actual and prospective. I think the business man of the United States, as one of their leading men told me over there the other day would not be deterred by this taxation measure from coming into Canada, because he is going to be pretty heavily taxed at home anyway. So that argument is not of very much weight, even from a business standpoint. I am discussing this matter at some length because it has been discussed in the press, or in a certain portion of it, and I say that the people of this country demand that men shall not be permitted to make undue profits in time of war. I say undue profits; I believe the public are quite willing that men should make reasonable profits. It has been said that men will not put forth an effort if we are going to take away 50 or 75 per cent of their excess profits. I do not believe that is so. I do not believe that any patriotic man will relax his efforts because the Government intends to take fifty per cent, or seventy-five per cent, of his excess profits; I have too high an opinion of the people of this country to believe it.


Edward Mortimer Macdonald: Why do you not tax accumulated wealth as well?


William Thomas White: I will come to that in a moment. The hon. gentleman always anticipates. He is the most anticipatory member we have.


Edward Mortimer Macdonald: But the minister
finishes without dealing with these matters.
Sir THOMAS W7HITE: I will finish all right. The hon. member for North Oxford (Mr. Nesbitt) asked: what about the income of the professional man? That is a fair subject for argument. But, if we are to compare Canada with England in this matter we must bear in mind one respect in which Canada differs from England. There they have only one income tax, that imposed by the Imperial Parliament; but in this country it is possible to have three different income taxes, that of the municipality, that of the province, and that of the
Federal Government. The income tax is peculiarly within the jurisdiction of the province and is a suitable tax for the pur-jioses of the province and the municipality. In my opinion the Federal Government should not resort to an income tax until it is indispensably necessary in the national interest that it should do so. Suppose that a man is taxed on his income for the bene. fit of the municipality. He may be taxed 20 mills-two per cent. There may be a further income tax for the province. If you add to these a Federal income tax, the total impost may be very heavy. I pointed out in-the Budget speech that the incomes of the professional and salaried classes generally have not increased since the war broke out, in many cases their incomes have actually diminished. On the other hand you have the high cost of living- higher than ever before in Canada. To levy an income tax upon these people under these conditions does not seem to me just. Of course, if it becomes unavoidable, if the Dominion Government finds itself in a position where it must have an income tax, I would not hesitate to resort to it. I believe that it is quite possible, even probable if the war goes on for another year or two, that the Dominion Government may have to resort to an income tax.
Now, my hon. friend has asked why the tax has not been broadened and applied to all corporations, even those that have a capital of less than $50,000. We discussed that at length last year. I admit there is a good deal to be said in favour of that view. But there are considerations on the other side as well. In all taxes on income, there is an exemption of a greater or smaller amount. But suppose that in this case you make no exemption, and consider the case of a company with a capital of $40,000 and making seven per cent profit. That means a total profit of $2,800 for the year. Having regard to the.taxation by the municipalities, there is not a very great margin to go on in the case of these small companies. For that reason, and also for the reason that the expense of creating the staff and of collecting from these small concerns would be so great that we should probably not be further ahead by including them, we decided in favour of an exemption of corporations with a smaller capital than $50,000. That is the position taken last year, and I see n,o reason to change our views.
This brings us to another consideration concerning the income of the professional man referred to last year and also in the

present debate. The tax on corporations is a tax on excess profits. The tax on income would affect not merely professional men but those having incomes from investments, such as mortgages and securities of various kinds. Men who derive incomes from mortgages and other securities rarely net more than five or six per cent. But under the excess profits tax the profits of corporations up to seven per cent are exempted. Suppose that a man with a capital of $100,000 invests in the bonds of an industrial company. He will derive an income of $5,000 or $6,000 a year. He is still below the $7,000 which is exempted under the excess profits tax. Therefore, there is not the glaring anomaly that has been suggested in exempting the income derived from investment and amounting to less than seven per cent.


Alexander Kenneth Maclean: But if a man has an income of $50,000 a year from such investments, why not tax him?


William Thomas White: If we bring in an income tax, it must be general in its application. It must be remembered that under the excess profits taxation we are not taxing capital, the very principle of this measure is the taxation of profits. If profits are abnormal, it must be owing to war conditions-that is, money is being made out of the war, or notwithstanding the war. But take the case of the man with investments which yield him an income of $50,000. That would represent five per cent on an investment of $1,000,000. Now, if you have a company with a capital of $1,000,000, its annual profits would be exempted up to $70,000-that is seven per cent on its million-dollar capital.


Mr. GRAHAM:: But what would be urged is that the money in the joint stock company would give employment to a large number of men and women and would mean the circulation of money for the benefit of the community, which is not the case with the capital of the men who derive an income in the way suggested.


William Thomas White: The money of the individual invested may be in the very enterprise to which the hon. gentleman refers. He may be the owner of its bonds, and in that case his capital is just as much employed in keeping that industry going as is the money of the man who has contributed to its share capital.


George Perry Graham: But without risk.


William Thomas White: No, not without risk. The bondholders do not always escape without risk. Now, my hon. friend from Pictou (Mr. Macdonald) asked why we did not tax capital.


Edward Mortimer Macdonald: I asked why you
did not tax accumulated wealth.


William Thomas White: The hon. gentleman said " capital " and I said I would come to that point, though he thought I would not. Now, let us see how far the hon. gentleman will go. Capital, in the sense in which he uses the term, that is, accumulated wealth, may consist of real estate, or it may consist of personal property, such as bonds and stocks. My hon. friend asks: why do you not tax that property, that capital? Well, that is arguable. The Dominion Government some day may have to extend, as I statecT in my Budget speech, the basis of taxation. My hon. friend has in mind: why do you not tax land, farms, and the real estate in towns and cities? Why do you not tax, in addition to that, the capital of those who have bonds, stocks and other securities, which are personal property? That is not the principle of this Bill, and they have not adopted that principle of taxation in any of the belligerent nations, so far as I know. They may have done so, but, if they have, it has not been drawn especially to my attention. The principle of this tax, I submit, is sound, that if there are firms, companies or businesses in Canada which in war time are making large profits, they must give a substantial portion of those profits to the Dominion Government for the purpose of assisting in carrying on the war. That is the principle. If a company has a capital of a million dollars and is not making 7 per cent, we do not tax that company, notwithstanding that it has a capital of a million dollars. I think that is just, for this reason, that that company may have a capital of a million dollars and yet it may have a thousand shareholders, each shareholder being interested only to the extent of $1,000. We know that that company is an entity, but it is made up of a thousand individual shareholders. We are not taxing that capital if they are making less than 7 per cent, but if they are making 40 or 50 per cent, we say: You are making a profit away beyond what we think you should be making in war time; you are making it out of munitions, or out of material which goes into the production of munitions, or out of supplies or other business, and you are making abnormal profits.

We say: if you make so much money as that, we propose to take part of it for the purpose of carrying on the war. That is the principle of the Bill, and even if it had the effect of preventing capital from coming into this' country in war time, which I do not admit, I would still say that it is a proper tax because it i6 more important that this money should be raised in war time than that even capital should come in. What about after the war? This tax is limited to three years. I am free to say that an excess profits tax is not a good tax in times of peace because I think then it would have the effect which my hon. friend suggests and that effect would not be good for the country. But this tax is limited by its terms to a three year period. If this war goes on-and I confess it looks to me as if it would go on-it might go on for another year, or even longer-then we would have to consider broadening the basis of our taxation. We might have to resort to other modes of taxation, some of which were suggested in this House when the Excess Profits War Tax Bill was under consideration last year, and which have been mentioned in the course of this debate. But it is not necessary to consider these now. We are taking one step at a time in our taxation, and I submit that it is sound. When the war broke out, it would have been a great mistake to have suddenly developed a formidable scheme of taxation. The effect would have been bad upon industry and upon the public.


Edward Mortimer Macdonald: Is .my hon. friend
aware that the financiers of the United States announced it as their purpose to make the men of the present day pay their full proportion of the cost of the war and not leave it to the boys after they come home from the front?


William Thomas White: Let me point out the distinction between the case of the United States and Canada. We have been bearing the burden of this war for three years. In the case of the United States, one of the wealthiest countries in the world-


Edward Mortimer Macdonald: What about England?


William Thomas White: I will come to England in a moment-and one of the greatest, they enjoyed a period of prosperity for the past three years. When this war broke out, the immediate effect in Canada was a dislocation of the business of the country. To have imposed a heavy burden
of taxation at that time would have been unwise from every standpoint. The result was that when the war broke out we imposed a moderate measure of taxation and in the following session raised the tariff by 7\ and 5 per cent and imposed special taxation calculated to realize a substantial sum. Last year we imposed the excess profits tax and this year, as these profits have become greater, we have increased the excess profits tax. Our taxation from the beginning, has been, I submit, scientific, and has progressed in such a manner as not to unduly disturb the industries of the country, hut rather to promote business and not to discourage our people. To have imposed as heavy a burden of taxation as we have to-day upon the people at the outbreak of the war would have been disastrous from the business standpoint and would have discouraged the people.


Alexander Kenneth Maclean: Will not my hon. friend withdraw the word 'scientific"?


William Thomas White: I will be prepared to argue that if my hon. friend desires. As to the excess profits tax, I would call his attention to the fact that we are in very good company.


Alexander Kenneth Maclean: How would one conceive of the methods of taxation adopted by the Government as being scientific?


William Thomas White: The burden has fallen upon those who are best able to bear it.' We have not taxed those engaged in the basic industry of the country-agriculture; we have imposed no direct taxation upon the ordinary citizen or artisan. Whom have we taxed? We have taxed those who can afford to Tide in Pullman cars, like the hon. member for North Oxford (Mr. Nesbitt).


Edward Walter Nesbitt: What?


William Thomas White: I say we have taxed those who can afford to ride in Pullman cars like the hon. member for North Oxford.


Edward Walter Nesbitt: I always take the smoking car ahead.


William Thomas White: My hon. friend has been found in a Pullman car, and I am quite sure he does not sleep in the smoking car. We have taxed banks, trust companies and loan companies; we have taxed them all; we have taxed excess profits; now we are taxing excess profits some more, and if that is not scientific all I have to say is that

it has 'been found to be a pretty good system of taxation. It has met with the approval of the people.
Mr. MeCEEA: You will find out what the people of the country think about it.


William Thomas White: My hon. friend says that we will find out what the people of the country think about it. I do not believe that my hon. friend, in these matters, is the spokesman for the people of this country. My hon. friend, I know, is annoyed about this measure. There is no question but that the industry in which he is interested will be hit by it, but there is no doubt, also, of the fact that the industry can stand it. Here is another point: it will not be hit by this measure unless it is doing well. Unless it is making profits it will not have to give any profits to this Government. That is the particular merit of this Bill. A man will pay only if he is making big money. If that is not a scientific measure of taxation I do not know what is.


Alexander Kenneth Maclean: The minister lias not answered the question that I put to him before he rose.


William Thomas White: As to how much will be realized?


Alexander Kenneth Maclean: Yes.


William Thomas White: It is not yet
possible for me to give even an estimate.


Alexander Kenneth Maclean: You have the
statements given ,to the department by those who were taxed last year.


William Thomas White: We have the
statements given to the department by those who were taxed for the first accounting period, and by some who will be liable for the second period, but not all. So far as the third accounting period is concerned, we have very few of those reports in. The result is that I am unable to make an estimate. But this is to be po-fhted out that it was last year that the large profits were made. That is to say, of the first three years I think last year was probably the best. Therefore this new taxation measure will apply more particularly to the larger profits of the third accounting period, and so substantial sums should be realized from it. It is not possible to make even a rough estimate, as we have no figures to which to apply the 50 per cent and 75 per cent taken from the excess profits.


William 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.


William 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.


Frank Broadstreet Carvell: Would there be any
objection to producing statements showing the persons, firms and companies, and the amount paid by them for the first accounting period?


William 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.


William Pugsley: The millers and the
ministers are partners in boosting the high cost of living.


William Thomas White: I do not see how that is.


William Pugsley: The greater the cost
of flour the greater the revenue received by the minister.


William Thomas White: The excess profit tax comes second in point of time. The excess profit must exist before I can take the tax.


Frank Broadstreet Carvell: 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.


William Thomas White: That was discussed last year in the House, and I then made the same, statement that I have made to-day.


William 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 this 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.


William Thomas White: That matter can be raised at any time. I do not^ think it

need be discussed in connection with this resolution.


Edward Mortimer Macdonald: Would the minister say why he is going to take only so much taxation from the people of Canada to-day? In view of the tremendous obligations we are assuming, is he not simply putting off the evil day? If the country is prosperous to-day, why does he not provide for a system of taxation that will be scientific in its character and put the burden on the people to-day, and not leave everything until the boys come home again?


William Thomas White: What I said today will still apply, that at present we are not only paying our pensions and the increased interest on our national debt, which is very large, but we have been able to pay $60,000,000 of the principal of the war indebtedness.


Edward Mortimer Macdonald: The hon. member
for Northumberland made the point that my hon. friend had taken $65,000,000 but had applied only $60,000,000 towards paying the debt created by the war. Did the minister have $5,000,000 more?


William Thomas White: No, because if
he had he would have applied it. We pay our ordinary expenditure, our capital expenditure, and then whatever balance there is is applied in reduction of the war debt.


Edward Mortimer Macdonald: The point made was that the minister derived $65,000,000 out of extra taxation but that he applied only $60,000,000 to the war debt, using the other $5,000,000 for the extra expense of ruling the country.


William Thomas White: I think that is entirely inaccurate.


Edward Mortimer Macdonald: The hon. member gave the details.


William Thomas White: But even supposing it was so, does my hon. friend say that we should default as to $5,000,000 of ordinary expenditure?


Edward Mortimer Macdonald: You should economize; you are not economizing at all.


William Thomas White: Not economizing? If we had applied that $5,000,000 to the ordinary expenditure, we would have been able to apply .only $5,000,000 in respect of $25,000,000 of increased interest and pensions due to the war because the increased interest and pensions are charged to our ordinary expenditures.


Edward Mortimer Macdonald: You should have
spent less last year; you are extravagant.


William Thomas White: We have devoted $60,000,000 to the payment of the principal of pur war expenditure. It seems to me that that is a sufficient answer to the hon. member for Pictou. If this war goes on, as I stated in the Budget, and if our expenditure increases, as it probably will increase with the increase: in our militia, necessitating additional taxation to raise more money, then $60,000,000 is a very substantial amount to have paid in time of war on the principal of our war expenditure. In 15 years, at the same rate of payment, $900,000,000 of indebtedness would be liquidated.
At six o'clock, the House resumed, and then took recess.
After Recess.
The House resumed at eight o'clock.



[Stage Direction]
Bill No. 41, respecting The Grand Trunk Pacific Branch,Lines Company.-Mr. Currie :

[Stage Direction]
The House resumed Committee of Ways and Means, Mr. Rainville in the Chair.
Edward Walter Nesbitt: When the House rose at six o'clock the Minister of Finance had been replying to various comments that had been made with regard to this resolution. This afternoon, when I read what the Financial Times had to say with reference to certain companies that were deterred by reason of the resolution from investing in this company, I simply gave the statement made by the Financial Times for what it was worth. I do not know as to the correctness or incorrectness of that statement. I did say that I believed if this measure were enacted it would deter capital from coming into this country, if the tax were not more equitably distributed. I said that I did not see why every person who made over seven per cent profit in his business should not be subject to paying his proportion of the tax. I said that so far as I knew the companies which would be affected by the fifty per cent tax and the seventy-five per cent tax would have no objection to paying their proportion of the taxation provided that every one else paid his proportion under the seven per cent



Clause, or under any ocf the other clauses of the resolution. My hon. friend argued, of course, as he did before, that it would be inconvenient to collect the tax from a person or company whose capital is only $50,000, and that a capital of $50,000 at seven per cent would earn only $3,500. That is no reason why such persons or companies should not pay their fair proportion of the tax. Every one in this country is willing to 'bear his fair share of the burden of taxation necessary to bring this war to a successful conclusion.
My hon. friend said that the main thing after all was the winning of the war, and with that we all agree. He said that if, in order to win the war it were necessary to do without capital coming into this country, he would be in favour of doing without the capital. If he carries that argument to its logical conclusion, why have these taxes? Why raise any tax? What is capital for but for the Government to use in carrying on the war? If his argument were carried to its ultimate conclusion, we would carry on the war without any capital or without any revenue. Such a position is, of course, absurd. We cannot get too much capital into this country to promote our industries and resources. That statement held good before the war and it will hold good during the war and after the war. We need in this country population and capital tnoTe than anything else. My hon. friend says that this tax will be limited to three years. I am afraid that he is not in a position to prophesy how long this tax will be exacted, and I do not think the people will grumble at how long it will be exacted so long as the revenue derived therefrom is properly used in the carrying on of the war. No one that I know of is grumbling at having to pay this war tax; what people are grumbling at is being selected as the only ones to pay the tax. I made that statement last year and I make it again now. My hon. friend, when he said that if, in order to win the war it were necessary to go without capital coming into this country, he did not care whether capital came in or not, knew that he was simply talking to the grand stand. We all know it is absolutely necessary to have capital to carry on the war. When in my boyhood days I used to play lacrosse, the boy who was disliked by the other boys was the one who played to the grandstand, that is the boy who kept the ball to himself and would not pass it along to the others.


George Perry Graham: There was no team play.


Edward Walter Nesbitt: Yes. I was surprised to see the Minister of Finance playing a good deal to the grandstand.


William Thomas White: Was my hon.
friend engaged in team play with the hon. member for Strathcona (Mr. Douglas) in his attitude towards this taxation measure?


Edward Walter Nesbitt: I certainly was not; I
did not even hear that hon. Imember's speech.


William Thomas White: Then there was
no team play on that side?


Edward Walter Nesbitt: Not so far as I was concerned. I was speaking with reference to the interest of the country and without reference to party at all. What I objected to in the minister's grand stand play was this: he said that the men and women of this country who were sending their boys to the front were doing more than any one who was paying taxes in this country. I was discussing the financial end of the matter; I was not discussing the sentimental nor the moral end. My hon. friend is not the only one in this country who feels for the men and women who have sent their boys to the front. Many a man in this country who is paying excess profits taxes has sons who are fighting at the front, and some of whom have died at the front, and yet there is no grumble on their part. If what the minister said was not grand stand play, then I do not know what grand stand play is. I had no intention of mixing up the question of the men who have risked their lives with this financial discussion this afternoon.


William Thomas White: May I interrupt my hon. friend, because I should not like him to misunderstand me. I had not in mind to suggest that the hon. member was actuated by any such motive; but the article which he read to the House, it seemed to me, unduly emphasized the money aspect of this excess profits tax, and it was rather to that than to the remarks of my hon. friend that I was addressing myself. I entirely acquit my hon. friend of being actuated by any other motive than that of discussing this subject in this House in a business way.


Edward Walter Nesbitt: I thank the minister, and I freely accept that explanation from him. So far as the article in the Financial Times is concerned, I am not accustomed to quoting newspaper articles, but I gave it for what it was worth. I did not say that these companies were deterred from

investing capital in this country, because I was not aware of anything of the kind. I would like to say one word with reference to income tax. My hon. friend complains that he cannot impose an income tax conveniently owing to the municipalities and the provinces also having the right to exact an income tax. I would suggest to him that the matter could be worked by excepting the amount paid to the municipalities and the amount paid to the provinces, that is to say, by giving the person who is paying under the Dominion tax credit for what he had already paid on account of the municipal and provincial taxes. I do not know that I have anything further to say in regard to the matter. I give my views honestly for what they are worth, without regard to party in any manner, shape or form.


Alexander Kenneth Maclean: I have a few observations to address to the committee before the adoption of the resolution. The consideration of a taxation resolution is a matter of business, and I quite agree with my hon. friend from North Oxford (Mr. Nesbitt), that there is not much necessity for exhorting hon. gentlemen to unite for the winning of the war when a matter of this kind is under consideration. As to the winning of the war, we are all agreed. But the consideration of taxation proposals in committee, is ordinarily, a time when we come to close quarters in discussion, and when there is more or less frankness. The Minister of Finance referred this afternoon to the fact that some hon. gentlemen on this side of the House had approved of the taxation proposals now under consideration. That is quite true. The hon. member for South Cape Breton in discussing the Budget this afternoon openly and very emphatically approved of the taxation proposals. On a matter of this kind one would naturally look for differences of opinion. There should not be a tendency to discuss taxation proposals from a point of view altogether partisan. There is a differenue of opinion, for instance, among hon. gentlemen on this side of the House as to the desirability of the proposals of the Minister of Finance, and it is desirable to have hon. gentlemen express .their views, whether favourable or otherwise. On the other side of the House there are hon. gentlemen who will probably support the proposals of the Minister of Finance; at least, I can safely say they will not oppose them. Nevertheless, it does not follow that in their best judgment these proposals are altogether
92i
wise, and just, or necessarily in the interests of the country. It is more difficult perhaps for hon. gentlemen opposite to indulge in the same freedom of criticism as hon. gentlemen upon this side of the House. I think it is very important indeed that we should have the utmost freedom in discussing a matter of this kind. I do not pretend to insinuate that the Minister of Finance does not entertain that view.


William Thomas White: I invite the
utmost freedom of discussion, because it will he of the greatest benefit to us.
iMr. A. K. MACLEAN:	Litigation in
court for instance is justified on the ground that from the conflict or shock of opposing views the court may reach the truth approximately. Similarly, through the conflict of opinion that may arise in this committee, the (Government may readh the best possible system of taxation fitting the circumstances.
There is another matter I wish to refer to, and my attention was directed to this by a reference of the Minister of Finance this afternoon to the fact that in several of our provinces there is already a certain form of income tax. It has often struck me that there should have been a conference between the Dominion and provincial governments in reference to taxation. During the last two or three years it seems to me that many of the provinces have practically exhausted every method of taxation within their powers. The province of Ontario, particularly, has initiated very wide taxation schemes; perhaps they were necessary, and perhaps they were not. But it is just possible that the province might have avoided such extended taxation by economies or reforms of some kind, and if so, it was their duty to have done so. I think it would have been desirable for the Minister of Finance to have met the provincial governments in conference a long time ago, and asked for their co-operation in the matter of financing the war. This would have given him an opportunity to present to them most clearly and forcibly the probable obligations that will rest upon the Federal Government in the future, and I think in that way he would have gained the co-operation of the provinces.
I would not undertake to say that the fresh taxation proposals of the Minister of Finance are altogether unpopular. They will be unpopular with the men who will have to pay; there is no doubt about that. But, after all, that applies to such a small

proportion of the .population of Canada that these proposals are bound to be very-popular with the great majority, who will not have to pay them. I suppose that if a man were viewing these proposals purely from the standpoint of political safety he would rather take the position that the proposals on the whole were pretty good, because the great majority of one's constituents shall not 'be affected by them. However, I do not consider that is a fair method of considering a matter of this kind, particularly on the part of public men who must assume the responsibilities attaching to they: position. We do know that persons and corporations liable to taxation under these proposals are protesting in large numbers and quite vigorously; perhaps it is true that in many cases their complaints are hardly justified, because the additional taxation to be imposed would mean very little beyond what they have to pay under the Act of last year. To some, however, it will Ibe quite a serious matter, and it is easy to understand there may well be an *honest difference of opinion as to whether or not it is desirable to increase the business profits tax, and obtain additional revenue from other sources.
The Minister of Finance justified all his taxation schemes this afternoon ion the ground of their being scientific. Of course, if they are scientific, they are absolutely sound. I suppose, however, the minister was using language rather loosely when he employed the term "scientific." He said that he started out by having recourse to one source at one time, and to another source at another time. But it might turn out that all these sources shall be exhausted or dried up when he turns to them later when his financial necessities are urgent. Our obligations this year are probably as heavy as they will be in any year in the future, no matter how long the war continues. The country is fairly prosperous. The average citizen is in rather happy circumstances to-day. Therefore, I say, this is the time to apply all possible forms of taxation, this is the best opportunity we shall have to secure for Canada the largest possible revenue in order to lessen the total of our public debt upon which the people will have to pay interest after the war. That there is an element of fairness in the business profits tax no one will deny. It may be true, also, that the Act of last year was on the whole a justifiable method of taxation and was perhaps quite popular in the country. The only objection I had to it-and I ex-

pressed myself so at the time-and the only protest I have heard from other citizens, is that it should be applied more widely. It was pointed out by hon. members on this side last year, and events have proven the soundness of their contention, that in some localities yon will find a firm or partnership earning, it may be, $50,000, and paying a substantial tax, while in the same place there may be another concern with earnings of $100,000, yet paying nothing. I think that inequalities of this kind irritate the community -and render that form of tax unpopular. It would- have been better, had the business profits tax had a wider application, not only because it would have been more in accordance with justice, but because the treasury would have benefited. The increased business profits tax will yield but little additional revenue; will impede industrial expansion, prevent the inflow of foreign capital. It would have been better to adopt- some other form of taxation. I am not, however, referring to concerns engaged in purely war supplies.
There is another aspect of the case which makes me think that you cannot infer the desirability of a business profits tax for Canada by showing that it applies well in England. In Canada there are very few businesses with enough capital. Many have sufficient invested capital, but the working capital, as a rule, is borrowed. Our business concerns are usually very heavy borrowers from the banks. In England, not only is there an abundance of invested capital, but the great industrial concerns there, as a rule, have large reserves. I read pretty regularly a financial journal published in London, The Statist, a journal which the Minister of Finance knows very well. Each issue gives the proceedings of annual meetings of important companies. In reading these reports, I notice that invariably they disclose a very substantial cash reserve accumulated in the course of years of operation of these concerns. Consequently, these concerns are not borrowers from the banks. On the conclusion of this war, there will 'be a period of anxiety for industrial concerns in this country. Many of them to-day carry contingent accounts, that is, they are setting aside a portion of their profits to meet contingent liabilities that may arise on the cessation of war. The cost of raw material may go up, or there may be many contributing causes to lessen profits. Therefore, they feel that a cash reserve is desirable against the time when a business depression will come and when

the banks may find themselves not in a liquid position to justify large loanings to industrial concerns.
My substantial objection to the resolution, is that which I voiced last year against the business profits tax, and that is that the efforts of the Government to secure revenue to meet our heavy obligations are too restricted. As I pointed out when speaking on the Budget, we are not paying enough of our annual war expenditure. It is eminently desirable that our national debt be kept down to the lowest figure possible, so that the country may be able, without distressing itself, to take care of its fixed charges and have sufficient revenues to carry on public services with efficiency. There are many people, I am sure, who would be quite happy to be compelled by law to pay something to the treasury who are not paying anything today. So, I say, the tax proposals contained in the resolution are too restricted, and also they are unjust to the small number who are obliged to pay. The result is that the treasury is not receiving the volume of revenue which could easily be had and which the country requires so much, and will require so much in the future. I put the case to the minister this afternoon that, if a man were in receipt of an income of $50,000 from invested capital, there was no reason why he should not be compelled to pay something toward the public revenues for war purposes. I can not conceive of any answer to that proposition. His income arises from capital which he has invested, and is more than he requires for his personal purposes. Most persons in that position would be willing to contribute a very substantial portion of that income to the treasury for war purposes.


Mr. W. H. BENNETT:: Have these people, who are so anxious to pay taxes, ever heard of a Patriotic Fund, a Red Cross Fund, or any similar institution to which they are free to contribute and by which their money would be cheerfully accepted?


Alexander Kenneth Maclean: I have no doubt that that class of people do contribute very generously to the Patriotic Fund and other similar causes. And so they should. The Minister of Finance stated this afternoon that if a business concern earns over fifteen per cent, it should not complain if the country takes fifty per cent of its surplus earnings. But even if men of the class to
which I refer had contributed generously to the Patriotic Fund, that does not answer my contention that out of the very handsome surplus remaining above that which is actually required for their private purposes they should contribute a very substantial portion to the country for war purposes.
There is another point which I urged against the business profits tax last year, and which I still believe in. In England the business profit tax applies to profits earned over and above the average amount earned for the three years prior to the war.
I do not recollect at the moment what answer the Minister of Finance made to this point last year, but I remember that he did make some reference to it.' That always struck me as being a very fair provision, and there is a very strong feeling among business men of this country who are liable under the Business Profits Tax Act, that this same provision should be applied to companies and individuals liable under our Act. I think it is only a fair and just provision. The imposition of a tax upon profits earned above the average profits prior to the war is justly and truly a war business profits tax. The title of the Act at the present time is a misnomer, because it does not apply merely to profits earned by reason solely of the war, but it refers also to profits which would be earned in peace times. These, in a general way, are the observations which I wish to address to the committee at this time upon the resolution.


William Thomas White: There are a few more points which my hon. friend referred to, and which I desire to deal with briefly. But, before doing so, I should like to say that so far from deprecating criticism upon any measure which I have in this House, and especially a taxation measure, I invite it. I am pleased to say that I have derived, in connection with my measures in the House, a great deal of assistance from the criticism which has been offered. I would also like to believe that I am willing always to make concessions when it appears proper to do so, as the result of the criticism to which measures are subjected. Last year when this .business profits War Tax Bill was under consideration in this House, I received many valuable suggestions and the Bill was very much improved by them. As far as this amendment is concerned, I should like to have the frank opinion of every one in this committee and, if it appears that the Bill is too sevfere or that it is

going to work out disadvantageous^, having regard to the national interest, I am prepared to consider that criticism. But I rather did resent in connection with the bill-probably that is not the word, because I do not think a man should resent anything that occurs in the House of Commons-being criticised, on the one hand, because the bill was not nearly severe enough, and, on the other, because the Bill was so severe that it would injure capital, drive out capital, and prevent capital from coming in. That did not appear to me to be fair criticism from the Opposition benches, because the one attitude is entirely inconsistent with the other.
I gave the reasons pretty fully this afternoon why I thought it was inadvisable that we should resort to a federal income tax at this time. I do not propose to go over that ground again but under the existing law in most of the provinces in this Dominion, a man is fairly heavily taxed today upon his income (that is, if the law is administered), and if we imposed a federal income tax it seems to me it would he an additional impost upon him at this "time when the cost of living has greatly increased. There is another feature in connection with this that is put forward and that is, that companies are severely taxed by this excess profits tax. At the same time it is suggested that there should be also an income tax. I believe that if we imposed an income tax in addition to the excess profits tax it would fall to a large extent upon those who are already taxed by this excess profits tax. Take managers and [DOT]other officers of the companies that are taxed by this measure;, they derive their salaries, and those salaries are subject to taxation under income legislation in at least certain of the provinces in which they live. If we added on a federal income tax, we should be taxing these men upon their salaries notwithstanding the fact that many of these officers are interested in the companies which are taxed under this excess profits tax Act.
* There is another feature of it. Income is derived from personal earnings, or from interest on mortgages, bonds, and other securities and dividends upon stock. Insofar as income is derived from dividends on stock, the recipient of such income is already taxed by reason of the fact that he is a shareholder in these companies subject to the excess profits tax. That has to be borne in mind. What I stated this afternoon, and what I desire to repeat, is,

that we may come to the time "when we shall have to resort to income tax. The hon. member for Halifax (Mr. Maclean) said: why not do it now? The reason I think it inadvisable to do it now is that income? are already subject to taxation by municipalities or provinces, and it does not seem to me that the burden should be placed upon the average citizen deriving income which would be subject to taxation, until the necessity is absolutely clear and until it is indispensably necessary in the national interest that we should impose such taxation. Take the lawyers in Canada, and I only speak of them as one class who are subject to income tax by municipalities and provinces; I do not believe that the income of lawyers has been increased since the war broke out. I believe rather that the contrary is the case. I do not believe that the income of physicians has been increased and I do not believe that the incomes of most of those who derive salaries from their employment has been increased. That is on the average; I suppose some of them have been increased and others have been reduced. But, the cost of living has gone up. Is it indispensably necessary at this time to tax all those who may derive incomes throughout the country? You could hardly select nine or ten large incomes and make them a special object of taxation. You could not introduce a Bill for the taxation of half a dozen or a dozen or twenty men in this country. Your income tax would have to be general. I am only pointing out these aspects of the matter because it seems to me that they are relevant to the question as to whether an income tax should be imposed now. My view has been that it should not be imposed now. My hon. friend has said, and his words are true, that people have paid this business tax gladly. I bear cheerful testimony to that. The spirit in which the excess profit tax has been borne has been admirable. Men have not been anxious, so far as I am aware, to avoid taxation; they have been desirous of contributing, and have willingly paid the taxation against them. That taxation, in many cases, has run into very large sums of money. The hon. member for North Oxford (Mr. Nesbitt) is always a valuable contributor to a debate, and I certainly had not in mind, when I spoke this afternoon about the sacrifices the people of this country are making, anything that he himself had said. But there has been a criticism of this measure which I do not believe is just, in

that it emphasizes the large sums of money which will have to be paid into the federal exchequer. I do not believe that that is a sound criticism of the measure. It would be a sound criticism to say that it is not fair, if that is the view of the critic, that only those having a capital of $50,000 or more should be assessed. That is a criticism that may fairly be put forward, to be met by us who believe that the line has to be drawn somewhere, and that if it is not drawn at $50,000 it would have to be drawn at $40,000, for the reasons which I gave last year. But I do not believe that it is fair to say at this time that the measure is objectionable, and to severely criticise the Government on the sole ground that large sums of money are taken from the industries of this country; because in a time of sacrifice such as this, money becomes of entirely secondary importance. It is very important, but it is of secondary importance. It is needed and will be needed for the prosecution of the war, and I have been unable to see, and I am still unable to see, why, if firms or companies are making huge, even abnormal earnings, a very substantial portion of those earnings should' not be taken for the treasury of the state engaged in the prosecution of - this war. That is what I had in mind this afternoon when I referred to the sacrifices which are being made in this country, and I think it desirable from time to time to emphasize that feature, certainly not in censure or criticism of any member of this House, but only because we are taking extraordinary action on account of extraordinary conditions. I assure hon. members that it is no pleasure to me to incur the criticism which I undoubtedly do and will incur in connection with a measure of this kind, which does take a heavy toll from many of our industries. It is no pleasure to bring it down, and it is not brought down with any object of political aim or advantage, although I do believe that public opinion will support a measure that, at a time like this, takes a substantial part of large earnings made, and honestly made, for the purposes of the war.
The soundest criticism I have heard of this measure has been that it may take so large a sum from a firm or company that the company may not be able to raise that amount of money readily, and that it may, to a certain extent, make the position of the company unliquid. That is the soundest argument I have heard against thie measure, but I do not agree that the amount
taken, although large, is unduly large in war time.
My hon. friend from Halifax (Mr. A. K. Maclean), who, as usual, made a very temperate speech and put forward his ideas and criticisms very fairly, raised the question why we did not adopt the English policy of establishing the average earnings of a company for the three years preceding the war, and then take only a portion of that excess profit earned now over the average profit earned for those three years. We gave that matter a great deal of consideration, and I have discussed the English income tax with many who are subject to it.
I believe that our tax is a better tax, and . that is the opinion of many from the United Kingdom to whom I have spoken about it. What has happened in the United Kingdom is this:	Those companies' that did the
largest business before the war, that were earning 25 per cent, 30 per cent, or 40 per cent, are in many cases earning that amount to-day and yet are paying nothing. Their average, we will say, was 25 per cent or 30 per cent before the war. Since the war they may earn only the same amount, and yet they are going scot free. But companies that earned only 4 per cent or 5 per cent before the war, which perhaps had a run of hard luck, or were engaged in a business that was not thriving at that particular time, but are now making perhaps 40 per cent, find themselves mulcted to the extent of 80 per cent of their excess profits. In my opinion, it is very much better to fix a Tate of 7 per cent or 8 per cent or ten per cent as a standard for all companies, and then, if they make excess profits over that rate, to take a proportion of those excess profits. It must be borne in mind that we are not taking all these excess profits. We did not confine the companies to 7 per cent under the Business Profits Wax Tax Act of last year. We took only one-quarter of the amount earned over 7 per cent upon capital as defined in the Act. This year we take one-quarter over 7 per cent and up to 15 per cent. That is to say, if a company is earning 15 per cent, we leave it 13 per cent and we take 2 per cent. Then, between 15 per cent and* 20 per cent, we take one-half, that is 21 per cent. So that a company earning 20 per cent gives 41 per cent and keeps 151 per cent. Then we take 75 per cent over 20 per cent. That is a heavy tax, but we are here getting up to the point where the dividends are abnormal. Take the industrial companies listed on the stock exchanges of this coun-

try, and it is not very often that in peace time they show more than 15 to 20 per cent profit. I am aware that many commercial companies that are not listed do show very much larger earnings than that, but probably not when you take into account, what we do take into account in connection with this measure, namely accumulated profits and unimpaired reserve as part of their capital.
As I have said, I invite fair criticism of this measure. We do not want to unduly tax industry; we do not want to drive capital out of this country, and we do not want to prevent capital coming in. But I do feel that we have a duty towards the public, and that in connection with the prosecution of this war, if abnormal profits are being made in munition supplies or in anj^industry, which .on account of the war enjoys exceptional advantages and is making abnormal sums of money, it is our duty to take a substantial part of that money for the use of the State.
It may be that the Bill is too severe. I have always been willing, if that is shown to be the case, to make concessions, and I want to assure the House that instead of depreciating criticism I invite it.


Frank Broadstreet Carvell: If the hon. gentleman is so anxious for criticism possibly he will pardon me if I give him my view. I do feel like criticising the Finance Minister, not so much on account of the actual provisions of this measure as upon his general policy. I do not think that he is taking enough out of the people who are earning money and who are financially in fairly good condition. It is said that Canada is prosperous to-day. There is, no doubt, a considerable degree of prosperity among certain classes of people, though I am afraid that if the minister went into the ordinary labouring districts he would have a somewhat different story to tell. However, so far as the financial world is concerned, there is a great degree of prosperity. But my hon. friend must realize that that prosperity is the result of abnormal conditions and of the influx of an enormous amount of borrowed money that is being scattered all over the Dominion. I suppose my hon. friend, himself is spending $300,000,000 or $400,000,000 yearly in the Dominion which is absolutely borrowed money and upon which interest must be paid next year and the succeeding year and during the years of our children's children.- Then, another $300,000,000 or $400,000,000 are coming in from the Allied countries for the purchase

of munitions alone, and hundreds of millions are coming in for the purchase of natural products over and above what would be the legitimate price that we would ordinarily receive for those articles. This is making ia false prosperity which is not equally distributed among the different classes of people. It seems to me, therefore, that it is the duty of the Finance Minister to take -as much of this money as he can get his hands on, in order to avoid borrowing too much money and rolling up the public debt to too great an extent. I do think that in some cases he should make a distinction between the different classes of industries from which he is taking money by way of taxation. I do not think that my hon. friend is justified in taking the same percentage of profits from the regularly established companies that are carrying on the same business that they carried on before the war broke out -as he is taking from the mushroom companies which have been established as a result of the war, are making money out of the war and are doing nothing but a war business. There are hundreds of such companies in Canada. Hundreds of companies in Canada have never put a dollar of their own money into their business; or, if they did, they were allowed such prices that within the first five or six months of operation they got all the invested capital back again and are now making enormous profits upon invested capital furnished them by the Government. That class of industry should pay a much higher rate of taxation than the well-established Canadian industry which was in business before the war commenced and which hopes to be in business after the war is over. An instance of an industry which my hon. friend has taken by the throat and forced to sell its product at a certain price is that of the newsprint paper industry. Industries such as this which were here before the war and have been carrying on a legitimate business, are, no doubt making large profits and are contributing a large proportion of excess profits to the Government. But surely it is unreasonable to say that an industry of that kind should contribute the same proportion of its earnings or profits to the state as the munition maker, who never put a dollar into the business and who is taking out of it 40,50,60,100,300, and as high as 900 per cent-and this in a -case where you do not fix the price of the product.
Another criticism that I wish to make is one that has been reiterated in

the House a good many times. In fixing the minimum amount of capitalization in respect of which taxation shall be imposed, the minister has not, I think, gone far enough down in the scale. He says that one has to stop somewhere. I admit that, but instead of stopping at $50,000, I would go down to $25,000, and even lower. Every man must make some sort of sacrifice in order to furnish money with which we may take our part in winning the war. The sacrifice being made by the company that is losing 25 per cent of its excess profits over and above 7 per cent is a mere bagatelle com- pared with the sacrifices that are being made by the people who are contributing to patriotic purposes. Why should not a company capitalized at even $25,000, and making profits of 7, 8, or 10 per cent, be compelled to contribute its proportion of the war taxation? My hon. friend says that you ought not to tax the dividends on stocks because the company has already contributed a portion of its profits. That may be true, but if I have $1,000 coming in from one industry, $1,000 from another and similar amounts from others, and am getting a total of say, $10,000, why should I not contribute a portion of that amount to the State? The reason given by the minister is that the companies in which I have my money invested have already contributed a certain proportion of their excess profits to the State. I do not think that the argument is logical. I think that we should go down the scale as far as it is possible to go without involving too great a cost of collection. The minister will say that if too many small companies are included in the taxation, the cost of collection will be greater than the amount received, but I think you can go away below where the minister is to-day before you reach the point where the cost of collecting will exceed the receipts.


William Thomas White: My hon. friend will recollect that there is no exemption of companies and firms engaged in the munitions business.


Frank Broadstreet Carvell: I am aware of that, but I have companies in mind which, with a capitalization under $50,000, are earning handsome dividends. This war has made it possible for hundreds

I think I may safely say thousands- of companies to get rich indirectly as the result of the war, though not engaged in manufacturing munitions. That is another criticism that I make in all sincerity. I could give the minister instances which have come within
my own personal knowledge, and I am satisfied that every hon. gentleman could give similar instances, of companies capitalized at less than $50,000, which are making big profits as a result of the war, but who are not contributing towards the war expenses. As to the question of incomes, it is not my
9 p.m. purpose to discuss that at length, because it has been discussed a good many times in the House. But there is hardly a city or a country district in Canada which does not contain a number of men who are in receipt of big incomes which go scot-free so far as taxation is concerned. I am sorry to say that a large proportion of those people do not even contribute to patriotic funds, Red Cross funds, or anything else of that nature, and I do submit that this class of people should be taxed. I make a more severe criticism of the minister for allowing these men to go free than I do of all the other things put together. I suppose there is not a man within the sound of my voice to-night who could not pick out half a dozen or a dozen persons in his own constituency who have accumulated a large amount of money, who never spend a five dollar bill unless they have to in order to .purchase the aotual necessities of life, and who salt their money away in bonds or stocks or stockings or banks-and contribute nothing in the way of taxation. The Legislature of New Brunswick a year ago imposed a direct tax in order to raise $500,000 for the Patriotic Fund; this method of raising the money was adopted in order to get after the men who would not contribute voluntarily. These people ought to be compelled to contribute a very large proportion of their incomes in order to assist in carrying on the war. The minister says that we *should not tax these people because they may be manager' of a corporation which is paying a large proportion of its excess profits. That has nothing to do with the matter at all.


William Thomas White: I indicated that some of those who are receiving salaries from the companies were also shareholders in the companies. I agree if the manager is also a shareholder in the company-


Frank Broadstreet Carvell: That is worse. He enjoys a big salary.


William Thomas White: A company is as I said subject to the tax, and the shareholder would also be liable to taxation upon income.


Frank Broadstreet Carvell: Why should he not be liable upon income? The most severe criticism I have to make to the minister in this whole business is the fact that when he issued his first call for an internal war loan -and he has repeated the offence in every war loan down to the present time-he persistently and deliberately provided, and advertised it to the world, that the man or woman who invested his or her money in that war loan would not be called upon to pay any tax which the Dominion might impose upon incomes. He has proclaimed this to the people of this country: You invest your money in this war loan and you will not have to pay an income tax. If the minister at any future time wishes to impose an income tax, he will have $350,000,000 of the savings of the people of this country exempt from taxation, and he has practically made it impossible to work out an income tax in this country in a fair and honest manner. I am not going to impute motives; I do not wish to impute motives to the minister or to any other man; but the result of his conduct and of his advertisements in the handling of these war loans is that he will meet witli a great deal of . difficulty in arriving at a fair and equitable income tax in Canada. There are cases of rich men investing a hundred thousand dollars, five hundred thousand dollars, a million dollars in these war loans, which are the greatest cinch that I know of in the financial world to-day. A man invests a million dollars of his wealth in war bonds, and when the income tax collector comes around to him and says: I want you to pay income tax, he replies: My money is invested in war 'bonds and I go scot-free. My hon. friend says it is open to argument whether or not we shall have an income tax and things are certainly looking serious; but he has spiked his guns before he comes to that position; he has put himself in a position where he cannot collect income tax on $350,000,000 of the savings of the people of this country, and I know no class of investors would be in a better position to pay taxes than those persons who have raised the $350^)00,000 of these internal war loans. My hon. friend may think my criticism is not as gentle as that of my hon. friend from Halifax (Mr. A. K. Maclean), but it is just as sincere and it is given with just as good grace and with no more bitterness than has been that of my hon. friend from Halifax. I have presented these things as I view them; I trust the minister will take some notice of them, and I hope my views will  v
benefit him and, together with the criticism of the rest of my friends around me, the result will be that Canada will raise more *money to carry on this war as she goes along, and when money is plentiful, and that she will not borrow so much money now and have to pay more interest when the time of peace comes. I do not think I was ever charged with being a pessimist, but I do look with the very gravest apprehension upon the affairs of this country when peace comes. When I think of three or four hundred thousand soldiers returning to Canada-and I hope that number does return-and of three or four hundred thousand munition workers being practically thrown into the streets; when I think of the tremendous debt and of the enormous interest charge that must be met; when I think of the pensions that must be paid to our soldiers or their dependents'-a debt that must be met .even if we have to sell all our land and property to meet it-when I think of the falling revenues that will occur, I feel it is the duty of every man in this country, no matter whether he be a financial magnate or not, to try to see if we cannot keep this debt down to something like reasonable dimensions and collect as much money as possible out of the people to-day when they are well able to pay it. Every million dollars we take out of the people to-day in taxes means one million dollar less on which we shall all have t,o pay interest for all time to come.


William Thomas White: My hon. friend stated that he was more severe than our genial friend from Halifax (Mr. A. K. Maclean). He was a little more severe, but he was not quite as well informed. I do not think my hon. friend from Halifax will put forward the argument which my hon. friend (Mr. Carvel!) stated was his main one, in criticism of this measure, namely, that we had exempted the war bonds which we issued from any income tax imposed under the authority of this Parliament. I would agree with my hon. friend as to the extreme undesirability of issuing bonds subject to that condition, if it could be avoided, but I say to my hon. friend that I know this opinion will be confirmed by any financial man in this country or in the United States, namely, that we could not conceivably issue a loan to the people of this country and the . United States unless that provision exempting them from any income tax was inserted on the face of the loan.


Frank Broadstreet Carvell: My financial transactions * are, of course, very small compared with

those of my hon. friend, but I have a good many clients who invest money, iand I have never in my life had the question asked me by a client whether bonds were exempt from income tax or not.


William Thomas White: That may be, but my hon. friend is thinking about peace time conditions, and I do not think the question would be asked under peace time conditions.


Frank Broadstreet Carvell: I am speaking about the war loan.


William Thomas White: 
Frank Broadstreet Carvell: What about internal
issues?


William Thomas White: The same is true of them. You take those loans which we put out internally. The average citizen
probably does not stop to inquire, but his investments are only a fraction of the whole. It is the man who is accustomed to invest who considers his investments carefully, and it is the insurance companies, the loan companies and these other companies, which are most careful in regard 10 their investments.
It is an attraction, a necessary attraction in connection with war loans that they should be free of income tax. The issue that the United 'States is putting out to-day is free of income tax, tout not free, I believe, of succession duties. In England, the very home of income tax, in order to meet the situation in connection with their last loan they had to make a double issue, so to speak, one free of income tax and the other subject to income tax, with a very substantial difference in price .between the two issues. If we had put out our loan without the provision of exemption from income tax, we should never have been atole to sell it pn the same interest basis. Consequently it is as broad as it is long. What we might have realized hereafter by way of income tax legislation would have been lost at the time of the issue. I stated when presenting the Budget that if we had an income tax it would fail to reach a large proportion of pur population toy reason of that unavoidable provision in our bonds. I agree with my hon. friend that it is desirable to avoid such a provision if we possibly can, tout it could not have been avoided, and 1 submit that to the judgment of this House.
My hon. friend has raised the question of the paper industry, and I do not desire specially to discuss that matter to-night except to say this, and I do not know that these remarks will apply exclusively to the paper industry. It is of course a great industry whose development and success we are all interested in, but it would not be possible for me to look at it differently from any other industry. We have unlimited resources of the raw material which is the basis pf the paper industry, and it is a great industry to toe encouraged and developed. The situation in regard to the paper business was abnormal and exceptional. Why? Because of the limitation upon the supplies available at the present time The supplies of sulphite from Scandinavia are shut off toy the war, and the result is practically a monopoly in newsprint. I do not say that it is an intentional monopoly; I do not for one moment say that the men engaged in the manufacture of

newsprint are attempting to monopolize the situation, but a virtual monopoly does exist on this continent by reason of the limitation of the supplies, and the result is that the price of paper has gone up by leaps and bounds.


Mr. LEMIEUX:: The cost of transportation too.


William Thomas White: It was admitted in my office that the price could practically be fixed as was desired by the manufacturers, but they claimed that the prices which they were charging were reasonable. It is true that their costs have gone up. They had gone up last fall when the matter was drawn to my attention, and they have gone up, I believe, since. In order to deal thoroughly with the situation, the Government on my recommendation appointed a commissioner who is engaged to-day in investigating the cost of production and the conditions in connection with that industry. I might say here, that there is no question in this country or the United States that has given the governments of both countries more trouble than this difference of opinion existing 'between the press and the newsprint manufacturers. This matter has been adverted to so often in this debate that I take this opportunity of saying that in November last I was waited upon by representatives of the press of this entire country, all sections being represented from Halifax to Vancouver, Liberal and Conservative alike. They drew my attention to the fact that under the prices then existing-and they pointed out what was open to them in the way of increasing the price of their newspapers and the charge for advertisements-they were threatened with ruination. It was not difficult to figure; they used so much newsprint; the price had jumped from such a figure to such a figure, and there was the net result. In many cases the earnings were wiped out completely, and in others they were substantially affected. I did not go out for the purpose of inviting the press to ask me to take up this question; the press came to me as they came to the authorities in the United States, and asked that the question be taken up as it was vitally affecting their business. This was in November. I called a joint meeting and the matter was so urgent that I called it on a holiday, Thanksgiving Day. I asked the newsprint manufacturers and the newspaper publishers to send repre-

sentatives to Ottawa, and they came and we held a joint meeting. I said: " Gentlemen, I do not want to interfere in this matter at all; it is an invidious task interfering in matters of this kind; I realize how complex this situation is, and I want you to appoint a committee of three from each side and see if you cannot reach a basis that will be fair." I pointed out that the war had created an exceptional condition, that supplies were hardly available from Scandinavia, that the situation was such that a virtual monopoly existed, that the profits of the sulphite and paper companies appeared to be large-and I had figures in substantiation of that placed before me-that on the other hand the newspapers were very hard hit and some of them threatened with ruin. I pointed out that the press was not a private enterprise, that although privately owned it had a quasi-public character, and that I did not think any government in this country could stand by and -see the destruction of the press on any substantial scale, and I stated that representative newspaper men in this country had represented that unless .something were done that would be the inevitable effect of the increase in prices. The committee that was appointed failed to reach a working basis.. They continued their negotiations, I believe, during my absence in England in November, and on my return the matter was again brought to my attention by the press. It had become still more urgent, and finally, having regard to the public interest and the desirability, as I conceived it, that the press of this country should be continued and not be ruined, we looked into the matter further and an Order in Council was passed which gave us power to deal with the situation. I differentiate that case absolutely from an ordinary business, because as I have said the press is quasi-public in character, especially in war time, and also because of the exceptional circumstances surrounding the paper industry by reason of which supplies ordinarily available in peace time were not available then, and the price had risen to a figure very much in excess of what at that time, at all events, appeared to be justified by the increased cost of production. We were not alone in that action, though we	dealt	with	theCanadian situation	only. At	thesame time the situation was	beingdealt with	on	the American	side,
and there certain prosecutions were instituted. I pass no opinion upon these, as I do not know the facts. But what I say

is that an extraordinary situation existed in the United States and in this country, so extraordinary that the Government there is concerned about it and action has been taken there looking to the relief of the press, and action was taken on this side, having a similar object in view. The hon. member for Carleton (Mr. Carvell) asks why the paper industry should not be put in the same category as the manufacturers of munitions. We are not discriminating against any industry by this taxation, for practically all industries in Canada are subject to it. But the paper industry has enjoyed exceptional profits by reason of the limitation upon the usual supplies of sulphite on this continent. I do not know what the situation is to-day, we are investigating it. But I know that the profits made in some eases have been exceptionally, abnormally, large.


Mr. McCREA:: Have these exceptional
profits been made from the manufacture of newsprint or from other branches of the industry?


William Thomas White: I could not say as to that. The businesses are different. It was brought to my attention when I had this matter under consideration that some newsprint manufacturers produce their own sulphite-, while others buy their sulphite from the manufacturer of that product. Some sell exclusively in the United States, some exclusively in Canada, and some find markets in both countries. The investigation of the newsprint business would inevitably involve an investigation of the sulphite industry. I dealt with an association, the Pulp and Paper Association, and, certainly, precipitate action was not taken. It was only when all the resources of persuasion had been exhausted that we took the action we did. I believed that they had the power, by adjustments among themselves, to bring it about that reasonable prices could be granted to publishers of Canadian newspapers. I felt more justified in taking the attitude I did because they had the American market- and the Canadian market is only about tne-sixth of the entire market. They could afford to deal reasonably, very reasonably, with these customers here, who are hard hit by the war, and who have been their customers for many years. The action we took, I think, was absolutely justified as a war measure. I believe that if we had not taken it the effect upon the press of this country would have been most serious- I use no stronger term.


Frank Broadstreet Carvell: I assure the Minister of Finance that I would not set my knowledge of finance against his, or that of my hon. friend from Halifax (Mr. A. K. Maclean). Yet, notwithstanding his very laboured explanation, I am not satisfied. It is very easy for him to advance theories which he has never worked out in practice, and to argue from these theories. But I would like to have seen him try to raise an internal load without attaching to it the statement that it would not be liable to income taxes. According to his ideas of finance, this would not do. But he has not tried it out. In view of what he has said, what becomes of all the newspaper articles we have seen for the last year about the patriotism of our financial people in raising victory loans? If what the hon. minister says is correct, these people were making a shrewd business bargain, and if they had seen a fifth, of a point, or even a tenth of a point, of advantage in placing their money elsewhere, they would have placed it elsewhere. I do not believe that.; I believe the financial people of Canada have more patriotism than he gives them credit for, and that they would have invested in the war loan, even if he had not put in that rider about income taxes. I think he should have taken the chance, even if he had had to sell the bonds at a little less than he received for them. The revenues he might have received by taxes on the income of these bonds would have been much greater than the small discount he might have had to allow in selling the bonds. As I say, I do not put my knowledge of finance against his, but I am simply putting forward the views of a man from the country who has given some thought to these matters.
As to the paper business, I had no object in referring to what the minister did in relation to this business, except to compare with the way in which he has treated these concerns whose profits are regulated by the open market and the way he has treated his friends, the munition manufacturers, some of whom have made nine hundred per cent profit. I do not know, nor care, very much about the manner in which the price of newsprint paper is fixed. But if it was such an easy matter, and involved so little harm, to take these people by the throat and say, "You should not charge more than so much for paper," why could he not have applied the same doctrine to the people who are selling wheat at $3.25 a bushel and making millions and

hundreds of millions out of it to-day? Why could not he apply these measures to the dealers in many other products that are being sold at fabulous prices? This is not germane to the subject under discussion, yet I could not help reminding my hon. friend of some of the powers conferred upon the Government by the War Measures Act. We have discussed this before, and I suppose we should have nothing more to say about it now. But, if the minister be in a receptive mood, I hope that before these resolutions are acted upon, he will give these matters serious consideration and see if he cannot in some way get more money out of the moneyed people during the times of present prosperity. He should invoke - some new measure of taxation, and make the man who has a large income contribute a portion of that income to the state and put our finances in a better position than, I am afraid, they are in at the present time.


Mr. J. G. TURRIFF (Assiniboia):: Criticism has been levelled at this excess profits tax ever since it was enacted. The two main criticisms that I have heard during the past year have been dealt with to a certain extent by my hon. friend from Car-leton (Mr. Carvell). One of these criticisms is that the hon. the Minister of Finance (Sir Thomas White) has made no distinction whatever between the ordinary, regular business concern that had been in business for five, ten or perhaps fifty years previous to the war, and which was doing a fair and legitimate business, and those companies that have been established for the purpose of supplying war munitions to the Government. In many cases, especially in connection with these larger companies, the Government has supplied all the capital for these, enterprises. They granted them contracts running into the hundreds of thousands, millions and tens of millions of dollars for the manufacture of shells and-I am not complaining of it- they gave them prices on the first orders, three, four and five times the amount that it cost to manufacture the shells, for the express purpose of enabling these companies to pay for their plants and buildings and to give them a handsome profit the first year. Granted that that was all right, on what ground and justification does my hon. friend put that company on the same level as the legitimate business enterprise that may have been struggling for ten, fifteen or twenty years and which, when times became good owing to the war, has made a profit, although it had not been making

one dollar of profit for three, four or five years previous to the war? Why, I ask, does the minister put a legitimate business enterprise of that kind on the same footing as a war munitions profiteer? That is the criticism that has been heard all over the country. I do not believe that the men who are paying these war taxes to-day are complaining because they have to pay them, but their ground of complaint is that only one man with money in ten is being taxed at all. It is not the amount of taxation that is being taken out of the manufacturer that is causing him to complain. The main ground of complaint is that he is singled out and all the moneyed people are allowed to go scot free.	.


William Thomas White: Who are singled out?


John Gillanders Turriff: I say that the manufacturers and business men of the' country paying this excess war tax .are not complaining about what they have to pay, but what they are complaining about is that they are . singled out and called upon to pay it while nine others who are making an equal or a greater amount of money are not even asked by the Government to pay one dollar.


William Thomas White: Who has my hon. friend in mind when he speaks about men who are making an equal or greater amount of money than the munition or other manufacturers?


John Gillanders Turriff: Let me give my hon. friend an instance. There are in the city of Ottawa, and in every city in the Dominion, men walking around the streets who are making from $100,000 to $200,000 clear cash every year out of their investments, and they are not called upon to pay one dollar. My hon. friend knows it perfectly well. That is not fair.


William Thomas White: If they are in business-


John Gillanders Turriff: But they are not in business.


William Thomas White: Well, then, we
must have an income tax to reach them. You could not single them out by a special Act. Are they not subject to income tax in Ontario? For instance, they have an income tax in Ottawa ; are they not subject to it?


John Gillanders Turriff: There is no income tax in Ontario for war purposes.


William Thomas White: I do not mean for war purposes.


John Gillanders Turriff: My hon. friend is raising this tax for war purposes and he singles out one roan in ten and imposes this heavy tax on him, while the other'nine men who are making money much more easily, who are not employing anybody and who have incomes ranging from $5,000 up to $200,000 escape. My hon. friend says to them: we do not ask you to pay a dollar. That is what the men who are paying this tax complain of. They do not complain of the amount they are called upon to pay, but they do complain because they are singled out. One-tenth of the population has to pay $12,500,000, and all the millionaires and multi-millionaires are allowed to go scot free and are not asked to pay one cent.


William Thomas White: Are not the incomes of most of these men derived from dividends on shares in companies which are subject to this tax? I believe they are.


John Gillanders Turriff: Supposing they are, is that any answer to the argument? Take, for instance, the case of a man who has money invested in bank stocks. The banks do not pay any tax under this Act, but they pay a tax under the Act that was put in force previously, the Act imposing taxation on loan companies, insurance companies and banks. Supposing that a man has money invested in bank stocks.


William Thomas White: Banks are liable to. this tax if they make sufficient profits.


John Gillanders Turriff: The tax is so fixed that it does not reach the banks as it reaches the manufacturers, except such as the little bank in my constituency which has a paid up capital of $250,000. The banks pay the tax that my hon. friend put upon them a year ago. But take the case of a man who has 100 or 1,000 shares in the Bank of Montreal. The Bank of Montreal pays whatever tax my hon. friend has put upon it and it is a very mild tax, but does the paying of that tax keep the bank from paying the dividends that give the man who is walking around the streets of Ottawa an income of $50,000 or $100,000? Because that man gets that dividend from the banks which pay this small tax is that any reason why the man receiving probably $100,000 a year should not pay anything? It is the most absurd thing that I ever heard of. This excess business tax is a tax made for the one and single purpose of letting nine millionaires or rich men out of ten escape altogether without even being asked to pay the tax. That is what my hon. friend from
Sherbrooke (Mr. McCrea) objected to, not to the tax that he had to pay. I do not think I heard one word of objection from my hon. friend to paying the amount he had to pay provided there was an even tax all round and that other men who had an income equal to his should pay their share.


William Thomas White: My hon. friend is contending really for an income tax? Is that not really it?


John Gillanders Turriff: Yes.


William Thomas White: Oh.


John Gillanders Turriff: My hon. friend can call it what he likes.


William Thomas White: Is my hon. friend then in favour of an income tax?


John Gillanders Turriff: Certainly; I think it is absurd that a man who is working hard in business, employing hundreds or thousands of men and women, helping the development of the*country and who makes, say, $50,000 a year should be discriminated against. The manufacturer who makes $50,000 a year should undoubtedly pay heavily out ,of it in taxes, but why should the man who has $1,000,000 invested in bank and railway stocks and bonds that pay 5 per cent, who is doing nothing except cutting off and cashing coupons, but who makes $50,000 a year cash income, pay not a dollar towards the cost of prosecuting the war? Why should the one man pay $10,000 or $15,000 in taxes and the other pay nothing? If my hon. friend is trying to avoid taxing this class simply because he sees that it will be difficult to collect the income tax, that is simply begging the question. As has been pointed .out by the hon. member for Carleton (Mr. Carvell), the Minister of Finance has so placed his loans in Canada that when another $500,000,000 that is now lying in the banks drawing 3 per cent is put into Canadian bonds for the carrying ,on of this war, and we have altogether one thousand millions of Canada s savings invested in war loans, none of it paying one cent of income tax, guaranteed by the terms of the bonds against the imposition of such a tax, then my hon. friend in two or three years, if he is still in power, will come forward and say: Well, the time has come when we ought to have the income tax, but unfortunately there is one thousand million dollars of the investments of Canada on which we cannot collect an income tax. My hon. friend from Carleton never said a truer w.ord than that


William Thomas White: Not quite so bad as that.


John Gillanders Turriff: Well, if it is not quite so bad as that, my hon. friend must have it in his mind that it is pretty bad anyway. This discrimination is undoubtedly a source of dissatisfaction. I have never yet heard one man in Canada object to paying the tax; but I have heard hundreds object to paying the tax and having others get off scot free. I think my hon. friend should take into consideration a change in his system of selling bonds, in making future loans. Let him leave these bonds subject to income tax. The time is coming and is not far distant when we shall have difficulty in raising the revenue necessary to pay the pension fund, the interest on the war debt, the sinking funds, and all the expenses of running the country. I have noticed during the last day or two, in the disoussion of this measure, that my hon. friend lays- great stress on the necessity of winning the war. We all agree that we must win the war, and my hon. friend, of course, wants to keep the financial matters of the country right. Let me ask the minister if when, last year, he gave his authority and sanction to the handing over of $8,000,000 to Sir Rodolphe Forget for his railway, which he knew then and knows now will never, as long as my hon. friend or the youngest hoy in this House survives, earn one cent of interest on the money-


William Thomas White: Is my hon.
friend not talking about the National Transcontinental Railway?


John Gillanders Turriff: I am talking about the $8,000,000 which my hon. friend gave to his political associates, and I am asking him if he thought that he was helping to win the war by giving that $8,000,000 to Sir Rodolphe Forget. There is no man in this country- because I have a great respect for my hon. friend's ability

	[DOT]


William Thomas White: I doubt that sometimes.


John Gillanders Turriff: I have a great respect
for his ability; but I should like to see him a little more free from the influence of some of his associates. My hon. friend would never have given that money of his own free will, I know him better than that. All I wanted to ask him was, did he think then and does he think to-day, that in giving that $8,000,000-'because it will cost Canada that much anyway, he was helping to win the war? That is a question my hon. friend has to consider.	.
Now let us see how much we are doing to pay for this war. This war has been going on practically within two or three months of three years, and during that time we have put $10,000,000, in round figures into winning the war-$10,000,000 of revenue, with all the taxation that has been put on the people. Do not let my hon. friend forget that at the first war session, the short session of five days, in August, 1914, he put on new taxes to the extent of many millions of dollars. Do not let my hon. friend forget that in the following session we amended the Customs Act again and imposed taxes of many million dollars on the people. Do not let him forget that, in addition to his custom taxes, he taxed everybody, poor and rich alike, by means of the stamp taxes and the railway ticket tax. * My hon. friend from North Oxford (Mr. Nesbitt) is accused of travelling in pullman cars. No doubt he does sometimes, but each time he pays his five cent tax on his ticket.


William Thomas White: That was only a joke.


John Gillanders Turriff: (But the man who has to buy a railway ticket, the labouring man who buys his ticket from here to Aylmer, ten miles, pays the same.


William Thomas White: He does not pay a cent.


John Gillanders Turriff: Well he did.


William Thomas White: Only when the ticket costs over a dollar.


John Gillanders Turriff: Well, if he goes thirty-three miles he pays the same as the wealthy man who starts from here and goes to Vancouver and back. He pays practically the same amount. That is a tax on the poor man and as usual, the rich man is favoured. But with all those taxes that have been put on, the direct taxes and the custome taxes, my hon. friend has put only

$10,000,000 to the good towards the war in three years. That is the position Canada is in to-day. It is all very well to boast about what Canada i? doing, but I agree absolutely and entirely with the statements that have been made here this evening, that during this time, when we are getting in $1,000,000 a day for munitions of war, when orders to the extent of $1,500,000,000, practically, have been placed in Canada, on which probably $500,000,000 of money has been made in profits, out of those huge profits made last year and the year before, we have got in taxes from the wealth of Canada the paltry sum of $12,500,000.


William Thomas White: How much does my hon. friend say has been spent on munitions? Did he say $1,500,000? If my hon. friend will go to the Munitions Board, he will find that it is not much more than one-third of that amount.


John Gillanders Turriff: 

under which Canada secured her revenue. I quote from, a press report :
The contrast between the above revenue statement and the revenue statement of Canada: for the same period is startling.
Canada's total revenue for the fiscal year just ended amounted to the sum of $228,217,-2T0, the percentage of increase over that for the preceding year being almost equal to that of the United Kingdom. But what a difference there is in the sources from which it was obtained.
In Canada the customs tariff accounted for $133,531,155, or 58.33 per cent of the total revenue secured.
Excise accounted for $24,253,632, or 10.52 per cent of the total revenue secured.
Railways and canals accounted for $25,018,997, or 10.96 per cent of the total revenue secured.
Post office accounted for $20,031,627, or 8.77 per cent of the total revenue secured.
The masses contributed the greatest proportion of the above amounts. But out of the total revenue of $2i2S,217,270, excess war profits contributed the insignificant and paltry sum of $14,552,383, or only 6.58 per cent of the total revenue raised'.
In Britain excess profits and accumulated wealth contributed 60.23 per cent of the total revenue. In Canada excess profits contributed 6.58 per cent
It will be seen, therefore, that Britain gets the great proportion of her revenue from her wealth, whereas in Canada the great proportion of the revenue is taken from the poor people, and the wealthy go free. The system of my hon. friend taxes the poor and lets the rich escape. And, because my hon. friend is taxing only a few of the wealthy people of Canada, under the proposed provision that we are now considering, the rich will continue to escape taxation.
I hardly think my hon. friend is quite fair in this proposed legislation. I do not want to do my hon. friend any injustice. When he brought down last year the legislation that he is now amending he said that the legislation would be operative during a period of three years. Any one reading his speech would come to the absolute conclusion that that was a fixture for three years. My hon. friend now goes back on what we understood him to mean last year and is now putting an extra burden of taxation on the same shoulders on which he put it last year, after stating, as every one thought, that that was the end of that system of taxation.


William Thomas White: What I did say was that the Bill would last just the three years. I do not believe I said that the measure would not in any way be changed.


John Gillanders Turriff: My hon. friend did not say in specific words: I will not come back

and augment those taxes. I will acknowledge that, but the general tenor of his remarks was that the tax was a fixture to the end of the three years, and no one looked for any changes along that line. Let me quote just a few of the remarks made by my hon. friend. While he was speaking on the 16th of March, 1916, he said:-
This is a temporary measure, and the operative part of it comes to an end at the date mentioned in the Bill, that is to say, the 31st day of December, 1917. It is true that in the succeeding year there will be a payment in respect of the accounting period falling due during the year 1917, but the Bill is designed to last only three years, and it will not last longer than that-


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


William Thomas White: No, I did not. Further taxation is possible, but I do not consider it necessary now to make any announcement along that line.


William Thomas White: What is the matter with that? I say that further taxation is possible.


John Gillanders Turriff: Later on in the same address, my hon. friend said this:-
This tax is, as I stated last night, for a limited period. My hon. friend questions whether I was justified' in making that statement. I certainly was justified in making that statement, because it represents the intentions of the Government. .	. That statement is in
no way inconsistent with that which I made iast evening, namely, that this particular measure is for a period only. The principle of the resolutions, it would appear to me, indicates that. .	. Therefore, it would seem to me
that I am perfectly justified in stating, as I do, on behalf of the Government, that this is a temporary tax. In making that statement, I largely meet the argument of my hon. friend that capital might be discouraged from embarking upon Canadian enterprise.
My hon. friend gave as a reason why capital would not be afraid to invest in Canadian enterprises, that he had fixed the rate and that it was only a temporary rate. Now my hon. friend comes back over the same ground and loads up the same people after they have invested capital, and says: Instead of taking 25 per cent, if you make big profits, we will take 50 or 75 per cent. While my hon. friend did not specifically say that he would not do this, he let the people believe and let capital believe that he would not do so, and no one could come to any other conclusion than that.


William Thomas White: In what my hon. friend has read did I not say it was possible there would be further taxation?


John Gillanders Turriff: Yes, my hon. friend said it was possible there would be further taxa-

tion, and no doubt he was speaking then as he is speaking to-night to the effect that it might be advisable or necessary to impose an income tax. But there was nothing in the speech of my hon. friend last year that would, for one moment, lead any one to any other conclusion than that the tax he was then imposing on certain industries was a final and definite tax for three years, and that it would not ibe raised before the end of that time. That is the only conclusion that any man reading that speech could come to.


Edward Mortimer Macdonald: And that capital need not be scared because the tax was going to be only 25 per cent.


John Gillanders Turriff: Later on in his Temarks, -my hon. friend said:-
This measure, therefore, being a temporary measure, it is not conceivable to me, when it is understood, that it will have any effect in retarding the flow of capital towards this country.
If, when my hon. friend made this statement, he had said:	Well this tax is for
three years; I am putting it on now, but possibly next year I may have to come forward and say that I am going to raise that tax of 25 per cent on profits ovier 7 pet cent to 50 per cent or 75 per cent, does my hon. friend for a moment thinik that would not deter capital from being invested? No man in Canada or elsewhere, after reading the report of the debate and the answers of my hon. friend could have come to any other conclusion than that, at all events for three years, there would be nothing more levied than 25 per cent on profits in excess of 7 per cent. It seems to me that my hon. friend is not doing himself justice on this occasion. I quite agree with him that more money must be levied. I would support him if he levied a tax that would enable us to collect $200,000,000 every year over and above the cost of running the country and if he put it into the carrying on of the war. He could get an extra $200,000,000 a year if he taxed every man of wealth in the same way as he is taxing men of wealth who have money invested in business or manufactures.


William Thomas White: Do not you believe it.


John Gillanders Turriff: That is what my hon.
friend ought to do. Let him bring forward an income tax. Let him tax every one alike; let him take not- only the extravagant amount that he allows his colleagues to spend but the pensions fund and the sink-
93*
ing fund and so on, but an extra $200,000,000 out of the people as the war is going on, and there will toe very little objection if it is done, not as my hon. friend is doing it now, tout in a fair, even way, so that the man who has $100,000 a year will pay more pro Tata than the man who has $5,000. .Let the minister do that and he will have all the income he needs and he will keep the finances of Canada in good shape; and let him also, when he makes further loans, eliminate that clause, that the bonds will not be subject to income tax, eo that when we come to levy an income tax-and there will be an income tax in Canada in a few years no matter which party is in power- we shall be in a position to say that every dollar of money invested in Canada shall pay its fair share towards paying the debt: of the war in adit'ion to the cost of carrying on the affairs of the country.
Mr. MeCREA: The Minister of Finance said this afternoon that last week I had been guilty of making a violent attack upon the Government, and especially upon himself. I wish to say that it was not my intention to be impolite or unreasonable in criticising the minister, although I criticised his method of taxation. I have no desire to be impolite or to use towards the minister or the other members of the Government language other than to criticise justly what I consider is entitled to criticism. The minister also stated that my criticisms were opposed to the tax.
If he will read my speech he will see that my criticism was of the inequality of the taxation; I said it was a tax bearing directly on but about five per cent of the population of Canada. If it were necessary, I said, I would be willing to be taxed 25, 50, 75 per cent, or even all my profits, provided everybody contributed in the same proportion; that was my attitude then, and it is my attitude now. I am still of the opinion that it is unfair and not in the best interests of the country to single out any one class and make it bear the whole burden. I have seen some criticism in the papers, and also heard some in the House, to the effect that, as I was a manufacturer, my complaint was purely an interested one. I do not suppose I could convince this House that such is not the case. Nevertheless, I wish to Bay that I have a very great interest in the welfare of this country. I have spent my life in doing a great deal of hard work, building up an industry with which I am still connected. But before my personal interests, I place the interests of my oountry. I believe the

effect of this taxation will have the effect of keeping capital out of this country, and I could not use a better argument than the one the Minister of Finance used a few moments ago when he told the House that it was absolutely necessary in floating the loans recently to specify in the prospectus that they would be free from taxation. Otherwise, he said, it would have been impossible for him to get anything like the same price for the issue. Well, if that applies to the selling of Government bonds, does it not also apply to the securing of capital for the development of this country? Comparisons have been made with the system of taxation in England. In my humble judgment, there is no comparison between this country and England so far as capital is concerned. This is an immense country, of untold wealth still undeveloped, and what we need for its development is, first, population, and secondly, capital, and if the Government by legislation frighten away capital, they will certainly not be helping to build up the country.
I said a moment ago that not over 5 per cent of our population would be directly affected by this taxation. But, indirectly, .it will affect everybody, because if capital is driven away from the country out industries will become dormant or die from lack *of capital, and then everybody suffers. I think it would be wise even at this stage for the minister to reconsider his measure o,f taxation with the object of devising some scheme for distributing the burden of taxation more evenly between all classes.
In his remarks this afternoon the Finance Minister stated that the first consideration was to win the war; he laid great stress on that. I hope that is what he had in mind when he was preparing this taxation. I hope I am wrong, but I fear he must have had in his head some thought of winning an election as well as winning the war. The minister said himself that this taxation was very popular. The reason it is so popular is because it is so unjust.


William Thomas White: I did not say it was popular. I said that I thought public opinion would sustain the measure. I did not use the word popular, so far as I recollect.


Francis N. McCrea: The minister said this afternoon that the people did not like taxation. Consequently, he exempts 95 per cent of 'the people from the tax, and puts the whole burden on the other 5 per cent. This will please the people, and will probably

be remembered when the proper time comes.
1	would like to say a few words about the paper business. I think in no other industry in Canada has so much energy been displayed and so much progress been made as in the production of paper of all kinds. To illustrate my meaning, I shall have to go hack in history a little. Some thirty-three years ago I supplied the fuel and paper wood for the Canada Paper Company, and I remember in the spring when I was receiving my cheque Mr. Thomas Logan, the president, said to me almost with tears in his eyes, "I do not know what is to become of this business. I am paying 50 cents a cord more for wood now than I ever did in my life before, and I am selling my paper for T| cents per pound less than a year ago." I knew what price he was paying for his wood, and I was curious to know the price he was selling his paper at, so I asked him, and he told me that the year previous the average price was 10 cents a pound, but that he could only get 8i cents at that time, and he almost had tears in his eyes at the thought of going into bankruptcy. To-day, before the war came on, newsprint was selling at about
2	cents a pound, and wood cost at least three times the price Mr. Logan had to pay then; that is, we were paying three times the price he was paying for his wood, and twice as much for labour and material, and yet the paper was selling for less than one-quarter the price he got thirty-three years ago. Yet he thought he would go into bankruptcy. I think this little story shows the great development that has taken place in the paper industry in this country, when newsprint can be produced so much cheaper than a few years ago. Down at Berlin in New Hampshire you will find a very large building in which are twenty or twenty-five men experimenting. If a man in the employ of a paper mill strikes an idea that seems to him an improvement in the processes or equipment of the works, he explains it to the manager. If the manager thinks there is anything in it he sends the man down to the building where the experimenting is going on. There the man finds draughtsman and all necessary assistance to put his ideas on paper. If the idea works out, well and good; his improvement or invention is adopted, and the inventor is rewarded. These are the methods employed by the paper manufacturers throughout the country, to produce paper at cheaper prices. The publisher wants all the benefit of this,

he wants to get paper at less than cost. Let me tell you the conditions in the paper trade prior to the war. You would think that when a man had cut his timber, driven it, and carried it through all processes of manufacture trO the finished paper and delivered that paper f.o.b. cars at the station, he had completed his part, and that the publisher to whom the paper was sold should pay freight and handle the product at destination. But that was not the case. The manufacturer had to prepay freight, and even prepay customs, and deliver the paper at Philadelphia or elsewhere, store it, and pay storage, and then deliver it to the publisher at the sidewalk each day for his next day's requirements. Now, nothing but keen competition would have driven men to such a position as that. The war came on, and everything in connection with the manufacture of paper went up in price. Pourdrinier wires, one of the big items, went up eight hundred per cent taking into consideration both cost and the life of the material. Is there any reason why the publisher, instead of crying baby and telling the Minister of Finance his tale of woe, should not have passed on his increased price as men in other lines of business have done? There was no reason why he should not have done it. Does any man believe that because you have to pay two cents for a paper that you used to buy for one cent you are going to stop reading the paper? Or that because you have to pay fifty per cent more for advertising space, you are going to stop advertising? That might be so if everything were dull and dead. Two years ago the clerks were standing behind the counters with folded arms and nothing to do. But to-day, business is good. I am n.ot referring to such conditions as those in Vancouver-you people there were in the land speculation business


Mr. STEVENS:: I was smiling, but it was to see the leader on that side (Mr. Graham), who is a publisher, and is suffering under the hon. gentleman's (Mr. Mc-Crea's) remarks.


George Perry Graham: Not badly.


Francis N. McCrea: The Minister of Finance says that he has had more trouble over this than over all the rest put together.


William Thomas White: No doubt about it.


Francis N. McCrea: I sympathize with the hon. minister, but the difficulty has not been caused by the manufacturers. They
have not been trying to get unreasonable prices. Whatever may have been done in other branches of the paper business, the demands in regard to newsprint have been very moderate.


Mr. EDWARDS:: What is the price of newsprint now compared with what it was before the war?


Francis N. McCrea: It was two cents a pound before the war, and now it is two and a half cents-an increase of twenty-five per cent.


William Thomas White: What is the actual price to publishers in the United States to-day?


Francis N. McCrea: It was three cents to
three and a half cents, and in some places more.


William Thomas White: The hon. gentleman mentions a price of two and a half cents. That is the price existing as the result of the Government's intervention-But what would the price have been had it not been for the Government's action?


Francis N. McCrea: I think the minister himself gave the proper answer when dealing with the other branches of the paper business-that supply and demand should govern. That is what should have governed in the newsprint business as in everything else. And it would have been wisdom on the part of the publishers to have paid a little more for paper for the time being. There was a movement to start new industries in paper manufacture 'by men -who were imbued with the idea that there was all kinds of mpney in the business. They were looking out for new locations. But the moment the minister fixed the price of paper, he put the idea of big profits out of their heads, and they have gone home with their capital, and will stay there for some time. The publishers made the mistake of their lives when they undertook, through the influence of the minister, to fix the price oi newsprint at a cent a pound less than the article could be made for legitimately. No man can go into the business to-day and make paper for less than one cent a pound more than the price that has been fixed. The minister may say that, taking a mill that is equipped, to manufacture from the standing tree to the finished product, there is a margin of profit. But the average price of sulphite pulp is not less than $100 a ton,, and it requires 500 pounds of sulphite for one toil of newsprint. That represents $25-

for your sulphite alone. Then it takes 1,600 pounds of ground wood pulp, which is selling-and quick sale, as fast as you can make it-at not less than $40 a ton. That is, for 1,600 pounds, the cost would be $32. Add this to the cost of your sulphite and you have $57 for this material alone. Then take the high price of coal, the high price of labour, and other necessary expenses, and the total will run to $70 a ton before you touch profits at all, or three and one-half cents a pound.


William Cameron Edwards: This is a matter I know *very little about, but with the hon. gentle-unan's permission I would like to ask a question in order that I may learn something about it. Am I correct in saying that the output of newsprint in Canada is about 1,800 tons a day?


Francis N. McCrea: It is somewhere around that.


William Cameron Edwards: And the price before the war was two cents a pound, and now it is two and a half cents a pound? Assuming a year of 300 days, that would make a profit at present prices, over and above what they were before the war, of $5,500,000 a year, would it not? I presume they were not selling at a loss when they sold at two cents a pound?


Francis N. McCrea: They were not making any money.


William Cameron Edwards: There is this difference of $5,500,000-


Francis N. McCrea: What about the raw material?


William Cameron Edwards: That was the point I was coming to. Whether the price is just or not can only be ascertained by estimating the cost of production. The hon. gentleman (Mr. McCrea) knows the facts. Does he contend that it costs the manufacturers of paper that extra $5,500,000 to produce paper for one year now as compared with what it cost before the war, and that the manufacturers are not making any money at two and a half cents a pound?
Mr. MoCREA: No, they are not making any money. The cost of raw material and of labour have increased very materially. Coal alone is posting us about 100 per cent more, and it requires one ton of coal to make one ton of paper. Coal that used to cost $5 a ton is to-day costing $10 to $11. Fourdrinier wire is a big item of expense. It cost $212 prior to the war, and the life of it was about

five weeks. We figured that out, taking it from the time we started using this material to the time the price increased, and that was the average cost. To-day the cost of the same wire is $490, and the life of the wire is 12 days. The cost of the wire is $490 as against $212 originally.


Henry Herbert Stevens: What accounts for the difference in the life of the wire?


Francis N. McCrea: The life of the wire is 12 days as against 5 weeks. The reason for the shorter life of the wire given by the manufacturer is that he cannot get the material. I presume also that he was forced by over production.


William Thomas White: Does my hon. friend produce, or buy, sulphite?


Francis N. McCrea: We buy sulphite.


William Thomas White: Then sulphite enters into your cost?


Francis N. McCrea: We make sulphite, but sulphite does not go into newsprint. The sulphite we buy. All the other items have increased in the same proportion. You ask me how it is that we cannot make money now that the price has been increased from 2 cents to 2i cents a pound, or $10 a ton? My reply is that $10 a ton does not begin to meet the additional cost of raw material. Pulp wood alone is selling at twice what it sold for a year ago.


William Cameron Edwards: How much do you save by your improved methods?
Mr. MeCREA: We have got it down as low as it can be got by improved methods. Take the case of the International, the largest industry on the continent, having some 30 odd mills; that company has been reorganized two or three times in the last ten years. It had not paid a dividend on its preferred stock up to the time that the increased prices came after the beginning of the war and when the increased prices caused by the War took place it was owing almost an amount equal to 50 per cent of its preferred stock in interest on its preferred stock. The minister said this afternoon that 7 per cent was a fair rate of interest to make on your investment. I agree with him. But, how many factories and industries are there in the country which, during the past ten years, have been obliged to pass their dividends? If it happens now that we are making large profits, if you like, what about the years when we made no profits at all? What about the years when the industries of this country were not able to pay divi-

dends on their preferred stock to say nothing about their common stock? What about the years to come when our industries will probably be very badly crippled?


William Thomas White: Supposing we had applied the English method, what would have happened to the pulp and paper industry?
Mr. McCREA; I am not advocating applying the English method.


William Thomas White: The English
method is to take the average profits of the three years before the war, and then take 80 per cent of the excess profits over that in time of war.


Francis N. McCrea: I am not advocating the English method; I am advocating a common sense method which will apply to everybody equally and alike and under which the rich man will pay according to his means and the poor man will pay also according to his. If you apply that method I am satisfied the people of Canada will be better pleased than they are now. I do not believe there are any people in the country who want to be slackers with regard to paying their fair and legitimate share of the expense of winning this war, rich and poor alike. But, let me finish this question of newsprint. The price of flour to-day is 816 a barrel, wheat 83 a bushel, potatoes $3 to $4 a bushel and pork 17 to 18 cents .live weight. Then, take half fat cattle;
I	saw some sold a short while ago. A farmer drove in a bunch of ten steers weighing about 1,050 apiece and he got $1,150 for the lot or
II	cents a pound live weight. The price of potatoes should only be 75 cents a bushel at the outside; to-day they are $3 to $3.50 a bushel. The price of wheat should not be over 90 cents to $1 a bushel; to-day it is $3 a bushel. The price of flour is $16 a barrel. The minister says that the press of the country must be sustained because it is one of the necessities. If a poor man has a big family and they are crying for bread will they be satisfied with the evening paper? Does it not appeal to the minister that there are other things as well as newsprint that ought to be regulated? The minister says that the winning of the war is the one and the main thing to which we should give our attention but I cannot help thinking that when this delegation from the press came down with their stocking full of printers' ink and told him that they would knock his political head off if he did not listen to them he said: hold
on, gentlemen, 1 do not want to be disfigured that way, I will listen to you; what will you have-paper at 21 cents a pound?-all right, gentlemen, you shall have it; the manufacturer can squeal all he likes but he has got no printers' ink and he cannot hurt me very much with his tongue. I am sorry to believe these things but I leave it to the judgment of the House and the people of the country to say if there is any just reason why the price of newsprint should be fixed at 21 cents a pound, which is one cent less than it can be made for when other branches of business are left untouched. I noticed a short time ago in the Financial Times that a company making sulphite pulp were describing the profits they had made during the last year when the average price was so much; they stated what they expected to make next year when the average price was going to be so much and they ended up by saying that " our business is not affected by the price fixed for newsprint." Why should this condition exist? Why should this one branch of the industry be left so that they could boast that they could make such large profits because they were not affected by what affected another branch of the same industry? I am not jealous of other .people. I wish I could say for the minister and for the Government that they had treated the manufacturers of newsprint as they treated other branches of the industry. I think it would be to the advantage of the Government and for the publishers if that were the case. The publishers are going to suffer for it later on, because they have prevented the construction of additional plants which would have afforded the only remedy for their complaint. If they had patience for about twelve months from the time they started to make the kick, the position would have rectified itself, as there would have been such competition that they could have again dictated the prices as they had done for the past ten years. Simply because we reached a period where for a few months they had to pay an additional price, they .had not the 'foresight to see what would .happen in the future. They made their kick at the wrong time, and will be sorry .for it later on. The American publishers are sorry for it now. They started to fix the price, but they saw where they were going, and thought it best to wait and see what would happen. The Canadian Government would do well, even at this late hour, to change their position, and say to the publishers:	Let supply and demand
govern these things, it is the best regulator

of prices on the face of the earth. And the *minister would be wise to consider well *before imposing additional war taxes on the manufacturers of this country, and see *if he cannot- find some other way of levying taxes so as not to drive capital away *and prevent its investment in Canada. We *who are here will stand it as beet we can, *but the man outside will do as the man to whom you are trying to sell bonds, who *will not buy bonds unless he has some assurance that the bonds will not be loaded down with income tax. The same thing applies to the man with money in his pocket; he will not .invest in a plant in this country unless he has some assurance that it will not be singled out and made to bear the whole burden of the war and other expenses of this country, while other men, equally able to pay, go scot free.
Progress reported.
On motion of Mr. Thomas White, the House adjourned at 10.55 o'clock p.m.
Wednesday, May 16, 1917.