1917-07-25

QUESTIONS.

[Stage Direction]
(Questions answered orally are indicated by asterisks.)

Air. DELISLE:: 1.	Is Mr. Armand Grenier, advocate, In the employ of the Government?
2.	If so, in what capacity is he employed?
3.	When was he appointed?
4.	What is his salary?
5.	Has he been appointed in place of another person, or is he occupying a new position?

6.	What is the classification of the position he occupies?
7.	Where does he reside?


Mr. DOHERTY:: 1.	Yes.
2.	Civil law reporter.
3.	May 16, 1917.
4.	$2,800.
5.	In place of L. W. Coutlee, deceased.
6.	First Division, subdivision A.
7.	He was at time of appointment a resident of Montreal. He is completing arrangements to establish his residence in Ottawa.


ENLISTMENT OP CANADIANS IN UNITED STATES.
Mr. MACDONALD:: 1.	How many commanding officers have been authorized to recruit for Canadian forces in the United States?
2.	What are the names of said officers?
3.	How many recruits have been obtained?
4.	Has any Order in Council been passed in regard to recruiting in the United States?
5.	If so, what are the terms of the Order in Council?


Sir EDWARD KEMP:: 1.	When the British recruiting, mission was authorized to recruit throughout the United States for the enlistment of British subjects in the Canadian Expeditionary Force, instructions were issued to all District Officers Commanding that all men accepted for enlistment in the Canadian Expeditionary Force would be forwarded, for attestation, to the nearest Canadian depot, the following places having been selected for this purpose, viz., Vancouver, Calgary, Winnipeg, London, Toronto, Kingston, Montreal, Valcartier, St. John and Halifax, and that these men should be permitted to make their own choice as to which Canadian Expeditionary Force unit, (Infantry), they preferred.
No commanding officer of any Canadian Expeditionary Force unit has been authorized to recruit in the United States, solely for his own unit.
2.	Answered by No. 1.
3.	Total number of recruits reported in Canada for Canadian Expeditionary Force to July 17,1917,2,194; total number of recruits reported in Canada for British Expeditionary Force to July 17, 1917, 679; total, 2,873.
4.	Yes, P.C. 1505 dated June 4, 1917,
5.	The order in council provides:
(a)	That there should he only one recruiting organization dealing with British subjects in the United States, and that this organization should consist of the staff of the British recruiting mission with whom should be conjoined selected officers, non-

commissioned officers and men from the Canadian Forces.
(b)	That the mission will accept for enlistment men who desire to join the Canadian Expeditionary Force.
(c)	That the Minister of Militia be empowered to detail the required number of selected officers, non-commissioned officers and men, and that he be also empowered to incur the necessary recruiting expenses and to authorize subsistence allowance to the officers, non-commissioned officers and men employed on this service.


STELLARTON, N.S., POSTMASTER.
Mr. MACDONALD:: Who is the acting postmaster at Stellarton, Nova Scotia?


Mr. DOHERTY:: With reference to this question, it may be stated that W. G. Miller has been appointed postmaster at Stellarton, N.S. The existing premises being unsuitable as regards site arid accommodation, it was necessary to move the post office to a more suitable site and to fit up the building in such a manner as to afford the public proper accommodation. The transfer of the Stellarton post office has, therefore, been deferred until the necessary alterations to the new building are completed. In the meantime, the late postmaster, Mr. A. M. Inglis, is acting as postmaster. The new building will be ready in the course of a very short time.


MR. WILLIAM BRINDLE.
Mr. LEMIEUX:: 1.	Has Mr. William Brindle been dismissed and relieved of his duties as Chief Section Master of his division upon the Transcontinental Railway District No. 1?
2.	If so, for what reason was he dismissed?
3.	Does the Minister of Railways intend to hold an inquiry into the matter?


Mr. COCHRANE:: 1.	Yes.
2.	Excessive use of intoxicants.
3.	The minister -has sent for all papers with the object of fully investigating the matter.


RICHMOND COUNTY MEDICAL OFFICERS.
Mr. KYTE:: 1.	Who were the medical officers appointed by the Minister of Militia in the County of Richmond, N.S., to examine, and who examined, recruits since the 4th day of August, 1914?
2.	What amount was paid to each such officer for such services?


Sir EDWARD KEMP:: 1.	B. A. Le Blanc and J. A, McDonald.
2.	B. A. Le Blanc paid $53.50; J. A. McDonald -services gratis.	)


ENLISTMENTS AND CASUALTIES.
Mr. SINCLAIR:: 1.	What was the total number of recruits enlisted in the Canadian Expeditionary Forces in June, 1917?
2.	What was the total number of casualties in the Canadian Expeditionary Forces in June, 1917?


Sir EDWARD KEMP:: 1.	6,347.
2.	4,351.


CUSTOMS MOTOR BOATS.
Mr. CARROLL:: 1.	How many motor boats are employed by the Customs Department upon Sydney Harbour?
2.	What are the names of the boats so employed?
3.	Who are the owners of said boats?
4.	What length of time have these boats been employed by the Department?
5.	At what rate have they been paid?
6.	How long has the motor boat Helena been employed?
7.	Who is her owner?
8.	What is the full amount paid for her services to date?
9.	What crew is employed upon this boat?


Mr. REID:: 1.	One-for examination of ships in connection with Naval Detention Service.
2.	Helena.
3.	Mr. Finlay MacDonald.
4.	Fiscal year ending 31st March, 1914, 142 days; 1915, 271 days; 1916, 257 days; *current fiscal year, 85 days.
5.	$15 a day, owner to supply gasoline and oil and a man to run the boat.
6 and 7. Answered by Nos. 3 and 4.
8.	$10,965.
9.	Answered by No. 5.


ENLISTMENT OF PERSONS OF FOREIGN BIRTH.
[Stage Direction]
On the Orders of the Day:
Sir ROBERT BORDEN:: Some time ago the member for Saltcoats (Mr. MacNutt) asked a question with regard to the enlistment of aliens under the voluntary system and under the Military Service Act. The matter of the enlistment of such persons under the voluntary system has been under consideration by the military authorities not only of this country but of the United Kingdom as well, and there has been consultation between the two Governments with regard to it. Upon that consultation the general policy under the voluntary *system of recruiting has been not to enlist men. of alien enemy birth for combatant service. With regard to the policy under the Military Service Act, it would not be *considered desirable to enlist for combatant service any man who, under the policy that has been carried out in respect of voluntary enlistment, would not be accepted. The same principle, we think, should be applied to both: that is, such a man should not be enlisted for combatant service.


RECRUITING OF CANADIANS IN THE UNITED STATES.
[Stage Direction]
On the Orders of the Day:
Mr. OLIVER:: Will the Minister of Militia be good enough to make, at his convenience, a statement in regard to the recruiting in the United States of Canadian battalions for overseas service?


Sir EDWARD KEMP:: A question in regard to that matter, asked by the member for Pictou (Mr. Macdonald), was answered to-day.


Frank Oliver: I do not think that the answer given to the question of the member for Pictou conveys the information that I am desirous of obtaining. I should like to have a statement of the policy of the Government in regard to the matter. I do not particularly desire the details; I want to know how far it is intended to carry this practice and upon what principle it is formulated. Are these instances merely exceptional, occurring for some exceptional reason, or are they in accordance with a well defined policy of the Government?


Albert Edward Kemp: If the information contained in the question which I answered is not sufficient I will make a note of what my hon. friend says now and will make a statement in the matter within a day or so.


CORRECTION-MR. KYTE.
[Stage Direction]
On the Orders of the Day:
Mr. KYTE:: The Journal-Press newspaper of to-day's date contains the statement that I did not vote upon the third reading of the Military Service Bill yesterday, and that I did not state whether I was paired or not. That statement is incorrect. I voted against the third reading of the Bill, and my name is recorded in Hansard as having so voted.


DELAY OF HOMESTEAD PATENTS.
[Stage Direction]
On the Orders of the Day:
Mr. McCRANEY:: I am in receipt of a telegram from Mr. G. Harmon Jones, Secretary of the Military hospitals commission in Saskatchewan 1 wish to ask the Minis-

ter of the Interior a question with regard to it. The telegram is as follows:
Settlement of returned soldiers on lands seriously retarded by delay of patent on account of failure to complete improvements. Possibly amendments contemplate removal of this obstruction. If not, cannot some method of relief be devised? The matter is urgent and soldiers considerably agitated over it.
I understand that duties are remitted in the case of homesteads belonging to soldiers returned from overseas. I would like to ask the minister if he will facilitate the issue of those patents.


Mr. ROCHE:: Yes.


Frank Oliver: 
William James Roche: The terms of the order in council are to the effect that any person who had made a homestead entry prior to enlistment has his residence duties counted while he is away. That is the point raised in the telegram read by my hon. friend (Mr. McCraney).


Frank Oliver: Then that remission does not cover improvements?


William James Roche: No.


QUEBEC AND SAGUENAY RAILWAY.
[Stage Direction]
On the Orders of the Day:
Mr. LEMIEUX:: Does the Minister of Railways and Canals intend to bring in any legislation this session with respect to the Quebec and Saguenay Railway?


Mr. COCHRANE:: I made a statement to the House some time ago that we were going to bring in legislation.



WAYS AND MEANS.


[Stage Direction]
The House in Committee of Ways and Means, Mr. Blain in the Chair.
Sir THOMAS WHITE (Minister of Finance) :: Mr. Chairman, the enactment of the Military Service Bill which has just passed through the House will result in material increase in and acceleration of the war expenditures of the Dominion.
By that Bill, provision is made for calling an additional 100,000 men to the forces of Canada. In view of the expenditure

involved, and in order to maintain the credit of the Dominion, it is necessary that we should adopt further taxation measures. Apart from this necessity from a financial standpoint, there has arisen, in connection with the Military Service Bill, both in this House and in the country, a very natural and, in my view a very just, sentiment that those who are in the enjoyment of substantial incomes should substantially and directly contribute to the growing war expenditures of the Dominion.
In view of these considerations, I desire to-day to lay before this committee proposals for a national measure of income taxation. I may say that the adoption of such a measure is a distinct innovation in federal fiscal legislation. Hitherto we have relied upon duties of customs and of excise, postal rates and other miscellaneous sources of revenue. It is true that since the outbreak of the war we have adopted the Business Profits War Tax Act which is a measure of direct taxation akin to income taxation, but not so wide in its scope. As the members of the committee are aware, the Dominion Government, under the provisions of the British North America Act, is empowered to raise revenue by any mode or form of taxation, whether direct or indirect. On the contrary, the provinces, and, by consequence, the municipalities which derive their taxation powers from the provinces, are confined, in the raising of their revenues, to measures of direct taxation. For this reason, since the outbreak of the war, I have hesitated to bring down a measure of federal income taxation. As I have stated, the provinces and the municipalities are confined to direct taxation, and I have not regarded it as expedient, except in case of manifest public necessity, such as I believe exists at the present time, that the Dominion should invade the field to which the provinces are solely confined for the raising of their revenue.
There is a further fact to which I have alluded in my Budget speeches since the outbreak of the war. Canada is not a country of concentrated wealth. We have a sparse population of some 8,000,000 people, scattered over an immense territory as large in area as the United States of America, almost as large as the continent of Europe. The result of that is that the cost of administration of an income tax measure will be quite substantial, and the cost of administration is always a factor which should be had in mind in connection with the imposition of taxation. Generally speaking, if the cost of administration of a tax is dis-

proportionately heavy, it is not a good tax. I do not say that the cost of administration of such an income tax as I shall propose to-day will be unduly heavy, but the fact that we shall .have to cover the entire Dominion in our administration of the measure has been an element to which I have given some thought when the matter of income taxation has been under my consideration and the consideration of the Government in the past.
Furthermore, Canada has been and will continue, during the lifetime of those present here to-day, to be a country inviting immigration. I have, therefore, thought it desirable that we should not be known to the outside world as a country of heavy individual taxation. There is another feature which has had some influence with me in hesitating to bring down an income taxation measure, and that is the fact that the people of this country, from the very outbreak of the war, have been most generous in contributing from their incomes to the Patriotic, Red Cross and other funds connected with the war.
We are, however, confronted with grave conditions arising out of .the war and with, as I have stated, an increased and accelerated war expenditure due to the measure which has just passed the 'House and which will enable us to continue to play our part in this great conflict. The war continues, not only on an undiminished, but on an ever increasing scale. I believe it is the will of the people of Canada that we should continue to exert to the utmost our human and material power to the end that final and decisive victory may .be obtained. I do not believe any other end than such final and conclusive victory will satisfy the high spirit and aspirations of the. free people of the British Empire. No matter what the cost may be in man-power or in treasure, I believe it to be the will of the people of this country that wre should persevere unto the end.
In view of what I have said as to the financial situation, as to the increased demands which will 'be made upon, us, and as to the purpose of the people of Canada in this war, it is manifest to me, as I think it will toe to most of the members of this House, that the time has arrived when we must resort to this measure o.f direct taxation. I am confident, Mr. Chairman, that the people of Canada whose patriotism during this war has been so often and so nobly proven will in the light of present conditions, which call for it, cheerfully accept the burden and the sacrifice of this additional taxation.
I shall nowr explain to the committee the nature of the proposals which I purpose laying before them. In framing these proposals we have had regard to certain conditions which I think ought to be taken into account in connection with a measure of this kind. In the first place, we must not be blind to the fact that the cost of living has materially, and indeed-, greatly increased in this country, as it h^s all over the world since the outbreak of this war, and that has a bearing upon the question of the exemption which should be allowed in>
an income tax measure. We have also borne in mind the fact that in most of the provinces of the Dominion there is a municipal tax upon income more or less heavy, running as high as two or three per cent. In addition to that, there is in some of the provinces a direct income tax levied by the province itself. So we must bear in mind that when this measure becomes law the people of this country whose incomes make them subject to the several income taxation laws in force in Canada will toe liable to three different sets of income taxation- first, income taxation by the municipality, secondly, income taxation by the province, and thirdly, income taxation by the Dominion.
There is another matter which I have thought proper to bear in mind, and that is the existing income taxation in the United States of America. For 3,600 miles the territories of the two countries adjoin, and there is a continual flow of population over the border. As I stated earlier in my remarks, we are inviting immigration to this country; we are inviting those of good character and capability from all nations in the world to make their home in Canada. The United States and ourselves occupy the northern half of this continent, and I think it would be undesirable, except for the gravest reasons of national necessity, that our income tax should be substantially heavier than that in .force in the United States. The American measure which I have had in mind for the purpose of comparison only when drafting this Bill is the measure which is now before Congress, and which provides for a very much heavier degree of taxation than is provided for by their existing legislation, or by the legislation which existed before the outbreak of the war.
In a measure of income taxation we should consider first, what 'amount oif exemption should fairly be altawed. On the one hand, we must toe careful that the entire burden of the taxation is not borne by

a particular class, and on the other hand, we must see 'to it that our taxation is not oppressive to those whose incomes are barely sufficient to enable them to sustain, the burden of 'the cost of living as it is to-day. It has appeared to us that it would be proper to fix the limit of exemption at $3,000 in the case of married persons, and $2,000 in the case of unmarried persons and widowers without dependent children. So that, so far as this measure is concerned, a married man who has an income of $3,000 or less will not be subject to its provisions. An unmarried man, or a widower without dependent children, having an income of $2,000 or under will not toe subject to its provisions.
We have also thought it advisable to adopt 'the principle of graduated tax. Within certain limits of income it is proper that an income tax .should be uniform, but when we reach the higher salaries I regard it as just -and propeT that the rate of taxation should increase as the scale of income increases. Our proposals are therefore as follows:
We propose Ito levy -an. income tax of 4 per cent upon incomes exceeding $2,000 per annum in the case of unmarried men and widowers without Children, and exceeding $3,000 in the case of other persons, and in addition thereto- -a supertax of 2 per cent upon the amount by which the income exceeds $6,000 and does not exceed $10,000; and 5 per cent upon the -amount by which the income exceeds $10,000 and does not *exceed $20,000; and 8 per cent u-pon the amount by which the income exceeds $20,000 and does not exceed $30,000; and 10 per cent upon the aimoumt by which the income exceeds $30,000 and d-oes not exceed $50,000; and 15 per cent upon the -amount by which the income exceeds $50,000 and does not -exceed $100,000, -and 25 per cent upon the amount by which the income exceeds $100,000.


Mr. NESBITT:: Is that the net tax or
the supertax?
-Sir THOMAS WHITE: Let me recapitulate. First, there is the exemption of $3,000 *in the case of married men, and $2,000 in the case of unmarried men -and widowers without children. Subject to those exemptions there is a 4 per cent rate upon iaLl remaining income no- matter how large it may be, and in addition to that 4 per cent there i-s the supertax as I have stated.


Mr. GRAHAM:: Are all .salaries up -to $2,000 and $3,000 respectively exempt, no matter what the .amount may be?


William Thomas White: All are free to that amount. If a man has an income of $100,000, $97,000 will be the amount unexempted. On this he will pay 4 per cent, plus the supertax.


Mr. A. K. MACLEAN:: Would the minister again recite the supertax figure from $5,000?


William Thomas White: First, there is the 4 per cent and in addition thereto the supertax of 2 per cent upon the amount by which the income exceeds $6,000 and does not exceed $10,000 ; 5 per cent upon the amount by which the income exceeds $10,000 and does not exceed $20,000; 8 per cent upon the amount by which the income exceeds $20,000 and does not exceed $30,000; 10 per cent upon the amount by which the income exceeds $30,000 and does not exceed $50,000; 15 per cent upon the amount by which the income exceeds $50,000 and does not exceed $100,000, and 25 per cent upon the amount by which the income exceeds $100,000.
I was about to inform the committee as to how this tax works out in concrete cases. The following statement will show:


INCOME TAX.
[Stage Direction]
Unmarried men and widowers without All other
Income of	dependent children, persons ex-	
	exempt $2000. empt $3,000.	
$ 4,000	$ 80	$ 405,000	120	807,000	220	18010,000	400	3G012,000	580	54015,000	850	81020,000	1,300	1,26030,000	2,500	2,46050,000	5,300	5,26075,000	10,050	10,010100,000	14,800	14,760150,000	29,300	29,260200,000	43,800	43,760
Mr. DEVLIN:: If the question is not		
premature,	might I ask	the ministerwhether the	income tax will	apply to the
revenues derived from industrial profits already taxed?


William Thomas White: I will come to that a little later, under the exemptions.


Rodolphe Lemieux: Will the minister define what income is?


William Thomas White: Income will be defined in the Bill, but I may say it is the net profit or gain arising from any business in which a person, as defined in the Act, is engaged-salary, income from investments whether stock, mortgages, or otherwise. In other words, we have endeavoured to give

a definition of income as wide as possible so that everybody in Canada shall be subject to the tax, provided the income is over the amount of exemption.


Rodolphe Lemieux: The point upon which I would wish information is' whether the liabilities will be considered before the income is fixed.


William Thomas White: " Income " means any income, not deducting living expenses. If a man has a "business and his gross receipts are, say, $100,000, but his operating and under expenses are $50,000, the income would be $50,000. Of course you cannot tax a man on his liabilities.


Mr. C. A. WILSON:: I suppose municipal and provincial taxes will be deducted?


William Thomas White: In connection
with a man's own business, yes; in connection with a man's own home I should say no, however that is a question which we will have to deal with a little more fully in committee.
I may say this measure applies to the income of the present year. It provides for returns by all parties subject to the tax before February 28 of next year. There are a number of exemptions under the Act, mostly of those institutions that do not operate for gain. I do not know that it is necessary I should specially refer to them here. Apart from those exemptions which I shall be glad to mention in , committee and take up more particularly when the Bill is before the House, there are certain exemptions which I should mention here. My horn. friend from Wright very properly asked .as to whether those who are paying a very heavy business profits taxation are subject to this income measure.. The House is aware that liability to the Business Profits War Tax Act of 1916 and the amendment thereto of this year comes to an end on December 31 this year, and it is not the intention to renew that measure. When that measure was imposed it was retroactive to the extent of one year so that in 1916 firms and companies subject to its provisions paid in respect of their profits of 1915; those liable on account of their profits in 1916 paid this year and those liable in respect of any accounting period falling dn during this year, 1917, pay the tax next year. I think it is only just and proper that those who pay the very heavy business profits tax-much heavier than this tax- upon an accounting period falling in during the present year should not be called upon to pay this income tax unless it chances to 239
be heavier than the tax they are paying. The result of that view is that we shall exempt from the taxation which would be payable by such firms and companies under this measure the amounts paid by any taxpayer under the Business Profits War Tax Act, 1916, and any amendments thereto for any accounting period ending in the year 1917. In the case of a partnership, each partner shall be entitled to deduct such portion of the tax paid by the partnership under the Business Profits War Tax Act, 1916, as may correspond to his interest in the income of the partnership. In addition to that, we provide that taxpayers shall be entitled to deduct from the amount which would otherwise be payable by them for income tax under this measure the amount paid by them for taxes during the year 1917, and in any year thereafter, under the provisions of Part 1 of the Special War Kevenue Act, 1915. That means that if the taxation under the Special War Revenue Act, 1915, is greater than the income tax, they pay the greater taxation, but if, on the other hand, this income tax is greater than the tax to which they are now subject, they are permitted to deduct from the income taxation the tax to which they are liable under the Special War Revenue Act, 1915.


Alexander Kenneth Maclean: Does the exemption of $2,000 or $3,000 apply to corporations?


William Thomas White: I will come to that. We are providing in the legislation also that we shall levy an income tax on corporations and joint stock companies earning an income exceeding $3,000. In England there is no super tax upon companies, but their shareholders are liable to it. We are providing by this measure that joint stock companies and corporations shall be subject to a tax of four per cent. Their shareholders are liable not only to the tax of four per cent but to the super tax. But, in estimating the income of any person subject to the tax, we credit him with the amount which has been paid by the company from which he derives dividends under the provisions of this Act, the idea being to avoid double assessment. Let me give a concrete ease.


Edward Mortimer Macdonald: Is that the same practice as is followed in the United States?


William Thomas White: Yes. That question gives a great deal of difficulty. In Great Britain they have not imposed a super tax upon corporations or companies. In the



United States they have an income tax called the normal tax to be paid by corporations and joint stock companies. They provide-and we have similarly provided- that, while the shareholders of these companies are subject to the super tax, the amount of the normal tax upon dividends shall be deducted from their income. It will be obvious to the committee that it is not possible to impose the super tax upon a company, much as we should like to do so, for this reason: Take a company that is owned by hundreds of shareholders, that has a capital of $1,000,000 and that earns six per cent; it would have an income of $60,000. Take another company with $2,000,000 capital and which earns six per cent; it has an income of $120,000. Although both derive six per cent, if you applied the super tax, because the income of the $2,000,000 company is larger than that of the $1,000,000 company, you would make one set of shareholders pay so much more than another set of shareholders. Accordingly, we get over the difficulty by making joint stock companies and corporations subject to a four per cent tax, called the normal tax, and then we make their shareholders liable to a super tax giving them an allowance equivalent to the normal tax upon the dividend that they derive from such companies.


Rodolphe Lemieux: What about the revenue derived from American companies?


William Thomas White: If my hon. friend is a holder, as I hope he is, of the shares of any corporation either in this country or any other country, he will be liable to pay in respect to the income derived from such companies no matter whence or how it is derived. If my hon. friend has such income, he has to pay provided he is a resident of Canada.


Alexander Kenneth Maclean: What about foreign corporations?


William Thomas White: Foreign corporations will pay in respect to their earnings upon their business in this country.


Sir HERBERT AMES:: What about a dividend that has already been taxed?


William Thomas White: In the case of a resident of Canada?


Herbert Brown Ames: Yes.	[DOT]


William Thomas White: In the case of a resident of Canada, if he was taxed in respect of his dividends in a fqreigri country, he would be entitled to deduct tHe amount of such taxation from his income for the

purpose of ascertaining the amount on which he should be assessed here. So far I have not been able to reach a conclusion, although I am glad to have an open mind on the matter, that he should be allowed to deduct the amount of such tax from the taxation which he would pay upon his entire income.


Alexander Kenneth Maclean: Do I understand the minister to say that foreign corporations are subject to his income tax only to the extent of the profits gained in this country?


William Thomas White: Yes, I am speaking of a foreign corporation domiciled in a foreign country and carrying on business in Canada, but if a Canadian company carries on business here and throughout the world you assess it on its entire income.


Edward Mortimer Macdonald: How about an alien who lives in another country and who has stock or interests in Canada from which he gets an income?


William Thomas White: We do not tax any but residents of Canada.


Edward Mortimer Macdonald: The United States impose such a tax?


William Thomas White: I believe they do but I am of the opinion that it is rather an unwise tax. I do not see how we can hold an alien liable unless we provide to cut off a portion of his income at his source and that would raise questions as to what his real income was and as to whether it was proper to do that. This Bill will not apply to aliens unless they are living in Canada.


Edward Mortimer Macdonald: What would he the course with regard to a British citizen who lives outside of the boundaries of Canada but who draws an income from Canadian sources?


William Thomas White: That is a very vexed question, a question which has been often raised in England and is before the British Government now; that is to say, the question' of double income taxation. My own view is that there should not be double income taxation within the Empire.


Edward Mortimer Macdonald: Take the case of a Britisher who lives in the United States; he is not taxed upon income that he derives from Canadian securities.


William Thomas White: I think he is.


Edward Mortimer Macdonald: I am inclined to think not. I think their taxation is confined to income arising within the country but still there may be some question about

that. Why should not he be liable to taxation in Canada?


William Thomas White: In the first place he is not a resident of Canada, There is another thing. We must bear in mind that we must not be too astute or too eager to tax an alien in respect to the small investments he may have made in Canada. I would fear that too stringent taxation in that regard would deter men from investing in this country-and we want investment.


Rodolphe Lemieux: What about the people who transform thejr present holdings into, say, Dominion war loan securities, which are free from any taxation?


William Thomas White: The Government war loans are free from any income taxation, and they must be. It is absolutely impossible for this Government to issue its bonds to the amount which is and will be required for the war expenditure of the Dominion unle'ss those bonds are income tax free, so far as Dominion legislation is concerned. The reason is that mem buy securities to yield a certain interest rate. Sometimes the difference between 5.30 and 5.40 per cent will determine whether a man will or will not buy a bond. My hon. friend knows that the value of securities' is regulated having regard to market conditions and the value of all other securities, and in offering Dominion issues, put out as we must put them out to finance a iwar of this kind, the uncertainty of an income tax so far as the future is concerned, or a heavy income tax so far as the present is concerned, means that people will not buy those bonds to the extent they otherwise would. And there is this further point to he considered. If you should sell your Dominion bonds without that provision that they are income tax free it would only mean that you would have to sell them to yield a higher rate than they yield to-day. So it is as broad as it is long; you would not get as much for your issue of securities as you get for them to-day, free of income tax. That is a question that has perplexed many Chancellors of the Exchequer. In the United States they have issued their loans free of income taxation for the reasons I have mentioned. Even in England, which is the home of income tax, where they struggled to the utmost against issuing securities free of income tax, in connection with the last loan in London they gave an alternative, one free of income tax and another subject to it. There is in the Bill
239i
provision for assessment, appeal and collection. I have placed no time limit upon this taxation measure; but I do suggest, and I should like this suggestion to be on Hansard, that after the war is over this taxation measure should be deliberately reviewed. What I have in mind is this: In the period after this war, as in the past, we will continue to invite people to come to this country. We shall need men of enterprise, men of ability, to bring in capital and develop our immense undeveloped resources. In reviewing this measure after the war, I think consideration should be given to the question whether the taxation is so heavy that it would operate to prevent men of that type from coming to this country and giving us the benefit of their enterprise and their capital and their ability. I have placed, as I stated, no time limit upon the measure. We cannot see very far ahead in these days. We do not know how long this war will last. We do not know what the attitude of the people of this world or of this country will be upon many questions, social, industrial, financial and fiscal. Therefore I have placed no time limit upon this measure, but merely have placed upon Hansard the suggestion that, a year or two after the war is over, the measure should be deliberately reviewed by the Minister of Finance and the Government of the day, with the view of judging whether it is suitable to the conditions which then prevail.
I therefore beg to lay upon the Table the following resolution:
Resolved, that it is expedient:
1.	To levy an income tax of four per centum upon income exceeding two thousand dollars per annum in the case of unmarried men and widowers without children, and exceeding three thousand dollars in the case of other persons, and, in addition thereto, a supertax of two per centum upon the amount by which the income exceeds six thousand dollars and does not exceed ten thousand dollars, and five per centum upon the amount by which the income exceeds fifty thousand dollars and not exceed twenty thousand dollars, and eight per centum of the amount by which the income exceeds twenty thousand dollars and does not exceed thirty thousand dollars, and ten per centum of the amount by which the income exceeds thirty thousand dollars and does not exceed fifty thousand dollars, and fifteen per centum of the amount by which the income Exceeds tflfty thousand dollars (ind does not exceed one hundred thousand dollars, and twenty-five per centum of the amount by which the income exceeds one hundred thousand dollars.
2.	To levy an income tax of four per centum upon income exceeding three thousand dollars in the case of corporations and joint stock companies.


Alexander Kenneth Maclean: Mr. Chairman, I do not propose to detain the committee for more than a moment at the present time, as it is quite clear that the proposal which is submitted by the Minister of Finance (Sir Thomas White), can be more properly and profitably discussed when we are considering the bill founded upon the resolution. I have no doubt that the principle contained in the taxation proposals just submitted to the committee will be approved of by the country. The advantages of the proposal are quite obvious. It will augment our revenues, which is very desirable and very necessary indeed; but, better than that, it will equalize taxation in this country, and that is obviously desirable. I think the House will approve also of the suggestion, of the declaration of the Minister of Finance-
The House having resumed.


THE ROYAL ASSENT.
[Stage Direction]
A message w>as delivered by Lieut.jColonel Ernest J. Chambers, Gentleman- Usher of the Black Rod, as follows:
Mr. Speaker, the Deputy of His Excellency the Governor General desires the Immediate attendance of this honourable House in the Chamber of the honourable the Senate.
Accordingly, the House went up to the Senate.
And having returned,
The Speaker informed the House that the Deputy of His Excellency the 'Governor General had been pleased to give, in Bis Majesty's name, the Royal Assent to the following Bills:
An Act respecting- The Guardian Accident and Guarantee Company, and to change its name to "The Guardian Insurance Company of Canada."
An Act respecting The Grain Growers' Grain Company, Limited, and to authorize it to change its name to "United Grain Growers, Limited."
An Act respecting the Saint John Board of Trade.
An Act to amend the Act incorporating The Canadian Surety Company.
An Act respecting The Canadian Order of the Woodmen of the World.
An Act to incorporate Alliance Nationaie.
An Act to incorporate La Socidtd des Artisans Canadiens Frangais.
An Act respecting the Athahaska Northern Railway Company.
An Act respecting The Lachine, Jacques-Cartier and Maisonneuve Railway Company.
An Act to confirm certain agreements made between The Vancouver, Victoria and Eastern Railway and Navigation Company and The Canadian Northern Pacific Railway Company.
An Act respecting The Western Dominion Railway Company.
fSir Thomas White.]
An Act respecting The Calgary and Fernie Railway Company.
An Act respecting The Canadian Northern Quebec Railway Company.
An Act respecting The Canadian Western Railway Company.
An Act respecting the Kaslo and Slocan Railway Company.
An Act respecting The Mount Royal Tunnel and Terminal Company, Limited.
An Act to incorporate The Eastern Telephone and Telegraph Company.
An Act respecting the Grand Trunk Pacific ilra.-ich Lines Company.
An Act to incorporate The Bishop of Mackenzie River.
An Act to amend the Act to incorporate The Canadian General Council of the Boy Scouts Association.
An Act respecting The Interprovincial and James Bay Railway Company.
An Act respecting La Compagnie du Chemin de Fer de Colonisation du Nord.
An Act respecting The Continental Heat and Light Company.
An Act respecting certain patents of George C. Breidert and Burton W. Mudge.
An Act for the relief of Delbert Ralph O'Neil.
An Act for the relief of Edward Austin Barnwell.
An Act for the relief of Charles Frederick Reuben Jones.
An Act for the relief of John Basnett Parker.
An Act for the relief of Amy Beatrice Mathews Hilton.
An Act for the relief of Colin Darrach Poole.
An Act for the relief of Thomas Edwin Jory.
An Act for the relief of Florence Evaline Snyder Lockwood.
An Act to incorporate The Grand Lodge of the Canadian Association of Stationary Engineers of the Dominion of Canada.
An Act to facilitate certain financial arrangements between the Government of the United Kingdom of Great Britain and Ireland and the Canadian Pacific Railway Company, and for other purposes.
An Act to amend the Penny Bank Act.
An Act to repeal The Ocean Telegraph Act.
An Act to amend the Chinese Immigration Act.
An Act to amend the Civil Service Act.
An Act to amend The Business Profits War Tax Act, 1916.
An Act respecting The British Columbia and White River Railway Company.
An Act respecting The Western Life Assurance Company.
An Act for the relief of George Walter Sherald Garrett.
An Act for the relief of Gertrude Ellen Beal.
An Act for the relief of Donald George Whibley.
An Act respecting a patent of Ernest Mead Baker.
An Act respecting a patent of James B. King and others.
An Act for the relief of George Maisey.
An Act for the relief of Herbert Featherstone Conover.
An Aot respecting The Empire Life Insurance Company of Canada.
An Act respecting the Security Life Insurance Company of Canada.
An Act respecting The Essex Terminal Railway Company.
An Act to incorporate The Kenora and English River Railway Company.

An Act for the relief of Florence Amelia Kennedy.
An Act to authorize the issue of a patent to James Wallace Tygard.
An Act respecting a certain patent of the Sharp Rotary Ash Receiver Company, Incorporated.
An Act to incorporate The Canadian Council of The Girl Guides Association.
An Act respecting The Canada Preferred Insurance Company
An Act respecting The Western Canada Accident and Guarantee Insurance Company.
An Act for granting to His Majesty certain sums of money for the public service of the financial year ending the 31st March, 1918.


[Stage Direction]
The House resumed in Committee of Ways and Means, Mr. Blain in the Chair.
Alexander Kenneth Maclean: When the attendance of this House was required in the upper chamber, I had observed that the country would at least approve the principle involved in the taxation proposal submitted to the committee this afternoon by the Minister of Finance, and that if there was any criticism of the same, it would relate entirely to the details of the proposals. The details of the resolution can be more profitably discussed when the Bill founded on the resolution is printed and distributed amongst the members. The taxation of income is as the minister has stated, a new form of taxation in this country except in so far as it is employed in the several provinces. My experience is that while there is an income tax in several of the provinces, still it is not enforced very rigidly and in the strictest sense I would think that there is still in Canada hardly any such thing as an income tax. One great value of this form of taxation will be that the taxpayer will take a greater interest in the expenditure of any money which he contributes directly to the public treasury. One of the evil effects of indirect taxation is that the taxpayer is apparently never fully seized of the fact that he is contributing anything in taxation to the public treasury. Consequently, he is as unreasonable in his demands upon the public treasury as are people who never contribute one cent either directly or indirectly. It is in the interest of sound national finance that we should have in this country some form of income taxation, and I have no doubt that once we have embarked upon it, the judgment of the country will be that it should be continued for many years to come.
The minister is a little alarmed that the imposition of taxation of this kind may, in the future, impede immigration. He left the impression upon me, at least, that in
[DOT]his mind there was a fear that the intending immigrant would consider an income tax as unfair and oppressive. I hardly look at the matter in that light. Our taxation in this country is by no means light to-day; it is very high; indeed, it is excessive. The fact that it is paid indirectly in the form of customs taxation makes the average taxpayer blind to the fact that it is from him we obtain all our revenue. The average rate of customs duty to-day is, I suppose, 35 or 40 per cent, and nobody could say that that was a light rate of taxation. The minister, therefore, need not be apprehensive that in the future immigrants might be deterred from coming to Canada by reason of the imposition of the income tax. If the country is in fear that our taxation would impede immigration in the years to come after the cessation of the war, such fear can easily be removed by a lower rate of customs taxation, which is now very excessive.
I wish to refer very briefly to the statement made by the Minister of Finance in justification of his taxation proposals. He stated that he was urged to do this by reason of the fresh burdens which this country was about to assume owing to the passage of the Military Service Bill. That is hardly a good ground upon which to justify the resolution. It may be that the introduction of the Military Service Bill has accentuated in the minds of the people of this country the fact that from the beginning of he war up to the present time the Government has not imposed a sufficient burden of taxation upon the people in order to meet in proper proportions our unusual obligations due to the waT. The Minister of Finance, in discussing his Budget proposals on the 24th of April last, took very strong ground against the imposition of an income tax, and argued very carefully and seriously the undesirability of imposing such form of taxation. I am not inclined to agree with him when he says that the justification of the income tax is due to the fact that we are about to engage in larger military operations by reason of the passage of the Military Service Bill. The truth is that almost since the beginning of the war we should have had in this country some form of income taxation. I do not say that it should have been imposed immediately at the commencement of the war, but I do say during the past two years we should have had some form of income taxation. Hon. gentlemen on this side of the House, and, I think, some hon. gentlemen opposite impressed this upon the minister on various occasions, in particular

*when we were discussing the annual Budget speech of the Minister of Finance. I am, however, sure the country will welcome the proposal submitted to the committee this afternoon. 1*116 only criticism which hon. gentlemen, or the country generally, will make to the proposal will have relation to the details and not to the principle.
I wish to say just a word or two in reference to the details of the resolution, although it might be proper to reserve discussion of such details until the Bill is printed. The exemption in respect to unmarried men is +oo high. We must realize -and if we do not it will be unfortunate for the country in the future-that we are rapidly piling up a tremendous national debt, which will tax to the limit the resources of this country and its people in the future.
We are enjoying commercial prosperity notwithstanding the war, and it seems to me that now is the time to impose upon the people of this country the utmost of taxation. According to the statement read by the Minister of Finance an unmarried man with an income of $4,000 will pay a tax of $80; with an income of $5,000, a tax of $120; with an income of $7,000, $220; with an income of $10,000, $400; with an income of $12,000, $580; with an income of $15,000, $850. I submit that this is certainly not an oppressive tax to impose upon an unmarried man or widower without dependent children. I think it is a very, very moderate tax, in fact, too moderate. I think an unmarried man with an income of $4,000 should be obliged to pay more than $80 taxation under this measure. I believe that the young men of this country enjoying a salary of that amount wrould be glad to pay a higher tax, at least during the war, and until there is a reconsideration of this taxation Bill. I do not intend to occupy the time of the hon. members now in discussing further this particular detail; I merely say that in my judgment the proposed rate of taxation in this respect is not sufficiently high. I also think that the exemption limit in the case of an unmarried man might be lower than $2,000. I make this statement believing of course that after the war the question of income taxation will be reconsidered and modifications made to .meet then existing conditions. It seems to me that an exemption of $2,000 is quite substantial in the case of an unmarried man, and I think it could very well be reduced. I do not know exactly what are the provisions of the income taxation IMr. A. K. Maclean.]
measure now before the United States Congress, but as the Bill was introduced and as it stood on July 7th it provided for an exemption of $1,000 in the case of single persons, and $2,000 in the case of married persons and the heads of families. Those provisions were still in the Bill when it was reported to the Senate. The Bill, however, was re-committed to the Senate Finance Committee, this being necessitated by the addition of certain clauses providing for the prohibition of the manufacture of spirits which reduced the estimated revenues, and I do not know now how the legislation now stands.
There are many other features of the resolution which require consideration by the committee, but until they are before us in the form of a Bill I shall reserve discussion upon them. I should .like to know what amount of revenue the Minister o.f Finance expects to receive from this income taxation.
Sir THOMAS WHITE; That is a very difficult question to answer. In fact, it is almost impossible to do more .than guess at the amount, because we have never had a tax of this kind in Canada; but roughly speaking, we hope to get $15,000,000 or $20,000,000 a year at least.


Alexander Kenneth Maclean: If the minister anticipates that amount of revenue, it justifies the statement I made a few moments ago that we should long ago have had federal income taxation in this country. My hon. friend always resisted the introduction of income taxation on the ground that it would bring in very little revenue. In fact, I think that on one occasion he said it would not bring in more than $3,000,000 or $4,000,000 a year at most. However, I am very glad indeed to learn that he anticipates a revenue of $15,000,000 or $20,000,000.


William Thomas White: That is merely an estimate. When I dealt before with the question of how much revenue we would obtain from an income tax in this country I always took into consideration the results of the American taxation, which was very much lower than this. Assuming that their population is thirteen times as large as ours, and that their wealth is from twenty to forty times as great, I thought that on the basis of their income tax, which for the reasons I have given I did not feel justified in exceeding, we would not obtain more than $3,000,000 or $4,000,000 a year. The new income taxation proposals in the United States, which have not yet been translated into legislation, provide for a

very much higher rate than their existing law, and while our taxation is about on a par with their new proposals, it is double or more than double the taxation I had in mind when I made the estimate of $3,000,000 or $4,000,000. I have always held the view that our income taxation here should not be materially heavier than the taxation in the United States, for reasons that will be obvious to the committee. Whether or not we will get $15,000,000 from this taxation I am not prepared to say, but on talking it over with the commissioner of taxation we reached the view that we might get that figure.
My hon. friend says that we should have introduced this measure earlier. I do not desire to enter into any controversy over that, but I would like to point this out. For a considerable period after this war broke out the business and industrial interests . of this country were greatly dislocated, and I cannot imagine anything that would have been more unwise, in 1915 at least, than to have brought in an income tax measure, because at that time owing to the dislocation which prevailed on account of the war it would have been a most serious and discouraging burden upon the people of this country. We had a pretty prosperous year in 1916, and I brought down the Business Profits Tax, which is giving us a very handsome revenue. The idea of that was to take a portion of the abnormal profits earned by firms and companies during the war. This year we increased that tax, and having regard to the financial condition of the country at the time I brought down the Budget, having regard to the fact that our revenues from all sources enabled us to pay all ordinary expenses, all capital and special expenses, all the increased interest charges due to the war, and all pensions, and still have left some $60,000,000 to devote to the payment of principal on war expenditure, 1 thought it inexpedient and unnecessary to bring in an income tax measure. But, with this new measure now adopted by the House, and having regard also to the fact which I mentioned, which is a most important fact, that by reason of the compulsory provisions of that measure there exists a just and proper sentiment that those who have substantial incomes should contribute substantially to our growing expenses of the war, I felt this to be a proper measure to bring in at this time.
In answer to what my hon. friend says about the unmarried men, I would like to state I traversed all that ground before
bringing this measure down. There are many men who are unmarried because they have others dependent upon them. I do not believe there are very many single men without dependents who have large incomes. There are many unmarried men who have incomes of $2,000, $3,000 or $4,000 who have many dependents upon them that the public know nothing about. I know of many such cases. I thought if we made a distinction of $1,000 between the unmarried men and the married men, in favour of the latter, that it would be a fair distinction. When I was in Washington I made some inquiry about the reduction of the exemption limit from $4,000, which is the limit under the existing legislation-


Alexander Kenneth Maclean: Three thousand dollars in the case of unmarried men, and $4,000 in the case of married men.


William Thomas White: I was speaking of the married men. I made some inquiry with regard to the reduction from $4,000 to $3,000, and from $2,000 to $1,000, and, while I am not prepared to mention names, I may say it is felt thete that they have gone quite a distance in reducing the exemptions to $2,000 and $1,000 respectively. I know this is a subject bn which differences of opinion may exist, but, having regard to the cost of living and to the fact that a married man has dependents, and that many single men have dependents, and for that reason do not marry, I felt if we fixed the exemptions at $3,000 and $2,000 it would be about fair play.
In the United States, as I said, the corporations are liable to the normal tax, while their shareholders are liable to the general measure of taxation which embraces both the normal tax and the super tax. Therefore, in this regard, our taxation follows the same principle as the British and the American taxation.


Mr. CAR YELL:: It is not very often that I heartily congratulate this Government on the measures it introduces, but I do so on this occasion. I have some objection to the details, but to my mind the principle is such a step in the right direction that we can very well forgive the Government for any error of detail it may make. I can hardly forgive my hon. friend from Halifax (Mr. A. K. Maclean) for reminding the minister that he stated some time ago that this income tax could not be worked out, because that was almost finding fault with the minister, or trying to point to some of his delinquencies in the past.


Alexander Kenneth Maclean: He is improving.


Mr. CARVELL:: He is improving, yes. We know it can be worked out, and it is not new to this side of the House. I find in Hansard that, in the month of August, 1914, I advised the minister that it could be worked out.


William Thomas White: ' That was the wrong time.


Frank Broadstreet Carvell: There has not been a session since at which I did not renew the statement. No measure has passed this House since I have been here which has given me as much satisfaction as has the introduction of an income tax. I realize the tax will probably not be maintained as it is now after peace is declared. In all probability there may be a grading downwards to some extent, but I hope the income tax has become an institution in Canada, and that it will remain for all time. We must not close our eyes to the fact that enormous liabilities have been incurred in Canada in the conduct of this war, and that enormous liabilities will be incurred in the future. Everybody has come to the conclusion that this cost cannot be met by increasing the customs tax on goods coming into the country, in other words, you cannot produce sufficient revenue by customs and excise.
I know of nothing as fair and just upon everybody as an income tax. It produces a condition of affairs by which, after the war is over, we can discuss questions of trade, commerce and tariff much more intelligently than we have ever been able to discuss them. We have heard the cry "you will ruin manufacturing," and "you cannot get revenue." The minister has shown to-day-and I am satisfied it will be thoroughly demonstrated-that we can get revenue by means of an income tax.
I do not agree with the minister, however, that the exemptions should relieve the unmarried man to the extent of $2,000 and the married man to the extent of $3,000.
I think the exemptions should only have gone to the extent of $1,000 and $2,000 respectively. What I shall say now will be without wishing to be sarcastic or anything of that kind. Probably, when we are discussing salaries, or taxation, we are apt to be guided to some extent by the conditions existing in Ottawa. We know that in the different departments at Ottawa, a man who is receiving only $2,000 is, in his own mind, a menial, and in the eyes of the people of Ottawa is not entitled to any kind of social distinction. When, however, a 
man in the ordinary country districts of Canada-and I do not care what part it may be-receives a salary of $2,000, he is looked upon as being in pretty affluent circumstances. There is no part of Canada, even including the city of Ottawa, where a married man in receipt of a salary in excess of $2,000 should not pay taxation on the excess. The same principle applies to the unmarried man. A man who is not supporting a wife or family in this country, in this time of stress, ought to pay much more heavily than the minister is providing for under this legislation.
I look upon this as purely a war tax for the present, although I was glad the minister did not state he would abolish it at the close of the war. It will never be abolished, because the good sense of the people of Canada will see it is kept in effect for all time. Inasmuch as it is a war measure at the present time, I think we could apply more drastic conditions to it than we* are applying, and get more revenue from it. I would suggest to the minister that there should be less exemption to the unmarried man than is provided for in this Bill. When an income reaches $10,000, or even $5,000, you are only exempting a married man to the extent of $1,000 more than the unmarried man. That is no- distinction whatever. When you reach an income of $15,000, or $20,000 it is- a mere bagatelle. In the practical working out of this scheme the unmarried man with a large- income really pays no more than the married man. With these two exceptions, the Bill suits [DOT]me. I heartily congratulate the minister and the Government on the fact that they have finally taken the grip and- have introduced a measure which the people have been looking for for many years past.


Alexander Kenneth Maclean: I wish to emphasize the point which my hon, friend from Carleton (Mr. Carvell) has just made -by calling the attention of my hon-. friend the Minister of Finance to the figures he gave the committee this- afternoon showing the amount payable by a married man, and then toy all other persons when the income reaches a large- sum such as $15,000 or $20,000. This will make very clear the point of my hon. friend from Carleton:
All Other
Income.	Unmarried	Men.	Persons.$15,000	$ 85-0	$ 81020.000	1,300	1,26030.000	2,500	2,46050.000	5,300	5,260
The difference is very 6mall and it makes clear the point of my hon. friend from Carleton.

Sir THOMAS WHITE; When you get up to these incomes of $30,000, $40,000, $50,000, $75,000 or $100,000, I do not think we need worry about how much a married or a single man has to pay. How many single men are there with incomes of $15,000, $25,000 or $30,000? I think that with very few exceptions the single men who have comparatively large - incomes have others dependent upon them. That is one of the reasons why they do- not marry. I do not believe there are many single men with incomes of $15,000, $20,000 or $30,000. The only unmarried man I can recall who had an income of $20,000 or $25,000 and w.ho was about 35 years of age, enlisted when war broke out and was killed at the front only the other day. Do not let us be too hard on the unmarried man who happens to have an income of $3,000, $4",000 or $5,000. He may have some maiden aunts, a mother or some other dependent relatives. The people of Canada are pretty careful of their relatives. That is to me one of the great glories of this country. I think you will find that there will be some special circumstances where there is an unmarried man who has a large income. Make a distinction of $1,000 and then let the Bill run on. We need not worry if the married man with an income of $30,000 and paying $2,500 by way of income tax reflects that a single man who does not appear to have any dependents pays only $40 less. I think the Bill will work out fairly well as it is.


George Perry Graham: I am glad that my hon. friend the Minister of Finance has seen through the mists, that the clouds have rolled away, that what seemed insurmountable and impassable difficulties have disappeared, and that we now have a measure which looks to the obtaining of revenue from those best able to pay. I am not alarmed at the introduction of direct taxation if properly and carefully administered. After all, as has been pointed out, if a man has to go directly into his pocket, or to his bank account, and pay a certain amount into the coffers of the country he is going to inquire, perhaps, a little more carefully how that money is expended than he does now, when it goes into the pockets of somebody else every time he buys certain goods. The Minister of Finance has pointed out rightly that the provinces have given to the municipalities the right to impose taxation on incomes. In some cases the provinces are exercising that right direct themselves. In a time like this particularly that
taxation will be found to be comparatively small. Even if it were not, the circumstances are such that the imposition of direct taxation is fully justified, particularly as the vast majority of the people will not be taxed by this measure at all, but only those who receive salaries and incomes enabling them to pay it without being seriously hurt. After all, not to go outside of this House, who of us has been really hurt in the matter of taxation in this war so far? None of us. I have not asked the minister yet whether he intends to include in this taxation the sessional. indemnities of the members. For myself, I would say: yes.
I think these ought to be called incomes for the purposes of this Act.
There is another question which will arise, and that is the situation in ihe city of Ottawa. Owing to an arrangement between the Government and the city of Ottawa, incomes in this city have been largely exempt from taxation. I mean Civil Service incomes. I think the incomes of ministers of the Crown have been exempt under the same arrangement. I presume that under this Bill none of these exemptions will be allowed, because this is something outside of the municipal income taxation. The arrangement between the city of Ottawa and the Government was merely to cover the incomes derived by those in the employ of the Government at Ottawa, the municipality accepting a certain amount from the Government for certain municipal purposes, through the Improvement Commission largely. This being outside and separate, I presume there will be no exemption for the purposes of this Act in the city of Ottawa any more than there will be in any other city in Canada. I think there should not be.


William Thomas White: All are liable.


George Perry Graham: The question of taxation ts one that affedts us all, and we are directly touched by it to a certain extent. I take it for granted that when this war is over there will be of necessity a readjustment not only of this system of taxation, but there will have to be, owing to new conditions, a readjustment of our tariff and all that kind of thing. I would not !be surprised to see, when this war is over, a revolution in our tariff. The introduction of an income tax, tapping a new source of revenue, will make it easier to deal with the larger question from the point of view of revenue. The Minister of Finance has said that the Business Profits War Tax Measure

will become inoperative at the end, I think, of next year.


William Thomas White: The tax will be collected next year, but it will be on this year's accounting period, which will be the last accounting period.


George Perry Graham: That is the intention now; but my hon. friend sometimes changes his mind on taxation, and perhaps whoever may be Finance Minister a year from now may say: we are going to have this business profits taxation continued. I am not sure that it should not be continued, because, at least until the war is over, I am inclined to think we must not let go of any source of revenue we now have.
What I am calling attention to is that while that is the suggestion to-day, whoever has authority and responsibility at the end of the last accounting period will have to take the responsibility of either renewing that Act or letting it expire through flux of time. The Finance Minister has also told us that one reason for the imposition of this tax at the present time, in contradistinction to not introducing it some time ago, is the fact that the Military Service Act is becoming law, and will entail considerable expense. The other reason given by the Finance Minister is a good and substantial one, that is, that when we begin to compel men to go and sacrifice ^themselves at the front, it is high time to compel those who stay at home, and who are able to do so, to pay more taxation. But to say that it will be more expensive to have the Military Service Act-


William Thomas White: I should say that it will greatly accelerate the expenditure, owing to the increased number of men.


George Perry Graham: As a matter of fact, from the standpoint of expenditure, military service under the compulsory measure will be much less expensive than under the voluntary system. What I mean is that 100 men going under the voluntary system cost much .more money, generally speaking, than the same number of men under this system, for this reason, that under the voluntary system thousands upon thousands of men have gone and left families, while under the compulsory service Act the younger men without families will be taken first. There will be no separation allowance for wives, there will be no money to be paid out of the Patriotic Fund for children. I submit that if we had had the compulsory service measure in force at the beginning of, the war- and now I am speaking only financially- 
Canada would have been millions and millions of dollars ahead financially at the present time. So I think that reason of my hon. friend is rather an excuse than a reason.


William Thomas White: I ba<d regard to' the numbers. Recruiting had slowed down and it was to the increase in numbers that I referred.


George Perry Graham: 
Edward Walter Nesbitt: Does the minister propose to deduct the amount of the income taxes, paid to the provinces and the municipalities?


William Thomas White: No, that is not the intention, a man may be liable upon his income for municipal taxation, for provincial taxation and for Dominion taxation under this measure.


Edward Walter Nesbitt: As I understood, if a
corporation pays more under .the present business tax than it will pay under this measure, it is exempt under this measure.


William Thomas White: Yes, it is exempt under this proposed legislation. A firm or corporation which is liable to pay the Business Profits War Tax for ^.n accounting period ending within this year will be permitted to deduct from the income taxation to which it would be liable under this measure the amount which it pays under the Business Profits War Tax Act in respect of that accounting period.


Edward Mortimer Macdonald: In considering the deductions made, are subscriptions to the Patriotic Fund taken into consideration?


William Thomas White: In the Bill which I shall lay before the House, a man will be entitled to deduct from his income, as part of his expenses, his contribution to the Patriotic, Bed Cross, and other war funds approved by the minister. That does not mean that he will be allowed to deduct that amount from the taxation to which he is liable. Let me put it this way: Suppose the income upon which a man would be liable under this Act is $10,000. Assuming tnat he has contributed $1,000 to those funds, he would be liable, under the Bill as I shall present it to the House, to income taxation upon $9,000. That is a matter which will, no doubt, be discussed in committee, and upon which i have an open mind.


Edward Mortimer Macdonald: I have seen conflicting statements as to the total expenditure of the Government for war and other purposes. Information of that kind should be available in considering this measure.


William Thomas White: Of course, our war expenditure is very heavy and is growing rapidly from day to day, notwithstanding the fact that we are making fair headway in our payment on account. In anticipation of the question which the member for Pictou (Mr. Macdonald) Has asked, I had a statement prepared by the assistant deputy minister as to the outrun since April 1 of this year. My Budget speech practically covered the fiscal year ending March 31. My hon. friend will recall that as a result of last year's operations we paid our running expenditure, our capital and special expenditure, the interest upon our national debt, including the increased debt due to the war, and all pensions. In addition to that, we were able to devote $60,000,000 to payment upon principal account. The statement which I have

received as to the period from April 1 to July 20, will, I am sure, be interesting, as well as gratifying, to the committee.
The total revenue from April 1 to July 20, was, in round figures, 378,276,000. Our total expenditure for that period, ordinary, capital and special was 340,821,000, leaving a balance applicable to our war expenditure of 337,000,000. That is to say, since April 1 of the present fiscal year we paid our ordinary, capital, special, pensions and increased income expenditures, and we have 337,000,000 to the go'od, applicable to our war expenditure. In a foot-note the deputy minister says:
These figures represent receipts and pay. ments which have passed through the hooks of the Finance Department to July 20, 1917, together with a close estimate of expenditure to July 20, 1917, not yet passed through the books.
So that, while the figures may not be mathematically accurate, they represent a close estimate.
The total war expenditure of Canada in Canada to July 20 was 3388,627,000. The total war expenditure elsewhere, including estimate of maintenance of troops in France from September 30, 1916, to July 20, 1917, at 6 shillings per man on an average of 117,000 troops, was 3234,600,000, making a grand total of estimated war expenditure to date of 3623,000,000.


Edward Mortimer Macdonald: That is since 1914.


William Thomas White: That is the entire expenditure since 1914.


Alexander Kenneth Maclean: What was the war expenditure from April 1 to July 20, 1917?


William Thomas White: War expenditure, Canada, from April 1 to July 20, 1917, $39,702,000. It will be interesting for the committee to observh that the amount which we have to the good is just about, though not quite, equal to our own war expenditure in Canada. I have not a statement here as to how much we have spent in Great Britain or abroad from April 1 of this year to July 20. All I can give is a general statement as to our expenditures elsewhere than in Canada since the outbreak of the war. I propose later, probably within the next week or ten days, to make a financial statement, in which I shall advert particularly to this matter, because I want the House and the country to keep informed as to the financial situation. I think it is right that they should know the facts, and as minister it is my duty to lay those facts before them.
The total amount which Canada borrowed from Great Britain to July 20, 1917, was, in [Sir Thomas White. 1
round figures, $317,000,000. That includes everything. On the other hand, we advanced to Great Britain up to July 20, 1917, $302,000,000. The amounts are about equal, subject to this: we repaid Great Britain $107,000,000 of the liability which we owed her, by an issue of securities of 3| per cent dollar bonds due March 1, 1928, $95,000,000; and 4J per cent dollar bonds due December 1, 1915, $12,400,000-a total of $107,000,000.
We repaid Great Britain our liability by the issue of those securities. I used the word "repaid," because those securities are pledged in New York for the indebtedness of Great Britain there. Therefore, the balance due by Great Britain to Canada on open account on July 20, 1917, is about $95,000,000. This statement is necessarily a fragmentary and partial one. When I make my financial statement to the House a little later on, I shall point out the extent of our estimated expenditure during the next few years and also inform the House as to the financing which we are doing here for Great Britain in order that Great Britain may purchase in Canada, munitions, cheese, hay, oats, flour, and other supplies. I have proceeded upon the assumption that it was our duty to do what we could to assist the financing of Great Britain in buying munitions and foodstuffs in Canada. In the first place, it is our duty because in that way we are materially assisting her in the prosecution of the war, and secondly, it is of great advantage to this country from a business standpoint and from the standpoint of our agriculture that Great Britain should be able to purchase in Canada munitions, raw material, supplies of all kinds, cheese and other foodstuffs. We have been able to do much in the way of assisting Great Britain to make those purchases. In my statement I shall refer to the extent of the assistance which we have rendered and are about to render.
It is necessary that we should extend liberal financial assistance to Great Britain to purchase in Canada by reason of an element to which I hesitate to refer, because I know my hon. friend from Pictou (Mr. Macdonald) takes decided objection to it.
I refer to the question of exchange. My hon. friend says that whenever I find myself perplexed or driven into a corner, I always resort to the exchange question. I would like to say to my hon. friend from Pictou, who knows more about exchange than is indicated by the remarks he has made respecting it to myself, that the exchange question is one of the most extreme im-

portance; its importance cannot be overestimated. In a word, this may be said: Great Britain can 'buy upon this side of the Atlantic only to the extent to which she can borrow upon this side of the Atlantic. Practically confined as Great Britain is to using the proceeds of her borrowings in the United States to purchases in that country, it is necessary that Canada should furnish credits to the Imperial Government to the utmost extent that we possibly can to enable her to purchase those munitions and foodstuffs so greatly needed by her army and by her civil population at this time. We have endeavoured to do that to the utmost of our power.


Frank Broadstreet Carvell: Would not the minister add to that ability our purchases from Great Britain?


William Thomas White: In the exchange situation, and having regard especially to shipping, and to the dislocation of British industries during the war, our imports from Great Britain are small, while our exports are great.


Edward Mortimer Macdonald: The other day I saw in an advertisement of the war savings certificates issued by the minister's department the- statement that we -were spending $2,000,000 a day on our obligations in connection with the war. Has the minister any computation of what our obligations amount to day by day at the present time?


William Thomas White: Both here and abroad?


Edward Mortimer Macdonald: I am referring to a statement made in an advertisement in an Ottawa paper.


William Thomas White: I observed that advertisement, which was not published by the authority of the department, or of the National Service Board, which has been assisting in promoting the sale of war certificates. I interested myself to have that statement withdrawn because it was misleading. Our expenditure is on no such basis.


Edward Mortimer Macdonald: Perhaps the minister, when he comes before the committee again, will tell us what the war expenditure is day by day. In framing this measure the Minister of Finance no doubt had in view the object of bringing home to all of our citizens the seriousness of the situation. There has been too much talk in this country of " business as usual," and of the prosperity of the country being so great.
Some hon. gentlemen have gone so far as to give some credit to the Government for that prosperity, whereas it is due to the huge quantity of supplies required in connection with the war, and to a great extent the people of this country have not realized the tremendous issues and the very great obligations this country is assuming and must assume in order that we may play our part in the war.
There seems therefore, to be this anomaly in the range of taxation the minister purposes imposing. Take the man who has an income of $5,000, which is an ample amount for any man to live on respectably in this country. After you deduct the tax he pays, he is left with an income of $4,880. After income tax is deducted the man with an income of $7,000 is left with $6,780; the man with an income of $10,000 is left with $9,600; the man with an income of $12,000 is left with $11,420; the man with an income of $15,000 is left with $14,150, and the man with an income of $20,000 is left with $18,100. Leaving out altogether those who have extremely large incomes, under the taxation proposed by the minister, you have a condition in regard to men with incomes between $5,000 and $20,000, under which my hon. friend does not really bring home to the door of the man who is wealthy and has much money to spend the stern necessity of the situation. $100 is of more consequence to a man with an income of $4,000 than it is to a man with $10,000, and the man with an income of $20,000 is left with over $18,000, which in Canada is a princely amount to live on. The percentage does not increase at the rate at which it should increase.
This taxation inevitably involves the strictest possible economy in detail. Every year the Government spends amounts varying from two or three to four hundred dollars on small matters in various parts of the country, and if the strictest economy is not exercised in these small expenditures the impression that it is desired to create by this legislation will be entirely lost. A measure of this kind imposes on the Government the duty of exercising the strictest economy even in the smallest expenditures. Although the ordinary citizen has but a faint conception of an expenditure involving millions of dollars, when he sees $2,000 or $3,000 wasted before his very eyes he gets the impression that this Government is not exercising the economy that it should, and I would particularly impress that phase of the situation upon the Minister of Finance.

Mr.' LEMIEUX: The one thing which will stagger the people of this country in connection with these income taxation proposals is the fact that they will be called upon to pay three sets of income taxation; first, a municipal tax, which I think exists in every province-it certainly exists in the province of Ontario, as all residents of Ottawa know too well-secondly, a provincial income tax, and now, superimposed upon these two taxes, comes the federal income tax. I do not say that I am opposed to a system of income taxation. Indeed, I warned my hon. friend a year and a half ago, when he introduced his business profits tax, that he would yet have to come to the income tax, which of all taxation measures is the most natural and the fairest. According to the best authorities, such as Adam Smith and Thiers, the income tax is the least objectionable of all systems of taxation, because it makes no distinction as between the taxpayers. The Minister of Finance stated at that time that an income tax would involve too large an expenditure in its administration. However, he has changed his mind, and to-day he lays before the people of this country a system of taxation which will bear heavily upon the taxpayers of Canada. The minister states, however-at least, that is what I gathered from his remarks this afternoon -that this income tax is only temporary, that when the war is over it will be either revised or wiped out. Personally, I do not share the optimism of my hon. friend on this point, because as a student of history,
I remember that when the first income tax was introduced in England by the younger Pitt at the time of the Napoleonic wars, a distinct pledge was given that it was only for the duration of the war, but Sir Robert Peel, Mr. Gladstone, and all the other great chancellors of England had to admit that the thin edge had been introduced into the taxation system of the United Kingdom, and the income tax was there to remain. In spite of the hopes of my hon. friend, bright as he thinks they are, I really believe that the income tax has to-day entered into the politico-economic system of Canada, to stay there for many generations.
Let me now emphasize what has just been said by my hon. friend from Pictou. If the people of this country have to be bled, and bled white, it seems to me that the duty devolves upon this Government to exercise the strictest economy in its expenditures; the Government should be implacable in. its reductions for the sake of economy. In the present financial crisis tMr Macdonald.!
which prevails all over the world-and that it is world-wide is made abundantly clear by the last presentment that was made to the British House of Commons by Mr. Bonar Law, as given in to-day's papers-it seems to me that the Government should reduce its ordinary expenditure to a minimum. I dare say that the Minister of Finance has read the article which was published a few weeks ago in the financial edition pf the New York Post by Mr. Hirst, the late editor of the London Economist, possibly the greatest financial authority in the British world. In that article, after calculating the war indebtedness of the different warring nations, he predicts that sooner or later, and probably sooner than later, some of the warring countries will be forced to repudiate their national debt. I do not say that this will happen in Canada, but it is well to pay heed to this warning from one of the highest financial authorities in the world. I am not referring to the war expenditure, although that, of course, should be very closely checked by the Minister of Finance, the Prime Minister and the Minister of Militia and Defence, but I say that the ordinary expenditure should be reduced by at least 50 per cent. There is no reason why to-day we should be building wharves, breakwaters, post offices and armouries in this country. There is no reason why at this present session, when we are.asked to pass this drastic legislation, the Government should insist upon the passing of the Quebec and Saguenay implementing Bill. There is no reason in the world for that, and if this miserable piece of legislation is insisted upon, it will revolt the people.
Then there is the Highways Bill, which it is intended to intioduce during this session. That Bill involves an expenditure of millions of dollars, and for what purpose? The highways are primarily under the jurisdiction of the provinces, and that expenditure if decided upon should be under provincial control. If we were living in ordinary times I for one would say: Very well, let the Dominion Government increase the provincial subsidies, and let those subsidies be specifically applied, so as to connect the highways of the different provinces from ocean to ocean.
But we are told that such will not Are the measure, that, on the contrary, it will afford the Government an opportunity at the proper time to spend vast sums of money for the highways of the Dominion. It is further stated that this expenditure

[DOT]will be the means of procuring employment for returned soldiers. Have we reached the point that Canada -will spend millions of dollars to make navvies of our returned soldiers? While I do not look upon the returned soldier as a first-class colonizer, or as a desirable agriculturist, still it is far better to direct the soldiers on the land in the West, according to the legislation introduced the other day by my hon. friend the Minister of the Interior, rather than to reduce him to the status of a navvy. Pray, do not insult the soldier by branding him as a navvy on his return. My hon. friend expects that the people of this country will voluntarily submit to this taxation. Perhaps so, but they will expect him to be the faithful watchdog of the treasury and see that no extravagant expenditure is made, such as the Quebec and Saguenay expenditure and the Highways Bill expenditure.
Now I come to the point I raised a moment ago, the Dominion War Loan security. I quite agree with my hon. friend that the people of the country should be impressed with the fact that it is right and proper that such security should be free from all taxation. I approve entirely of that principle. Perhaps I did not make myself clear on the subject, but the point I wished to place before my hon. friend was this-by this exemption of taxation as regards the Dominion War Loan securities, you invite, so to speak, capitalists and investors generally to transfer their funds from industrial investments to Dominion War Loan securities, and thereby you create this bonded aristocracy to which I referred the other day. I would like my hon. friend to examine that point and see whether it is right that a gentleman drawing dividends from industrial investments liable to taxation should transfer his holdings into Dominion War Loan securities and thereby avoid all taxation. I know my hon. friend gave good reasons, and reasons which I approve of as being quite proper and patriotic, why our Dominion War Loan should be exempt from taxation.


Mr. SCHAFFNER:: May I ask the hon. gentleman a question? Is is not likely that those industrial investments would toe earning more than five per cent, and is not that a reason why investors would not withdraw from industrial investments in favour of the war bonds?


Rodolphe Lemieux: If my hon. friend will consult the market returns he will see that since the beginning of the war there has
been many a -slump in the market, and there is much uncertainty in the minds of the investor as to the after-math. Owing to that uncertainty, people are disposed- and indeed more than disposed to- transfer their holdings into Dominion war loan -securities. A-s a matter of fact, -many of them have actually done so.


Herbert Brown Ames: May I -point out the fact that an industrial security usually brings a very much higher return than the Government war securities. If the industrial security does not biting a higher return than five per cent, it only -selfl-s for fifty or -sixty cents on the dollar, and if a man wished to convert -such industrial securities -into war bonds, he would only get about half th-e amount of war bonds.


Rodolphe Lemieux: My -hon. friend is too
keen a business man not to know that practically all industrial holdings which pay large dividends to-day are war industries. The war will come to an end -some day, -and those securities will be valueless or practically so, then you will have to build up new peace industries, and it may take years before they are in a position to yield the same -average return as they yielded in ante-war times. Take the paper industry for instance. I happen to kno-w a little about the business, because I represent cne firm dealing in pulp -and paper, and I have seen the European and United States contracts that firm had before the war. Compare those figures with the contracts which they are making to-day, -and tell me if -the present contracts will last 1-ong after the w-ar, when we -shall have reverted to normal conditions? It is only a passing prosperity. As was stated last year toy my hon. Mend from Pttctou (Mr. Macdonald), it is -a fictitious prosperity. Take any industry, and tell me if present conditions will continue *after the war? Perhaps in the -case of the *steel industry they may, because of the reconstructive period which will ensue, but do you believe -that after the war conditions will be the same with any other industry -as they are at -the present time? And that the large dividends now being earned will continue? Therefore, I say to my hon. friend from St. Antoine, that the investors who receive to-day tho.se large dividends, dividends for which waT conditions are primarily responsible, will not fail to acquire non-taxable war bonds.
Do you believe that these people will ever live in a fool's paradise and not think of the aftermath, when as the first news of peace is flashed out there will be a slump, when values wrill decrease and dividends will

vanish? It may be that I am somewhat pessimistic but my hon. friend knows that in the main I am right. The average investor who is the recipient of large divi dends knows that the Dominion War Loan bonds are gilt-edged securities, even if they do yield less than those industries which to-day are so prosperous, and he will hasten to convert those securities into Dominion War Loan bonds. That is the practice of a sound business man and I do not know or any Scotch investor who would not do that.


Herbert Brown Ames: To sell you must find a purchaser. Try to sell industrials today and find out how easy it is.


Rodolphe Lemieux: I hope that my hon. friend the Minister of Finance will look into the question and see if there should not be a maximum transfer in these cases. I simply throw out the suggestion to my hon. friend that he may think over it. On the whole, having supported the participation of Canada in this war, I shall support this measure. The income taxation measure, which, in spite of what my hon. friend stated this afternoon is here for many, many years to come will, I humbly submit, act on the people of this country as a sobering influence. I am, with all my heart, in this war, but I always stated that we should not go beyond our means and resources. Many titled gentlemen who are always ready to launch this country into imperialism and militarism will pause and ponder when reading their morning paper to-morrow. They will then realize that taxation measures constitute the sobering influence upon their dreams of imperial and military domination.


Mr. McCREA:: With regard to the exemption of married and single men I think the limit is probably quite low but it should be graded. The responsibilities of a single man who gets beyond $10,000 a year are very much less than those of a married man. A single man who has an income exceeding $10,000 should be graded very much higher than he is. A single man may have dependents, a mother and sisters to support, but as a rule he has not nearly the responsibilities a married man has. He has not the responsibility of housekeeping, of keeping a family and providing for their future as a married man has. I think it would be well for the Minister of Finance (Sir Thomas White) before this Bill finally passes to consider this matter. I think he will find that it is only reasonable that a

single man without any family or responsibilities, when he gets beyond a certain amount, should be graded very much higher than a married man.
There was -another matter that I notice the minister did not refer to. What effect will this Bill have on the income of soldiers at the front? There are some men who have investments -and their incomes will be subject to taxation. I would like to know if it is the intention of the Government that a soldier who would be subject to taxation under ordinary circumstances will be subject to taxation under this Bill? It does not appear right.
On the general principle of taxation of incomes I must congratulate the minister. I am pleased to see that he has shown that his mind is in a sound state. It always is pretty sound but it is now better than ever. I was pleased to hear him state that he was not in favour of the policy of taxing industry or energy or of putting an obstacle in the way of a man who puts his energy and ability into the building up of the business of the country. In my judgment, it is a shortsighted policy to tax men of that class because they are the men who are building up this country. I was glad to hear the minister say that he had realized this fact and that the business taxation would be terminated in one year. If the minister had gone a little farther and had remedied his mistake in interfering with the price of news print paper and placing it at a -cent a pound less than it could be produced for I would be inclined to give him absolution.


William Thomas White: I desire to say
just one word in reply to my hon. friend from Sherbrooke (Mr. McCrea) about the unmarried men. There is more to consider in connection with a measure of taxation than the amount which might be taken from the taxpayer. There may be unmarried men in -Canada of great ability and great enterprise whose activities mean much to this country. If we tax them too drastically the question comes as to whether they would-I do not mean immediately, but in the future-be liable to. remain in Canada.	'


Frank Broadstreet Carvell: Yes, they would remain and get married.


William Thomas White: There is always a
question as to whether unmarried men, enterprising, able, about to make Canada their home, may not be debarred from doing that by too heavy an income tax. I just throw

out these suggestions to my hon. friend. My own view is strongly that a distinction or a discrimination of $1,000 in favour of married men is about as fax as we should go. I do not believe there are many unmarried men in Canada getting salaries from $10,000 up to $50,000. An unmarried man who has an income of that kind usually has a good many dependents.
In regard to what my 'hon. Mend from Eouville (Mr. Lemieux) said as to the exemption of income from Dominion bonds he agrees with me and I think most men will agree, that these bonds should be free from taxation. There must be a certainty about a bond of that character. The public will not buy it in the large volume in which the issues are made unless they know positively that it is free from income tax present or prospective. As to whether people will sell out stocks and bonds, try to realize on the securities they have and buy Dominion bonds, I may just say to my hon. friend that these things adjust themselves. If a man has a mortgage investment that pays him seven per cent, it would not pay to change it into Dominion income bonds because the yield would be very much less than that which he is now obtaining. This -income tax will have this effect, I think, and I hope' it will tend to make an excellent market for Dominion bonds. While that market exists for Dominion bonds it means that you can put your issues out at an advantage. You can sell them at a lower interest yield and the country gets the advantage. I am not at all apprehensive that it will bring about a serious dislocation of the business of the country. It will benefit the market for and the price of Dominion securities and that is a matter that is desirable in the national interest. But I do not believe that people will sell out a mortgage investment or other securities and buy Dominion bonds because the rate of yield which they get from these other securities is much higher than they will get now or in the future from the Dominion issues which are not subject to taxation under the provisions of this Act.
The hon. member for Pictou (Mr. Macdonald) asked me for certain information which I now have, and which I shall place upon Hansard. I find that the war expenditure of Canada in Ca'nada from April 1 to July 20 of this year was $39,700,000; that the estimated expenditure elsewhere than in Canada, including France, was $62,600,000. That means that the total expenditure from April 1 to July 20, on war account, was $92,000,000. That is at the rate of a little less than $840,000 a day.
Let us say, in round figures, that $850,000 to $900,000 a day represents the war expenditure of Canada at present.


Alexander Kenneth Maclean: The hon. member for Pictou had in mind an item that appeared in the Ottawa Citizen to the effect that the expenditure amounted to $2,000,000 a day.


William Thomas White: That is incorrect.
Resolution reported, read, the first and the second time and agreed to.


William Thomas White: I will introduce the Bill to-morrow.
At six o'clock the House took recess.
After Recess.
The House resumed at eight o'clock.


THE SOLDIER SETTLEMENT BOARD.
[Stage Direction]
Hon. W. J. ROCHE (Minister of the Interior) moved the second reading of Bill No. 116, to assist returned soldiers in settling upon the land and to increase agricultural production.
Mr. J. G. TURRIFF (Assiniboia):: Before this Bill is read the second time, I want to put myself on record as being absolutely opposed to the principle of putting on the land men who are not accustomed to farming. Undoubtedly, returned soldiers who have been farmers will be able to make good; the aid given by the Government under this measure will be an advantage to them as well as a general advantage to the country, but I understand that the provisions of this Bill apply to returned soldiers from any part of the Empire. Not one in fifty soldiers from Canada or from other countries who have not been accustomed to living on farms can possibly make good under this proposal. It is proposed that men who for the last two or three years have been living in large communities, as it were, with plenty of company, shall be sent to land belonging to the Government which is situated twenty, thirty or forty miles from a railway-because in many cases you have to go that far from railway communication in order to get good land. By making an advance of $2,500 to men of that kind who occupy these lands, it is expected that they will make good. We had experience with that class of settlement in the West in early years. People of different nationalities were brought into the country, placed upon land and given an advance of $600, a mortgage being taken just as is proposed here. "These people did



not understand farming. They spent several years at the work, but in the end they lost everything, they were unable to pay one dollar of the money that was adr vanned to them, and the mortgage companies, or whoever advanced the money, took over the lands in lieu of the debt. In those days $600 would buy almost as much as $2,500 will buy to-day.
This policy may well be applied to men who know something about farming, but some other -method should be adopted of giving a start to the men who are not accustomed to farm life or living long distances from towns. A better way of looking after returned soldiers who are not accustomed to farming would be to follow the example set by Alberta. There they have established schools in which men of education are trained to become school teachers, while those who are not fitted for teaching are put into a technical school and taught trades. By following this course, such men can be put in a position to earn a good living, with resulting advantage not only to themselves, but to the country generally. The Government will make a great mistake if they pass a general law under which returned soldiers from all parts of the Empire, inexperienced in agriculture, will come into Canada and occupy land. They get a quarter-section of land, we advance them $2,500-and five years afterwards they will not be worth a dollar. It turned out that way in practically every instance in the past; why should the chances for success be any better now, especially in view of the fact that we are dealing with men who will not be content to live a long distance from railways, separated from social intercourse, and put up with the conditions that any man has to put up with who pioneers in a new country a long distance from railway communication? I know a good deal about it; I went through it myself. Many difficulties have to be overcome, and I say that only the men who are accustomed to life on the farm will make good under this proposal.


William James Roche: Mr. Speaker, I am afraid that if we were to follow the advice of the member for Assiniboia (Mr. Turriff) we should be discouraged from attempting to place upon the land any person who has not had experience in farming. As I have explained, the desire of the Government under this legislation is twofold: first, to do something for the returned soldier by placing him upon the land; secondly, to increase agricultural production. Every other

country is, with good hope of success, adopting a land policy, not confining it at all to those who were previously upon the land; I do not see why we should be discouraged from doing the same thing in Canada. The cases referred to by the member for Assiniboia are cases in which there was no supervision of the expenditure. In this instance the loan to the returned soldier will be expended under the supervision of the Board of Commissioners who will be appointed for that purpose. Besides, it is the intention to grant loans, not to persons inexperienced in agriculture, but only to those recommended by the Board of Commissioners, who will first satisfy themselves that the persons in question measure up to the qualifications set forth in this legislation. It is the intention to provide agricultural training for the men who have never had agricultural experience. Australia and New Zealand are encouraging soldiers to go on the land-not only their own soldiers, but British soldiers as well. We are safeguarded by advancing loans only to those who are recommended by the commissioners as being likely to make a success of agricultural work. And, as I have said, the commissioners have supervision over the expenditure of the money.


John Gillanders Turriff: Will this legislation apply to the soldiers of India?


William James Roche: No.


John Gillanders Turriff: Does the Bill not so provide? What about British subjects from India?


William James Roche: The legislation defines
" 'settler " as follows:
Any person who has served in the naval or military expeditionary forces of Canada during the present war, or who was engaged in active service during the present war in the naval or military forces of the United Kingdom or of any of the self-governing British dominions or colonies.
So that it does not apply to the class of persons referred to by my hon. friend.


[Stage Direction]
Motion agreed to, and Bill read the second time.
The House went into committee on the Bill, Mr. Rainville in the chair.
On section 2-Definitions.
Frank Oliver: In regard to subsection (c), the minister will remember that the hon. member for Bonaventure (Mr. Marcil) made a certain suggestion in reference to the inclusion of citizens of Canada who

served in the forces of the Allied countries. There are some such cases, and the hon. member was anxious to know if the minister could see his way clear to accept that suggestion.


William James Roche: The hon. member for Bona-venture particularly referred to the French and the Belgian reservists who were summoned to the colours and who were citizens of Canada. I have an amendment here to meet the wishes of the hon. gentleman. I beg to move:
That subsection (c) of section 2 be amended by inserting after the word "Colonies" in the fifteenth line, the words "or who being a British subject resident in Canada before the war has been engaged in active service at one of the seats of war in either the naval or military forces of any of His Majesty's Allies in the present war."


John Gillanders Turriff: A few minutes ago the minister stated that in the past the classes of people vHio had failed under a system something like this were people who had settled on the land and been given advances of money, the expenditure of which was not subject to supervision. I know of two colonies that were settled under somewhat similar conditions and that were under very strict supervision, and success did not result. Take the crofter settlement of Moosomin and the crofter settlement in the vicinity of Killarney in southern Manitoba. These were well supervised; the men were put on the land and given an advance of $600. And yet not 2 per cent of them made good. They lost their land, and they lost that money. The parties who advanced the money took the land back in the end, and it was only after many years of experience in the country that these settlers, after starting absolutely on their own account without a dollar, began to make some advancement and to meet with some success. While it might be all right to 'incur a loss of $2,500 in fihe case of any of our returned soldiers, when you come to run the risk of incurring a loss of $2,500 on any soldier from any of the other parts of the Empire who chooses to come here and who may toe passed upon the commission, the country is undertaking to ispend many millions of dollars and will probably incur a loss of millions without helping on development. I am absolutely convinced that, with the exception of men who are .accustomed to farming, not two per cent of the returned soldiers who settle on the land will .succeed.


William James Roche: They will have to prove
their ability to the satisfaction of the commission.
240J	>


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 3-Boards.
Frank Oliver: I notice that the commissioners may he removed at any time by *the Governor in Council for cause. Those commissioners will have very important powers, and it is, I assume, desired by the Government that in matters o.f administration they should exercise those powers as a commission without let or hindrance on the part of the Government. That is to say, the Government will lay down certain limits within which this board shall have full power to act. Does not this provision in regard to the dismissal of the commissioners hold them under the authority of the Government to a degree that is not altogether desirable? If it is the idea of the Government to have the commission independent of departmental administration, it would seem to me that the appointment should be made somewhat more permanent' than it is in this section. I am not urging that that should be the policy of the Government, but if it is the 'Government's policy then the wording of the 'section *should give a greater guarantee of independence on the part of the commission.


William James Roche: 
Frank Oliver: If this provision is parallel to that in the Railway Commission,, it ought to be satisfactory.


[Stage Direction]
Section agreed to.
On section 4-Dominion lands to he reserved.
Frank Oliver: When we were discussing the resolution, I raised a question as to the advisability of what might be called permanent reservations, such as are contemplated by this section. While we desire to meet the purposes of 'the Bill by giving priority of right to those taking advantage of the provisions of the Bill, we do not wish unduly to prejudice the ordinary settlement of the country. I think at the time I suggested to the minister and

if I did not, I desire to suggest now, that instead of a permanent reservation to continue until three years after the wax being made, provision be made that reservations may from time to time be made for the purpose of giving soldier settlers priority, but that any such reservation shall not continue for a longer period than six months. That would give the soldier settler priority during the period of six months, but it would not hold back other settlement awaiting the time when the soldier settler might find it possible to take advantage of the provisions of this Bill.


Mr. EOCHE:: I think the object is that this power should be exercised with discretion by the commissioners. They need not necessarily place the reservation on certain lands for three years. It was deemed advisable, however, to stipulate that no land should be reserved for a longer period than' three years after the close of the war, because we were convinced that any person taking advantage of this legislation would do so within that time. Of course, it would not be wise to lock up any large reservation for a period of two or three years and say that nobody should go in there. I think the commissioners would be guided largely by the number of applications they received from returned soldiers to go on the land. For instance, after a certain number [DOT]of applications had been received they *would ask that a certain township, we will say, be reserved, and the soldiers would have priority for a certain length of time.
I do not suppose that the commissioners, as soon as this legislation comes into force, would go out and select a large area of land and say that they were going to make a reservation of that land for three years for the returned soldiers. We set three years as the maximum, but of course it might be very much less than that. The commissioners will operate under regulations to be approved by the Governor in Council, and I think they will take the view that I have suggested.
* Mr. OLIVEK:	The wording of the section places the matter under the direction of the minister, and after the minister's declaration of policy I have no objection to this power being given; but my understanding is that the policy of the department will be as stated by the minister a moment ago.


John Gillanders Turriff: What is the idea of the Government extending this privilege to returned soldiers from all parts of the EmfMr. Oliver.]
pire? Why should Canada undertake the expenditure of the many millions of dollars that this Bill will entail for soldiers from other portions of the Empire? If seems to me that we shall have a pretty big job on our hands looking after our own. returned soldiers without making ourselves responsible for the welfare of returned soldiers from other parts of the Empire.


William James Roche: As I stated when I introduced this legislation, our first duty will undoubtedly be to look after our own returned soldiers., and I fancy that for at least one year after the war we shall have very few returned soldiers coming to us from the armies of Great Britain or our Allies, because the transportation companies will probably require a year to bring home our own soldiers. I understand that Lord Shaughnessy said some time ago that it would take at least ten months after the close of the war to get our own soldiers back to Canada, so I think within that time we need not look for any immigration. I hope the hon. gentleman's expectations in one respect may be realized; so many of his colleagues, and many who are not his colleagues, have expressed the conviction that comparatively few of our own soldiers will go on the land no matter how attractive the inducements may be. At all events, it is certain that we will not be rushed into an expenditure of millions in looking after our soldiers in this way. They will have to show their bona fides to the commission, and the commission will satisfy themselves that the applicant has the experience in agriculture and the other qualifications set forth, before recommending that the loan be advanced by the Government.


John Gillanders Turriff: I would point out that returned soldiers from other parts of the Empire can get to Canada much more easily than they can get home in many cases, and I think many of them will come here direct instead of going home to their own country.


Frank Oliver: I wish to draw attention to the last two lines of subsection 3 of section 4:
The minister may grant .... a free entry for not more than 160 acres subject to such conditions as in the opinion of the Governor in Council are necessary to secure the use of the land for the purpose for which it is granted.
That is to say, the homestead regulations which are embodied in the Dominion Lands Act are to have no parallel in this Act, as the regulations are to be the subject of

Orders in Council. Following the same line of argument that I used a day or two ago, regarding game preservation in the Northwest Territories, I would respectfully urge that the conditions upon which the settler may acquire the land and the use he must make of it should be set down in plain terms in the Act, so that everybody could see exactly what they are. I think that is only fair to the soldier, and only fair to the country and everybody else.


William James Roche: The trouble lies in the impossibility of knowing at this time just what conditions should be imposed. As a matter of fact the commission will determine that, and we will act upon their recommendations. The commissioners will recommend regulations to us which will set forth conditions such as are set forth in section 3. That is the manner in which it has been done in New Zealand, Australia, and the other British colonies. In both New Zealand and Australia there is very little in the statutes. Their Acts are mere skeletons. I have the New Zealand regulations before me, and the Act is administered almost entirely by a set of regulations which were recommended by the local board. I cannot see how it would be possible in passing this Bill to impose the conditions under which this land may be secured when, as a matter of fact, the Governor in Council will have to depend upon the commissioners for knowledge of those conditions.


Frank Oliver: I do not see the matter in the same light as the minister has placed it. The Government is asking the House to assent to a provision of a very important nature, when we have no knowledge as to what we are assenting to. We simply give a blank cheque to the Government for them to fill in as they please. In my judgment that is not good legislation, and is not fair either to the soldier or to the country. The fact that this is done in Australia, or in New Zealand, or in some other country, does not at all settle the question so far as Canada is concerned. We have greater experience in the matter of the settlement of homestead lands than either Australia or New Zealand could possibly have, and instead of our being guided by their action, I should think our action would be a guide for them, allowing, of course, for the great difference in climatic conditions which make it impossible for us to accept the land regulations of Australia and New Zealand as being applicable to Canada. I may go
so far afield for a moment as to say that during this session of Parliament we have been taking part of our legislation from London and part from Washington, and we have made no objection to it, but when we begin to bring in legislation from New Zealand and Australia, I think it is really overdoing what may be a very good thing. In making any arrangement for the disposition of our own lands, to our own soldiers, we should let our people know exactly what we are doing beforehand, so that there may be no misunderstanding as to the character of the offer we are making.
Upon this condition depends the whole character of the offer. The conditions may be such as will actually debar the settler from taking advantage of it, or receiving any advantage from it. On the other hand, the conditions may be such as to create a situation in which the country will suffer very seriously instead of being benefited.


William James Roche: I would call my hon. friend's attention to section 8, which provides that:
(1) The Board may, with the approval of the Governor in Council, make regulations,-*
(a)	Prescribing the manner in which entries for land and applications for loans may be made;
(b)	prescribing the conditions upon which free entries and patents for the land may be granted and issued.
-and so on. The hon. gentleman will see that the Board itself, with the approval of the Governor in Council, makes the regulations. I think that would accomplish the purpose that he has in view. I am sure that there will be a disposition' on the part of the Board, as well as of the Governor in Council, no matter what Government is in power, to deal most leniently with the soldiers and to. make the conditions bear as lightly upon them as is consistent with carrying out the policy which we all have in view. I cannot see the necessity of incorporating certain of the conditions upon which they get the land in detail in the statute. I think that a certain latitude must be allowed to the Board to lay down conditions by way of regulation, as they have done in New Zealand and Australia.


Frank Oliver: It has been recognized as being necessary, ever since we began to administer homestead lands, that the conditions under which those homestead lands might be acquired should be set out in the

statute and not be made the subject of Orders in Council. We are going into an arrangement here which reaches very much farther in the matter of governmental responsibility than the ordinary homestead regulations, and all I ask is that we give the same assurance of stated facts to the conditions that we found necessary in the case of ordinary homesteaders. If this was necessary in the case of ordinary homesteaders, it is very much more necessary in the case of this special class of people with whom we have to deal.


[Stage Direction]
Section agreed to.
On section 5-Loan to settler not exceeding $2,500.
Frank Oliver: I assume that the soldier who has rendered service and has returned will he eligible, under this section, to secure a loan on his homestead?


William James Roche: Yes.


John Gillanders Turriff: Will a returned soldier
who is eligible as a homesteader be able to take a homestead and then get from the Government under this Bill an adjoining quarter section in addition?


William James Roche: This Bill does not interfere with a man's homestead rights, so that he can qualify for this 160 acres upon being a soldier and in addition he can exercise his privilege of homesteading under the Dominion Lands Act and take an adjoining homestead.


John Gillanders Turriff: Will he be allowed to take a homestead in this reserve?


William James Roche: Either in or outside of the reserve. He will not be confined to the reserve.


John Gillanders Turriff: A man who has not had a homestead in Canada will be able to secure a half-section under this Bill?


William James Roche: Yes.


Mr. JAMESON:: What arrangement, if
any, does the minister purpose to make for settling soldiers in those provinces in which they desire 'to settle? I would like to know if any provision will foe made for the expropriation of land of a suitable character and what steps will be taken in that direction.


William Roche: All the public land outside of the three- prairie provinces is Crown land in the right of the provinces and each of the provinces has a land settlement policy of its own. Some of the provinces have already
[Mr. Oliver !
passed legislation with special reference to the returned soldier. Others possibly have in contemplation legislation with special reference to the returned soldier. We thought it advisable, after consultation with the representatives of the various provincial governments, to leave the disposition of the Grown lands of the various provinces entirely to the provincial governments. Some of these provinces, notably Ontario, at the last session of the provincial legislature, gave 80 acres of homestead land in the North ern part of the province to any returned soldier who wished to settle on it. I do not think that Nova Scotia has adopted legislation as yet with special reference to the returned soldiers. However, the returned soldier who desires to locate upon Crown land in Nova Scotia, or who has a little capital of his own and desires to purchase some land, may utilize this section and secure a loan to the maximum amount of $2,500, just the same as those soldiers who want to locate upon the free Dominion lands in the West. The loan part of this Bill is available to the returned soldier in any province of the Dominion and with reference to any land upon which he may desire to locate.


Herbert Brown Ames: What course will be pursued where there is already a loan policy on the part of the province? Will both loans be available?


William James Roche: In that respect the commission will have to measure up their security. They, will have to get the necessary security, which is a first mortgage on the land, and if the provincial government have already granted a loan to the returned soldier on provincial Crown land and got a first mortgage, the soldier would not be eligible under our legislation unless he utilized our loan for the payment of the first mortgage, giving us a first lien.


Clarence Jameson: The difficulty I foresee is this: In certain provinces in Canada, notably, Nova Scotia, Prince Edward Island and New Brunswick, there are no free lands suitable for settlement.


Francis Cochrane: 
William James Roche: I imagine that there will
he so much rivalry between the various provinces to retain their own soldier population within the confines of these provinces that they will be only too* pleased to adopt land settlement policies of their own and do the same as the provinces of Prince Edward Island and New Brunswick have already done. New Brunswick is expropriating land other than its own Crown lands. Most of the Crown lands are disposed of but they have a land settlement policy under which they iare purchasing unoccupied lands and farms and making them available for returned soldiers. There is no reason why Nova Scotia should not inaugurate a similar policy for her returned soldiers and vie with the other provinces in retaining her own soldier population.
The province of Prince Edward Island sent a deputation here and explained to us that it is their intention to expropriate certain land and they desired to know if they could oo-opeTate with us and take advantage of this loan. We assured them that we would be only too- pleased to have them do so. A returned soldier in Nova Scotia, who has a little money of his own and desires to remain in his own province and take up farming, may purchase whatever land he likes but whether he remains in his own province or whether he desires to take up a praiiie farm, we will, under the provisions of this Bill, advance him $2,500 to pay for the farm. That would strike me as being a much fairer policy than that the Government should step in and expropriate land within these provinces for soldiers to locate upon. I am satisfied that the provincial governments would be only too pleased to do their utmost to supply any available 'Crown lands they have of their own to keep their own soldier population within their own provinces.


Clarence Jameson: If the minister pursues his argument a little further he will see that, upon his own statement, it is quite unnecessary for the Government to introduce this Bill at all. If the provinces will do it, why have this Bill?


William James Roche: The hon. gentleman overlooks the $2,500 entirely.


Clarence Jameson: No, I am not overlooking it at all. I am speaking of the acquisition of the land. It is going to work a great unfairness to those provinces where the lands are not held in the Crown in the right of the Dominion. Of course, I can do nothing more than express my views to the minister and indicate the course which, in my opinion, the Government should pursue. Instead of adopting this unsatisfactory policy I can only point out what in my judgment would have been a better and a proper policy.


Herbert Brown Ames: While the Returned Soldiers Committee were meeting a [DOT]large number of deputations waited upon us, many of which referred to land settlement. We found that no two provinces asked for the same thing in the matter of land settlement, and we have a large number of memorials in our evidence, which members can read for themselves, coming from various provinces with reference to the conditions of settlement of returned soldiers. We found in each ease that the pro-
378(6

posals were adapted to the particular conditions of the provinces themselves. If these provinces were to control their own regulations, we thought the better way would be to allow each to take its own time to work out a policy of its own with reference to the assisting of returned soldiers having reference to the peculiar conditions obtaining in each province. A number of the provinces have already parsed statutes and they are planning several more- One proposition for land settlement that has been very popular in the Maritime Provinces is the community settlement plan. Several projects were submitted to us, the essential idea of which is that land should he expropriated, a central village established in each area and small farms within a radius of it taken by persons who might have a house and a barn in the little village that it is proposed to create. All the schemes have special reference to the province wherein they were devolved, and it seems to me that we can rely upon each of the provinces adopting legislation which will suit the soldiers of these different provinces.


John Gillanders Turriff: 
William James Roche: We have not drawn the line so fine as that. We have defined "settler" to mean "any person who has served in the naval or military expeditionary forces of Canada during the present war."


John Gillanders Turriff: That would bring them in.


William James Roche: That covers the point.


Herbert Brown Ames: If a man joins to-day, spend a week in the expeditionary force expecting to go overseas, and is then discharged, is he entitled to the benefits of this Act? He is a member of the "expeditionary forces of Canada" on active service.


William James Roche: The commission will exercise a discretion in that regard. The loan shall only be given to a man "who has left
I Sir Herbert Ames.]
the forces with an honourable record and who has been honourably discharged." If he has been discharged on account of any irregularity, he would not be eligible, and the commission would exercise a discretion in that case.


Herbert Brown Ames: Will men who enlisted, were passed as medically fit, served a short time in Canada in camp or barracks, went to England and were found to be unfitted for soldiers and were discharged, be entitled to the benefits of this Bill?


William James Roche: I do not see any reason to deny them the benefits inasmuch as we are desirous of getting increased production and getting soldiers on the land. We are not making a gift to any individual. We are desirous of getting a quid pro quo, and the quid pro quo is a soldier settler. We should not offer any interference or any bar to any returned soldier who desires to settle on the land. We ought tp make the interpretation pretty broad. Any person who has joined the Canadian Expeditionary Forces for active service would be included.


Herbert Brown Ames: It seems to me there should be some recognition of the degree of service rendered, and that a man who has only served a week or so in Canada should not be compared with the man who has actually gone to the front or who has given two or three years of service. As far i as getting at the facts is concerned, and that sort of thing, you might make a classification as between the men who have been in France and the men who have only been a few weeks in the service here. There should be a differentiation. I do not think that any man should get special privileges unless he has actually gone overseas.


Mr. SUTHERLAND:: What are the special privileges? Has a soldier, to get a land grant, to do settlement duties and make improvements the same as an ordinary settler?	<*


William James Roche: That was all discussed a few moments ago.


Donald Sutherland: Well, I was not in.


William James Roche: He has to comply with certain conditions which will be recommended by the Board of Commissioners, and approved by the Governor in Council under conditions that will be laid down by regulation.


Donald Sutherland: In some of the other provinces where land grants were given to veterans on previous occasions

there was great difficulty. The soldier was anxious to avail himself of the free land grant, but not to settle on the land. This was unjust to adjoining settlers and retarded development. These returned soldiers must become settlers?


William James Roche: Undoubtedly they must he permanent settlers.


Donald Sutherland: So that the returned soldier does not receive much favour in respect of the land, but he receives this loan of $2,500, at a rate of interest not much below the ordinary rate, with which he can start operations. I should think that to induce the soldiers to go on the land some further inducement will be necessary. I am glad that the Bill is to apply to other provinces than those in which the Dominion holds lands. Otherwise there would be discrimination against the older provinces. After their experience as soldiers I doubt if these men would wish to settle on isolated farms, and by the provision enabling the purchase of lands they can be given farms in the older provinces where they may be more comfortably settled. I was impressed by the measure introduced this afternoon to assess large incomes for carrying on the war. The soldier is making the greatest sacrifice, and it is only right that the rich man at home should give of his wealth to assist in carrying on the waT. I think our treatment of the returned soldiers should be generous, that we should do even more than is proposed by this Bill. Many of these men will not like the idea of going into the newer districts and becoming pioneers after their experience of the last few years.


Frank Oliver: I have the authority of Lord Shaughnessy in support of a view which I advanced on the same line as the argument of the bon. member for South Oxford (Mr. Sutherland). I said that it would be economical and in the interest of rapid increase of production if prairie land not under cultivation, but situated in the vicinity of railroad communication were expropriated at a fair price and then distributed among the soldiers on fair terms. With the financial assistance given them by this Bill they can bring that land into production in the shortest possible time. We should be getting a return upon our investment, and the soldier himself would be doing better than if he became a pioneer. But it may be said that that would increase the investment of the country on behalf of the soldier. It
does and it does not. It does increase the initial investment required in payment of the expropriated land. That would be an additional amount, but it would be no additional risk. The $2,500 would be a loan to the soldier to purchase stock and machinery upon which the Government would hold a lien, and of course the land would be worth what the Government paid for it.
If the payment for the land were extended over a long period of years at a moderate rate of interest, while the original investment of the Government would be increased, the risk of loss would not only not be increased, but would be very greatly lessened, and the results in the matter of increased production and of self-support by the soldier would be reached in a very much shorter time. I observe provision in section 5 empowering the Government to take such action as I have suggested. Is that in contemplation?,


William James Roche: The principal reason for putting that in is to enable any soldier who desires to go on land other than Dominion land to acquire land wherever he likes. It is thought better that he should buy the land than that the Government should expropriate it. If, as has been suggested, we are going to lose a lot of money under our free land grant and the advance of $2,500 to the soldier, the country would be much more involved if, in addition, we expended millions in expropriating lands which might remain on our hands for a long time. It is true we should have the lands, which would be of value, but in war times we have better use for our money than buying lands which may not be required even for the purposes of settlement for years to come. This provision is to enable the soldier to purchase land wherever he may desire. He can use the money in clearing the land and getting started.


Frank Oliver: I am not the originator of this suggestion; I first saw it mentioned on the authority of Lord Shaughnessy, of the Canadian Pacific Railway. I think that everybody must pay some respect to a suggestion ' in regard to land settlement coming from such a source, especially in view of the fact that the organization of which Lord Shaughnessy is the head is the owner of a large amount of unoccupied land. He said that he was prepared, *n behalf of the company, to take the same chance as anybody else and have the land expropriated for this purpose. While the policy of the Government does not at the moment contemplate any such action, under this subsection, it would be possible

for such action to be taken. May I urge upon the Minister of the Interior and the Minister of Finance the advisability of taking up that question and of discussing it with those who are well posted on the subject? Having had -as great experience, perhaps, in the matter of homestead settlement as any other member of the House, I am strongly of the opinion that in the end it would be better for the settler, and better for the country, to adopt the suggestion that has been made than to depend upon the occupation of distant, unimproved, uninviting and, to some extent, inaccessible land, such as our present homestead land largely is.


William Thomas White: It has frequently been suggested that it would be a wise policy for the Government to buy extensive tracts of land and sell them to settlers who have a certain amount of capital-the last having always been regarded as an essential feature. In order to get the Northwest settled up, it may be necessary for the Government to expropriate lands at present held in private ownership-as my hon. friend suggests, and as, I think, Lord Sbaughnessy suggests-and to sell them to settlers coming in who have a certain amount of capital, which would be a measure of security to the Government, the Government possibly making a further advance to those settlers. The question of the expropriation of lands held by railway companies, or in private ownership, convenient to railways, is really one of the larger questions of settlement; it is a wider question than that which is now under consideration. It is, I think a matter that is well worthy of consideration. At present there is the financial difficulty in the way of considering it, even if it were regarded as otherwise practicable and as good policy. As to this particular measure, we are advancing $2,500 to any soldier who may desire to settle upon Dominion land in the West on terms of settlement to be established by the commission and approved by the Governor in Council. In the case of a man taking free lands, $2,500, or even a less amount, would be of substantial assistance to him in establishing himself and his family on the farm. A comparatively small percentage of those who have gone on free lands in the West have had as much money as that to start with. Moreover, there are provinces, in which the Dominion has no lands, and it was regarded as desirable that this measure should afford also a degree of assistance to the soldier who might not desire to take up free lands in the West, but who might 
desire to remain in Ontario, Quebec, or the Maritime Provinces. Under the provisions of this Bill, the $2,500 is available to such a soldier. We had a provincial conference here in which this matter was discussed. All the Provincial Governments are greatly interested in the matter; they all proposed to take steps to secure their share of the soldier settlement. New Brunswick has already a land settlement scheme, and they intended to proceed actively with it. Under that scheme a soldier could buy from them land which was owned in the right of the Crown, or that had been expropriated or otherwise acquired under their Land Settlement Act. We are asked if this $2,500 would be available to a soldier so settling upon land in New Brunswick. The answer was, as the minister has stated, that the $2,500 would be available, secured, of course, as provided in the Bill; and to that extent it would afford substantial assistance to the soldier settling upon land in New Brunswick. The soldier in New Brunswick might desire to go into intensive farming and to take up from ten to fifty acres-not necessarily 160 or 320 acres. The $2,500 would enable him to take up a small farm, especially if he had a little money of his own or had received such assistance from the Provincial Government as I have mentioned. Quebec is interested in the matter; Quebec has Crown lands. Ontario intended to proceed actively with this land settlement scheme, and has so proceeded. It seems to me, therefore, that the Government is well advised in giving a loan of $2,500 to the soldier who settles, first, upon the free lands of the West; or, secondly, upon the free lands of any of the provinces, if the provinces make provision for making those lands available to the soldiers, as I believe they intend to do; or, thirdly, upon any land that he may have acquired. Some question was raised as to the rate of interest, five per cent. That is a lower rate than the Dominion can borrow money at to-day. The valuable feature of these loans is that they are spread over a long period of years, with a gradual amortization of the principal. I had a good deal to do with this measure, because, if it is availed of to a considerable extent, as I believe it will be, it will involve very heavy financing. It seemed to me that- the measure would be very helpful in the establishing of soldiers on the land. I put it to my hon. friend, as a man who knows the West, that a scheme of the kind thaj, has been suggested, having to do with the larger question of settlement, is not likely to sue-

ceed unless the settler to whom the land is sold by the Government has himself a substantial amount of capital which will represent his stake in the property. Given settlers such as we get from the United States, who have capital of two or three thousand dollars, to whom loan might be made by the Government under some general scheme of land settlement after the war, the adoption of such a suggestion might result very advantageously to the West, and consequently to the whole of Canada. It is a matter to which we should be glad to give consideration.


Frank Oliver: I do not want the minister to take what I have said as a suggestion that the Government should go into a general scheme of expropriation of prairie land. I only suggested that, in so far as it might be applicable to this Bill, under which we are really taking hold of a special class of people and giving them special privileges, the expropriation of this unused land, if made would be in order that the land might be acquired at a fixed and reasonable price. But I think the Minister of Finance hardly caught my suggestion, which was that the purchase price of the land would be in addition to the cash amount advanced which would be for the working of the land. Suppose we paid $20 an acre, which would be a very high price for raw land. That would mean $3,200 for a quarter-section. That, of course, would add very considerably to the obligations of the Government, but it would, I contend, add to the security of the total investment, and, besides, bring a return very much more quickly than could be expected where the settler spent his $2,500 and spends four or five years of his time in bringing into production a part of a wooded quarter-section which might be ten, fifteen, twenty, thirty, forty, fifty or seventy-five miles distant from a railroad over roads which might be very difficult. Surely the man who has a quarter-section in open prairie within ten or fifteen miles of a railroad, with good roads leading to it, and who is given an advance of $2,500, will produce a greater and quicker result to the country and to himself than the man who has 'to spend $2,500 in the improvement of a bush or brush farm.


John Gillanders Turriff: I quite agree with the suggestion made by the hon. member for Edmonton (Mr. Oliver.) The Saskatchewan Government, at the last session of the local legislature, took power to do this very thing -that is, to purchase unoccupied lands held by speculators. Their idea is to purchase those lands at their value, or as cheaply as they can, and to re-sell them to adjoining settlers or to any other settlers who are prepared to go on the lands, and to give them thirty years for repayment of the purchase price. The object of the local Government is to get more people into the province and more land brought under cultivation.


Mr. MARCIL:: I was not in the House when section 2 was passed, but I understand that my suggestion was adopted and the Bill amended accordingly. I must thank the minister for having accepted my suggestion. I have had the opportunity of learning in Montreal, since this matter was mentioned in the House, that those who did take part in the war either for France or for Belgium would have thought an injustice had been done to them if they had been left out. Although I have never been west of Winnipeg, I have for twenty years been legislating here on matters connected with the West. Since this matter of land settlement has come up, I have had the advantage of being a member of the Returned Soldiers Commission and attending meetings at Montreal, Toronto and Ottawa, and the impression gathered was that unless very substantial inducements are given to the soldiers to go on to the land, very few of them will do so.
In Toronto, we were told that out of six or eight hundred men .at that time who had been asked as to what their future intentions were, only two per cent declared their intention of going on the land. The same thing might apply in Montreal. It is no exaggeration to say that the great bulk of those who enlisted in the military forces of Canada came from the cities and towns, and that a relatively small number came from the rural parte. If those returned soldiers are to go on the land, we shall have to give them good inducements. Some valuable suggestions have been made here to-night by the hon. members for Edmonton and Assiniboia. It strikes me as most extraordinary that the Dominion Government should allow large tracts of land to remain unoccupied and uncultivated along the line of .any railway in any part where the Government can exercise jurisdiction, and thus compel settlers to go long distances from railroads. The idea of expropriating lands and of giving the soldiers first choice is an excellent one and one well worthy of being looked into. I am sure the House will agree that anything that can be done for the returned soldier will be

heartily supported by hon. members on both sides of the House.


Frank Oliver: In regard to this land
grant, what will be the decision of the Government as to the point at which responsibility to the returned soldier begins? I think the question was asked and the minister made the reply that it would be provided under regulation made by the board. Has the Government not a definite policy cn that point? That is to say, will men who have never gone overseas come within the provisions of this Bill?


William James Roche: We did consider that point, and the question was discussed as to whether we should include the soldier who enlisted but who did not leave Canada to go overseas. For instance, suppose a man enlisted just before the war ceased. He might not have the privilege of going overseas. Inasmuch as we desire to secure as many settlers as possible for the land, we decided to include those, so that they could take advantage of the provisions of the Bill just the same as those who went overseas.


Frank Oliver: A large number of men
who have enlisted in Canada, have been discharged in Canada as unfit. Will they be included?


William James Roche: Any person who has enlisted and who has been honourably discharged, through no fault of his own, would he included.


Herbert Brown Ames: Wihat would be the position where that clause does not coincide with the corresponding clause in provincial legislation? For instance, the Ontario Act provides that:
The lands set apart shall be reserved for location by persons who since the fourth day of August, A.D. 1914, have been upon active military or naval service with the British forces, out of Canada, against the King's enemies.
In other words, you cannot take advantage of the Ontario Bill for agricultural settlement unless you have been out of Canada. Therefore, there would be a wide class who could take advantage of this Bill, but who could not take advantage of the Ontario Bill.


William James Roche: That shows that our policy is much more generous than the policy of the Ontario Government. Hon. gentlemen might as well compare the acreage given by the Ontario Government with the acreage given by the Dominion Government. 
The Ontario legislation provides for only eighty acres whereas we provide for 160 acres. The Ontario Government charges 6 per cent whereas we charge only 5 per cent. They have also more restrictions as to the class of individuals whoi can take advantage of their legislation. There need be no difficulty at all on that score. Each legislature has paramount jurisdiction within its own sphere. I think that what has been said goes to prove that, our legislation is much more generous to the .soldier than the legislation of the Ontario Government.


Herbert Brown Ames: The Ontario Government legislation restricts the offer to men who have gone overseas, and I think it is the same in New Brunswick.


Charles Marcil: That is not fair to the
men who enlisted in good faith and who were not given the opportunity of going overseas, but were sent to Bermuda, and on their return to Canada were discharged. The Ontario legislation leaves them out entirely.


Mr. GLASS:: Could a soldier receive assistance from this Government and from the Ontario 'Government as well?


William James Roche: Yes.


Samuel Francis Glass: 'Supposing the Ontario Government had a first mortgage on the soldier's land. What .security would the Dominion Government take if they also loaned money to him?


William James Roche: The facts of receiving assistance from the Ontario Government would not interfere with the soldier's receiving this loan. With this loan he might he able to pay off the first mortgage the Ontario Government held against his land, giving us a first mortgage, and use the balance of the money in working his farm.


Herbert Brown Ames: Would it be possible for him to take one farm under the provincial government and one farm under the Dominion Government?


William James Roche: Certainly.


Mr. MACNUTT:: This Bill deals only
with settlement by soldiers, but I wish to say a few words in connection with the general settlement in the West. I think such a discussion is in order because the same principle obtains. Whether a man is a returned soldier or an ordinary settler, we want him to be successful; that is the *main thing. There are two classes of land in the West. One is the homestead system of free government land, and the other is the system of purchasing lands that have

been acquired by land corporations, railway companies, and so on. The good homesteads which attracted people to the West in the first place have been pretty well exhausted, although there are no doubt still many acres of good homestead land in north Saskatchewan and in the Peace River country. It seems to me, however, that the policy of the Government should be to settle successfully those lands that are in the vicinity of towns, with schools, a railroad, and other conveniences. It is better worth a man's while to pay for land of that kind than to go a long distance away and get land for nothing, providing of course the terms of payment are made easy. The difficulty of which I have seen so many instances is not so much the cost of the land, as the terms of payment. A man may be unfortunate and be put back for a year or two, but if he is able to meet his payments he will remain. I have found farmers a very optimistic class of people. I have known some to be hailed out completely, and just as soon as they could get on the land again they would have teams out ploughing for next year's crop, and then go and work with the team for somebody else to earn enough money to carry them over the winter. I have known some of them hailed out two summers running. The people who settle in the West want to make homes for themselves and, with an eye to the future, they are willing to put up with a great many hardships if only they can make both ends meet. That is the class of people we want in the West, whether they are soldiers or not. We should do everything we can for the soldier, but I do not see why this other class of good settlers should not be included in a plan for settling the older parts of the country, even if the settlers have to pay for the land. But they should not have to pay for it on the short terms that are now allowed. I have known many cases where good settlers, with good outfits, have bought good land. They would have to make a first payment down, and sometimes it would be three years before there would be any return, iand their capital would be all eaten up. A great many of these men have left their farms altogether, and others have rented them on tenant shares. They could not make the farms their own, because the payments were not spread over a sufficient number of years. The provincial government of Saskatchewan has taken this matter up to a certain extent, but I think it is i a matter for the Dominion Government to deal with. It would not require any
new railways to develop these lands in the vicinity of the towns. The Government could gradually expropriate the lands, and sell them to bona fide settlers on long terms. I do not think there are many lands that are purchased from speculators in less than six payments. I have made a little calculation. I have put ordinary good land at $20 an acre, six payments, 6 per cent interest. Without going into details a man would have to pay in five years a first payment down of $533, with the interest added each year. Altogether in the five years he would have to pay $3,838.20 on the six-payment plan. If the payments were spread over 25 years at the same interest and the same price, in the five years he would have to pay only $1,754.68, or a difference of $2,083.52. Of course, under the twenty-five payment plan he would still have a lot of payments to make at the end of the five years, but he would be able to make them. It is the first few years, when nothing is coming in, that eats up his capital.
With regard to returned soldiers and set-tiers generally I would say, let them make a first payment down to show they are bona fide settlers, then for the next couple of years let them pay the interest only. This would not cost the country anything. Land bonds could be sold, I suppose, and if a man were to give up his land-I do. not suppose many would-somebody else would take it up 'and work it. I do not think there would be the slightest charge on the country. Do not confiscate these lands by any means, but gradually expropriate them. At the same time no speculator should be allowed to unload lands on to the Government; there should be no favouritism of any kind; the matter should be handled in a business-like way. If this plan were carried out, then, if a settler had a bad year, he would not have a heavy payment to make and could carry on. I should say after about eight or ten years an ordinarily successful settler could start making definite payments.
Mr. .CURRIE: That is provided for in subsection 6 of section 6 of the Bill.


Thomas MacNutt: I did not read the Bill through. If it is provided foT I am endorsing what is in the Bill. If the hon. member has no objection I will continue to endorse it. This is not a new idea. Two or three years ago, when I first thought of it, I believe it was fairly original. With regard to soldiers particularly, and with regard to any settlers, I would make it easy for them

to pay interest, if nothing else, for two or three years. The great thing is that they shall not be obliged to use up what capital they have, whether it is loaned to them by the Government, or whether it is then-own. I live out in the western country and I generally know what I am talking about with regard to matters pertaining to the West. I will give you an instance as indicating the accuracy of the statements I have made. Three years ago about forty families came from the United States and settled about twenty miles south of me, on land they had purchased. Last spring twenty-nine of those families went away, and the rest will follow them. They gave up simply because the payments were too large and came too fast, and they thought they had better go while the going was good. The principle of the thing is this: the people who are there must have a certain capital to work on, unless they want to go away back and homestead, in which case they can make their own capital, as the first homesteaders did. Of course, it takes a great many years to do this, and I do not know that we have very many people who would care to do it at the present time. I do not believe the soldiers will want to do it.


Mr. CURRIE:: Will the hon. gentleman repeat what he said about the soldiers?


Thomas MacNutt: The soldiers would not care to go away and isolate themselves a long distance from the railways and from civilization, because they are so accustomed to community life. Of course, some of them might do it. At the same time, I think it would be far better if they settled on some good lands, of which there are millions of acres, in the West, in the hands of different companies. If they were able to buy these lands on easy terms, I think it would be far better than if they went away from civilization altogether. It would be to the advantage of the country, because when you put in a lot of settlers, before long they will require transportation facilities, and you will be obliged to Inuld new railroads for them. We have railroads now running through these lands, and our country roads are getting into pretty good shape. We also have our schools, and our little towns. These towns would become larger and the business men would become more successful; they would have more customers, and living might possibly become cheaper on that account. The country will have a great burden to bear later on, altogether apart from the soldiers. The 
more settlers come into the country the easier the burden will be borne, and if you make it so attractive that the settlers will come, they will bear their share of the burden. It is a wonderful country, but there is no use trying to settle it and then have the people leave the land, because if that happens matters are a great deal worse than they were before. There are altogether too many abandoned farms at the present time. I know of a man who lived about two miles from me, who came up from the United States and bought a section of land. Last winter he sold everything and went back to the States to live on an eighty-acre farm. He found the payments were coming too fast.


John Allister Currie: Was it also because German is taught in the schools there, and he could not have his children taught English?


Thomas MacNutt: No, nothing of the kind. There is no German taught there. If the hon. gentleman would go out there and live for about three years, he would know something about the country. A little trip through the West once in a while does not give one very much knowledge of it. The point I was making was that it is of no benefit to the country, or to anybody, to get people in unless they become successful and stay there. Neither is it a good plan to make it too easy for them to come into the country. We want the right class of settlers, who know some effort is required on their part, and who know they can make a success of it if they put forth the effort. If, however, they are up against heavy land payments, which come too fast, they will simply get broken-hearted and leave the country, and the result will be a worse state of affairs than before.


Frank Oliver: Section 6, which deals with the loans and the payments of interest, is specific. I was asking that similar specific provisions be made with regard to the use to which the lands would be put. that is with regard to the settlement duties. I think it is very much more necessary that the settlement duties should be indicated in the Act than it is that the terms of the loans should be set out, although I find no fault with the latter, on the contrary I think it is very commendable.


[Stage Direction]
Section agreed to.
Bill reported, read a third time, and passed.
On motion of Sir Thomas White the House adjourned at 9.45 p.m. "

Thursday, July 26, 1917.