1918-04-30

REPORTS AND PAPERS. ,

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Copy of Order in Council " Defence of Canada Order, 1917," entry in Canada of vessels carrying explosives in self-defence. -Hon. Mr. Ballantyne.
Copy of Order in Council instituting rank of Surgeon Probationer, R.N.C.V.R.-Hon, Mr. Ballantyne.
Report of the Commissioners appointed to investigate the businesses of the William Davies Co., Ltd., and Matthews-Blackwell, Limited.-Hon. Mr. Crothers.
Statement of the expenditure of the Dominion Publicity Committee in account with the Dominion Government and in connection with the Victory Loan, and report of Mr. A. E. Ames, chairman of the Dominion Executive Committee of the Canada Victory Loan, 1917.-Hon, A. K. Maclean.


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On motion of Hon. J. D. Reid (Minister
of Railways), Bill No. 70 (Letter A of the
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Senate), to Consolidate and Amend the Railway Act, was read the first time:.


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On the Orders of the Day.
Major-General MEWBURN (Minister of Militia and Defence) : Mr. Speaker, I have been requested to make a statement in the House regarding the procedure that has been adopted by the Department of Militia and Defence regarding the obtaining of men for military service, in pursuance of Order in Council (P.C. 919), of the 20th April, 1918, and also, of Order in Council (P.C. 962), of the 20th April, 1918.
By paragraph five of the Order in Council first mentioned,-
The Governor in Council may direct orders to report for duty to issue to men in any class under the Act of any named age or ages or who were horn in named years or any named year or part of a year and any exemption theretofore granted to any man of any such named age or year of birth shall cease from and after noon of the day upon which he is ordered so to report, and no claim for exemption by or in respect of any man shall be entertained or considered after the issue to him of such order provided, however, that the minister may grant leave of absence without pay to any man by reason of the death, disablement or service of other members of the same family while on active service in any theatre of actual war.
After the most careful consideration, and having regard to the national interest, which must be the dominating factor today, it was considered that in pursuance of Order in Council (P.C. 919), those between the ages of 20 and 22 years both inclusive, should first be called out and an OrdeT in Council was passed accordingly.
The age of every man by or on whose behalf exemption was claimed had to be given in the claim, hence the age given on the original registration is to be taken as conclusive evidence against the man' of his age and year of birth.
Under the last-mentioned Order in Council the Military Service Registrars were instructed to notify all those registered within these ages to report for service, but to notify first the men coming from urban centres', so that men of these ages (20 to 22), who are on farms should not be called sooner than is absolutely necessary, and might thus have an opportunity of completing their seeding operations. Although no exemptions are given in this class it seemed reasonable that this opportunity

should be given while the men from urban centres were being brought in.
The responsibility for securing men between the ages of 20 to 22 thus called out has been placed upon the Militia Department which has to assume the duty of apprehending any such men failing to report.
In regard to the men in class one, other than those between the ages of 20 and 22, the operation and administration of the Military Service Act is still controlled by the Military Service Council, and all appeals still pending are being prosecuted to a completion.
The return shows the total number reporting under the Military Service Act, up t£ the 29th April, 1918, as 39,208 to be deducted . from this are 2,063, who have gone to Imperial Units, such as Royal Air Force, leaving 37,145 recruits for the Canadian Expeditionary Force. This, of course, includes men of class one who have voluntarily reported.
Desertions.
According to the reports there were, on the 29th of April, 1918, some 7,096 men of Class 1 who had, so far, failed to report and who had not yet been apprehended. Every effort is being made to apprehend these men. The attention of the House should be called to the fact that these men are deserters and, therefore, lawbreakers, and as my Department is charged with their apprehension, I wish to inform the House that it is the intention of the Department of Militia and Defence to carry out that duty, and for that purpose to use whatever measures may be found necessary.
Under the Order in Council (P.C. 919) the House will notice that there is only one ground for exemption, viz., " The Minister may grant leave of absence without pay to any man by reason of the death, disablement or service of other members of the same family while on active service in any theatre of actual war," and by the same Order in Council, the words " in any theatre of actual war," are defined as " not including the high seas or Great Britain, or Ireland."
It, therefore, became necessary for me to give definite ihstructions to district officers commanding for the purpose of defining the persons who should he granted leave of absence under this proviso. These instructions were promulgated in Routine Order No. 466 of the 20th April, 1918, wherein it is stated that the exemption extends to the only remaining son of military age. In any

such case the man so affected will, on reporting for duty, claim leave of absence on this ground to the officer commanding the unit to which he reported, whereupon the latter will give provisional leave of absence and the case will be forwarded to Militia Headquarters, by the officer commanding the district to be confirmed. It must be clearly understood that every man within the class so called out must report, and his claim for leave of absence will then be considered.
At this point I might explain, to clear up confusion which possibly exists, that all men in a class called out are, by the Military Service Act, deemed to be soldiers for the period of the war and demobilization thereafter, and that, if they do not come within the specially excepted classes under the Act, and have not been granted exemption by the tribunals the only method by which they can be relieved of military duty is to give them leave of absence without pay.
Every application for leave of absence on the ground of death, disablement or service of other members of the same family will be dealt with on its merits, the principle to be applied is as follows:	If there are several sons, seme of whom are serving in France-or in England, with the early prospect of being sent to France-and only one son of military age remains at home, such last-mentioned son is to be granted leave of absence. Cases may arise where there are two sons left at home, one of whom is of military age, and the other of whom will become of military age, say within six months. In such a case there will, at the expiration of six months, be two sons of military age remaining home, and in that event one of them will then be called upon to serve.
In calling out the classes aibove mentioned, it is realized that we chiefly require men of category " A." We are, therefore, only notifying men. who, having already had a medical examination, are found to be in this category or who have not yet been medically examined. Every man, however, upon reporting for duty will immediately be medically examined, whether he has been examined previously or not, and those who fall within the categories lower than " A," will be given leave of absence until further orders."
It should be explained that men of category " B " in Claes I under the Military Service Act aTe being generally warned to report for duty, but, as the number of such men presently required is not large, it is intended, for the present, to retain and
utilize only those who did not claim exemption or whose exemptions were refused, and not to make use of men in category " B " between the ages of 20 and 22, unless and until their services become necessary.
Temporary Leave of Absence to Farmers and Farm Labourers, in Categories lower than " A."
Realizing the serious need of food production, we have endeavoured to meet this situation as far as possible, and it has been provided that any member of the C.E.F. in Canada, in category lower than " A " who can be spared from his military duties, may be granted leave of absence without pay. This can he done by the authority of the officer commanding the district on presentation of a certificate from the agricultural representative of the district that the man in question is an efficient farm labourer.
The so-called " Regulations " that were printed and distributed to the members of the House, are really extracts from our routine orders that are issued daily from headquarters, for the guidance of district officers commanding. It was considered that extracts from these orders would bt useful to the members of the House.
'No doubt members would like to knowhow many men will probably be obtained under these Orders in council. As there is no complete registration in Canada, actual figures cannot be given, but as far as can be gathered from the lists of men who. reported for service or claimed exemption under the Military Service Act, it would appear that there are in Canada between the ages of 20 and 22 inclusive, a total of about 70,000 men. From this number, however, two important deductions must be made,-
(1)	A very considerable number who have not yet been medically examined, and
(2)	A further considerable number who will, on re-examination, prove to be in categories lower than " A."
Previous experience shows that this latter class will represent a substantial proportion of the whole. Therefore, a conservative estimate, under all tne circumstances, would appear to be about 35,000.
As the Order in Council of the 20th April, 1918, (P.C. 919), brings into Class 1 boys of nineteen and those who became twenty since the 13th October, 1917, a proclamation will issue calling on them to register. No. date for calling up these men has yet been decided upon. It will, of course, depend on the exigencies of the military situation.
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As already stated, the order in which exemptions affecting men of any named age or ages are to be cancelled, rests with the Governor in Council and, of course, before any additional years are selected the matter will be exhaustively considered from all points of view.
The broad principle upon which the Government has acted is that having in mind the urgency of the national peril, very few men, (a) unmarried or widowers without children, (b) between the ages of 20 and 22 and (c) in medical category "A" can really be regarded as indispensable to any business.
Some representations have been made with regard to the only son of a widow who is her sole support. This subject must be approached from two points of view:-(1) the national interest; (2) personal hardship. In the first place, it is conceded that the calling up of the only son of a widow necessarily brings sorrow to the mother, but it must be recognized that this sorrow comes to every mother who parts with her son. There are cases where the only son on the farm is between the ages of 20 and 22, and the widowed mother will suffer hardship if he is taken. The same considerations would apply to the only son of a widow who is living in the city and who, for example, is engaged in business and is supporting a mother, possibly sisters as well. There is also, the case of an only son supporting an invalid father, where equal hardship exists. From the standpoint of financial difficulties, it must not foe overlooked that the widowed mother in such cases will be in receipt of,-
(a)	Separation Allowance,
(b)	Assigned Pay,
(c)	Patriotic Fund Allowance.
Take for example, the case of a widow on a small farm. It may be that the farm cannot be operated to its fullest capacity without the son's assistance, but it can be operated to a sufficient extent to provide the living of those people residing on it, and against the loss of income from increased production, etc., must be set off the allowances above referred to.
Further, from the standpoint of the national interest, the diminution of production upon such small properties must be considered, under present circumstances as negligible.
The Government fully realize and most deeply regret that hardship and sorrow are entailed by every new application of the Military Service Act, but they hope the people will realize that those upon whom
[Major-General Mewburn.]
this stern duty falls have no alternative. Our forces at the front are likely to be attacked by overwhelming numbers at any time until the tremendous struggle which began on 21st March last ehall have reached a conclusion. Our failure to support them with adequate reinforcements might lead to their decimation or destruction. It would be of little avail to increase production if that increase should be accompanied by such disaster at the front, that our products could not reach Great Britain or the Allied Nations beyond the seas. In that case we should have sown so that Germany might reap.
Moreover, the Government hopes that during the coming summer a more effective mobilization of the human energy of Canada may be effected, with the result that the crops sown during the spring may receive necessary attention during the summer and may be successfully harvested in the autumn.
Quebec Situation.
I have constantly stated, in the past, that I believed Quebec would do its duty, and I am happy to be able to report to the House many evidences of a marked change of feeling in that province. It is gratifying to note by the papers that Saint Mary's College and Laval University have granted leave of absence to all their students who come under the military law of this country, and have encouraged them to do their duty and it is hoped that this good example will considerably help matters.
Further, I have a report that the quotas from both the McGill and Laval Universities, for the new Tank Battalion, have 'been completed and more men are offering than can be accepted, for this unit.
There is very good evidence to show that many young men in the province of Quebec who have been exempted are now ready to come forward and serve, and it is realized where these men have had no former military experience, there is a certain amount of dread in the minds of their families as to their associations. Therefore, special efforts will be made to keep friends and associates together.
In view of the splendid spirit displayed by the universities and colleges, arrangements are being made to organize new units in connection with these institutions.
Of course, it must be realized that we are not sending any complete infantry battalions overseas, but representations have been made to the overseas authorities with a view to ensuring that the young men

who come from certain localities shall go to the same reserve unit in England to complete their training and finally to the same linked battalion at the Front; the object being, so far as possible, to ensure that these young men will serve under as congenial conditions as possible.
As far as I am personally concerned, every effort will be made to avoid all misunderstandings with a sincere desire tio promote a better feeling between provinces in the Dominion of Canada. It seems to me that where the national interests are at stake, all provincial feelings should be eliminated, so that Canada may present a common front to the common enemy.
In conclusion, permit me to read the following extract from a speech made by Mr. RudyaTd Kipling, at Folkestone, and published in the London Morning Post. The paragraph is headed-
If the Hun Wins.
If for any reason whatever we fall short of victory-and there is no half-way house between victory and defeat-what happens to us? This. Every relation, every understanding, every decency upon which civilization has been so anxiously built up will go-will be washed out, because it will have been proved unable to endure. The whole idea of democracy-which at bottom is what the Hun fights against-will be dismissed from men's minds, because it will have been shown incapable of maintaining itself against the Hun. It will die; and it will die discredited, together with every belief and practice that is based on it. The Hun ideal, the Hun's root-notions of life will take its place throughout the world. Under that dispensation man will become once more the natural prey, body and goods, of his better-armed neighbour. Women will be the mere instrument for continuing the breed; the vassal of man's lust and man's cruelty ; and labour will become a thing to be knocked on the head if it dares to give trouble, and worked to death if it does not. And from this order of life there will be no appeal, no possibility of any escape. This is what the Hun means when he says he intends to impose German kultur-which is the German religion-upon the world. This is precisely what the world has banded Itself together to resist. (Cheers.) It will take every ounce in us; it will try us out to the naked soul. Our trial will not be made lesd>
by the earnest advice and suggestions that we should accept some sort of compromise, which means defeat, put forward by Hun agents and confederates among us. (Hear, hear.) They are busy in that direction already. But be sure of this: Nothing-nothing we may have to endure now will weigh one featherweight compared with what we shall most certainly have to suffer if for any cause we fail of victory.
Mr. W. F. McLEAN (South York):: Will members of the House be able to get this afternoon copies of the official statement which the minister has just read, so that they can forward those copies to their constituents as answers to questions they have
received? Many hon. members would very much appreciate it if that could be done.
Major-General MEWBURN:	I shall endeavour to have the statement printed at once.


Sir WILFRID LAURIER:: Mr. Speaker, by your leave, may I make another suggestion to the minister? In the regulations it is provided that any member of the Canadian Expeditionary Force in Canada in categories lower than A, who can be temporarily spared from his military duty, may be granted leave of absence without pay on the authority of the commanding officer of the district, on production of a certificate from the agricultural representative. If the minister would supplement the statement which he has made to-day with a list of both the commanding officers and the agricultural representatives in every district, the matter of giving information in reply to questions could be greatly facilitated. I am satisfied that all the members of the House are in receipt of letters asking for information as to how men should apply for leave of absence. If an hon. member can say: Apply to Mr. So and So in your district, and if he can give the name of both the commanding officer and the agricultural representative, he would be able to get the information much more quickly.
Major-General MEWBURN:	In reference to the Order in Council, I have practically completed arrangements in every military district throughout Canada as to those men (20 to 22 inclusive) who are to report. I realize that it will mean more or less of a hardship for a man to come from the country info the city to report, but we must have some evidence that a man is within a category lower than " A." All the man has to do is to appear at the Depot Battalion to which he has beeni ordered to report, when he will be medically examined, and if his medical examination places him in a category lower than " A," he will at once be given leave of absence. We thought the simplest way to do, so as not to put men to undue'trouble was to have a representative of the Department of Agriculture in each district to verify applications of men who claim to be farmers or efficient farm labourers. These agricultural representatives will certify that such and such a man is an efficient farm labourer and on his certificate the man will, at once, be given leave of absence. It might facilitate matters if fuller information were given to the public.


Hon. RODOLPHE LEMIEUX (Maisonneuve):: I wish to thank the Minister
of Militia and Defence for the kind words he has spoken in regard to the young men of Quebec, especially the Laval College men and St. Mary's College men. As I informed the minister yesterday, I met several of the young men who joined the Tank Unit in Ottawa and I think I can safely say that if the minister would follow up the idea of having units in which young men could keep their associations as much as possible, he could easily raise at once in the city of Quebec alone a complete Tank Unit. I have this from several of the young men who have joined that unit.


Mr. SPEAKER:: Order. The hon. member is exceeding his privilege.


Mr. E. LAPOINTE (Kamouraska):: While I was at my home over the week end, I met two farmers whose sons had been exempted, but their exemptions are now can-called as a result of the new regulations. At the same time they are receiving notices to appear before the Central Appeal Judge; the judgments granting them exemption having been appealed from. As late as Friday last, some of these men have received notices to appear before the Central Appeal Judge on the first of May. Is that a mistake, and have these young men anything to gain or lose by appearing or failing to appear before the Central Appeal Judge?
Major-General MEWBURN: Were those men other than the ages of twenty to twenty-two?


Ernest Lapointe: Yes.
Major-General MEWBURN: The exemptions have been cancelled only of the men between the ages of twenty and twenty-two both inclusive. All men of the ages other than those mentioned can still continue to prosecute their appeals under the regulations of the Military Service Act.


Ernest Lapointe: But these are men of twenty-one and twenty-two years of age.
Major-General MEWBURN:	I cannot
understand why any such notices should have been sent out, because the registrars had from the Military Service Council a distinct notification to inform all men between the ages of twenty and twenty-two, both inclusive, that their exemptions were cancelled, and I requested that the men in the urban centres should be called first. Some ihistake must have been made. I shall have the matter looked into at once.
[Major-General Mew burn. ]


Mr. J. A. C. ETHIER (Laval-Two Mountains) :: In the statement which has just been made by the minister, I do not find any mention of farmers who were proprietors of farms before the proclamation was issued in October last, and who are now twenty-one or twenty-two years of age. Supposing a young man of twenty-two years of age is a proprietor of a farm and a farmer himself ; supposing he has 150 acres and a large stock and he is alone on the farm, is he bound, as coming under the regulations now in force? He is a bona fide farmer. What action should he take?


Edgar Nelson Rhodes: Order. The hon. member is going to an inordinate length to ask a question.


Mr. J. A. CURRIE (North Simcoe):: We all know that there are some 60,000 exemptions claimed in the province of Quebec. We know that the exemptions of men between the ages of twenty and twenty-two are all wiped out. That settles that question. Did the minister state how many of those exemptions have now come before the tribunals and how they were disposed of? How many cases have come before the Central Appeal Judge and how many exemp- * tions are there now?
Major-General MEWBURN: The figures I gave which I obtained from the Military Service Council were an estimate of the number of men of the ages of twenty, twenty-one and twenty-two to whom exemptions had been granted on account of the result of the medical examinations or their position, and it was estimated in that way there were .about 70,000 men available. Many of those men have not been medically examined and the figures are only an. estimate.
I have not the other figures.


John Allister Currie: The matter is very important. Cannot the minister bring the information down to-morrow?
Major-General MEWBURN: In reply to the hon. member for Laval-Two Mountains (Mr. Ethier). Many cases of hardship have already been brought to my notice. In the meantime, the only thing to be done is for the young man to report to the Officer Commanding the Depot Battalion, and state his case there. There should be noi difficulty in his getting a sufficient leave of absence to enable him to wind up his business.


Mr. W. C. KENNEDY:: Would the Minister say how soon Class "A " men in the rural districts will he called?

Major-General MEWBITRN:	I cannot
give a definite reply as that matter is left largely to the registrars. We have simply requested that the men in rural districts should not he called until the corresponding classes in the cities have been exhausted.
Mr. H. A. FORTIER (Labelle)': In the case of a boy of twenty or twenty-two with a widowed mother to support, is there any possible chance of his being exempted?


Edgar Nelson Rhodes: That case has already
been dealt with in the statement of the Minister of Militia and Defence. I must remind the House we are not in committee and hon. gentlemen are going far beyond the latitude allowed on the Orders of the Day.


Sir ROBERT BORDEN:: If the hon. gentleman will look at the minister's statement to-morrow he will see a full reply to the question he has just asked.


Mr. FORTIER:: I had not finished my
question.


Edgar Nelson Rhodes: I think we can with profit adjourn the discussion to another day.


Wilfrid Laurier: Do you rule, Sir, that the hon. gentleman cannot put his question?


Edgar Nelson Rhodes: The right hon. gentleman will see that if every hon. member were to exercise the right of asking a question upon the Orders of the Day we should be here until six o'clock without advancing the business of the House. That would be carrying the privilege beyond reasonable ^bounds.


Mr. MICHAEL CLARK:: Has not every hon. member of this House exactly the same rights as the Minister of Militia has?


Edgar Nelson Rhodes: It has long been the custom for a minister when desiring to do so to make a pronouncement upon an important public matter on the Orders of the Day being called, just as has been done by the Minister of Militia and Defence to-day. It is quite proper for hon. members to address questions to the Government on matters of policy but it is not proper that they should enter into what is in effect a discussion when there is no subject before the House.


Wilfrid Laurier: I think the
hon. member is entitled to put his question.


Edgar Nelson Rhodes: I would ask the hon.
member not to be unduly long in putting his question.


Hyacinthe-Adélard Fortier: Is there any possibility of having exemption granted in the case of a young man of twenty or twenty-two who is the sole support of a widowed mother with a family of young children? If there is no provision for his exemption have the Government considered taking over the farm in such a case rather than allowing it to lie idle?
Major-General MEWBURN: There is no power vested in me to do that.


Mr. T. H. THOMPSON (East Hastings):: The minister has said that the men in the rural districts will not be called out until after the men in the cities have been ordered to report but I understand that many young men in rural districts have been .ordered to report on the 1st of May.
Major-General MEWBURN: I did not say that we were not going to call out the men in the rural districts I said a request had been made to the registrars under the Military Service Act that the notices ordering men between twenty and twenty-two years of age inclusive to report be first sent to men in the urban districts. I might say that many men living on farms gave their city address to the registrar when registering. A man living ninety miles from Montreal came in to see me to-day and said his boy had received notice to report, but that it was his own mistake because in registering he had given his residence as Montreal; the mistake is being rectified by the registrar. We are not granting exemption to the men in the rural districts but we are simply doing what I think is fair and reasonable, namely, calling out the men in the urban centres first. It will take some time to deal with those classes, before the men in the rural districts are called.


Mr. H. C. HOCKEN (West Toronto):: May I ask to what the Minister of Militia attributes the better feeling in the province of Quebec?


Mr. BUREAU:: Always true to the Orange Sentinel!


Edgar Nelson Rhodes: That is not such a question as can properly be put on the Orders of the Day.



THE BUDGET.


[Stage Direction]
TAXATION; CHANGES IN TARIFF.
Hon. A. K. MACLEAN (Acting Minister of Finance) moved:: That the Speaker do now leave the Chair for the House to go into Committee of Ways and Means.

He said: Mr. Speaker, in presenting today the annual statement of the financial affairs of the country I deem it but fitting and proper that at the outset I should give expression to -what I believe is the profound and sincere regret of Parliament, that Sir Thomas White, the Minister of Finance, was unable to deliver the annual budget by reason of an enforced and lengthy absence from official duties. Regardless of party distinctions, and the inevitable differences of opinion that must prevail regarding the 'administration of the financial affairs of the country, I am sure that honourable gentlemen will heartily concur in the observation, that the highly important duties attaching to the Department of Finance, so abnormal! in their magnitude and exacting in their detail during the war period, have been discharged by Sir Thomas White with distinction 'and with conspicuous ability, fo his task he has applied great energy and industry, and in his labours he has been solely animated by the high motive of rendering faithful and unselfish service to the State. I iam confident the House will join with me in expressing gratification upon the fact that he has so far recovered his health that he proposes an early return to Canada to resume his official duties, after disposing of some public business now engaging his attention in the United States.



REVENUE.

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The revenue for |he fiscal year ending March 31, 1918, will, when the accounts are finally closed, reach $258,000,000, exceeding the revenue of the preceding year by $26,000,000, and that of the first year of the war by $125,000,000. Of the total amount of $258,000,000, Customs will yield $146,000,000 and Excise $27,000,000. From the various taxations apart from Customs and Excise, we shall have received nearly $25,000,000. The several sources from which this revenue was derived, and the amounts, might be of interest to the House. For the past fiscal year they are as follows: Business profits war tax, $21,271,283; banks, $836,724.28; insurance companies, $385,127.68; trust and loan companies, $267,917.68; Inland Revenue from railways, steamships, telegraph and cable companies, stamps, etc., $2,229,922.81; a total of $24,990,975.45.

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Coming to our ordinary expenditure and taking cognizance only of expenditures for civil government, and disregarding all outlays on account of war, the expenditure for the fiscal year 1917-18 is estimated at
fMr. A. K. Maclean.]
$173,000,000. The total expenditure of $173,000,000 includes payment of interest, estimated at $45,000,000, and pensions of some $7,000,000, or $52,000,000 altogether; whereas prior to the war the outlay on interest was but $12,000,000, and of course the expenditure for pensions on account of the war had not yet begun. It is also inclusive of the sums of $25,000,000 and $7,500,000 voted and advanced on account of the Canadian Northern railway and the Grand Trunk Pacific railway respectively. For the capital outlay® beyond the ordinary current expenditure of $173,000,000 an expenditure of $30,000,000 is estimated. These two items of expenditure amount to $203,000,000, and represent the outlay of Canada for all purposes apart from war during the past year.
With a total revenue of $258,000,000, and an ordinary and capital expenditure of $203,000,000, it will be seen that during the fiscal year 1917-18 the Government was able to meet all ordinary and capital outlays, including an increased amount for interest account and pensions over the previous year of nearly $15,000,000, and have a favourable balance of about $55,000,000 to be applied to war expenditures.

[Stage Direction]
The main estimates for 1918-19 have been submitted to the (House, and supplementary Estimates will be presented later. Apart from the increased interest caused by our war borrowing, and the amount required for pensions, also arising out of the war, substantial reductions have been made in the estimates of practically all the services, and I anticipate that actual expenditure will be well below the amounts voted. These reductions, however, are more than offset by the additional sums needed for interest and pensions for the current year over the past year, and which excess I estimate at $25,000,000, so that ordinary expenditure for 1918-19 will increase materially over that of the previous year. Outside of interest'and pension account, ordinary expenditures should not exceed those of last year. Substantial disbursements this year will be necessary in connection with the soldiers' land settlement programme, and a substantial liability has been assumed for the year in connection with the Halifax disaster. The capital expenditure vote has been materially cut. It is estimated that for the fiscal year 1918-19 we shall be able to pay our ordinary and capital expenditure out of our revenue and have, as in the past two years, an appreciable sum over, which we can apply to war

purposes. The unexpended balance of the Victory Loan will finance our war expenditures and advances to the Imperial Government until July next, when Treasury bills will be temporarily negotiated, until the proceeds of the next public loan are available.

[Stage Direction]
Canada ie now in the fourth year of the war. Our expenditure on, war account for the year 1917-18 will approximate $345,000,000, of which amount $167,000,000 was expended in Canada,	the balance, $178,000,000, represents our war expenditure overseas. Up to March 31, 1917, we had expended for war purposes $533,437,036.11,so that on March 31, 1918, our total outlay for war will be approximately $878,000,000. This amount includes all expenditures in Canada, Great Britain and France, and is also inclusive of the upkeep of our troops overseas. The amount does not, however, include any pay due but not yet paid to the troops overseas. During the past two fiscal years we have applied to war expenditure surpluses of revenue over ordinary and capital outlays the sum of $113,000,000, and our interest and pension payments attributable to war and covering the entire war period would approximate about $75,000,000.

[Stage Direction]
The net debt of Canada, which before the war stood at about $336,000,000 has now passed the billion-dollar mark, and it is estimated that when the accounts for the year 1917-18 are closed it will reach, approximately, $1,200,000,000. The increase is almost entirely attributable to war expenditures. To provide funds for our war necessities, apart from the amounts we were able to spare from the ordinary revenues of the country, we have had recourse to' public loans, and from, time to time to temporary loans from our banks, which were subsequently liquidated from the proceeds of loans.
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The statistics of our trade indicate that our exports, year by year as the war progresses, are showing a greater and greater increase over our imports. The year before the war the imports exceeded the exports by nearly $300,000,000. In 1917-18 this condition had been so -completely reversed that the exports exceeded the imports by almost $625,000,000, and our total trade, which passed the billion mark in
1913, exceeded the two and a half billion mark in 1918.
It must be borne in mind, however, that this increase in our total trade is very largely attributable to war conditions, and as well the very favourable trade balance. It might be informing to the House to briefly state that in 1917-18 our exports to Great Britain were about $860,000,000, while our imports amounted to $81,000,000. Our exports to the United States reached the sum of $440,000,000, while our imports were $790,000,000.

[Stage Direction]
The general impression I fear prevails that we have had practically no immigration into Canada since the beginning of the war. While of course it is proportionately much less than in years just prior to the war, still it is not a negligible quantity. In 1915-16 our immigration w-as 48,537; in 1916-17-it was 75,374, -and in 1917-18, 79,074; a total of 202,985 in the past three fiscal years. Of this total number 169,640 came from the United States and 20,124 from the British Isles. An important fact in connection with this- immigration is that it comprised a large proportion of agriculturalists. The Minister of Immigration and Colonization informs me that everything-clearly indicates a very large immigration into Canada, commencing shortly after the conclusion of the w-ar and' so soon as transportation facilities are available. A factor to be kept prominently in mind is that the employment of women and girls in occupations heretofore filled by men will continue in all the belligerent countries for many years at least, thus limiting the avenues of employment ordinarily open to men, and leaving a surplus for emigration, notwithstanding the heavy toll upon life exacted by the war.

[Stage Direction]
Owing to the inability of Great Britain to settle in the usual way her trade balances, and to which I propose referring later, we are experiencing an acute exchange problem in Canada. During the past few months1 a very high rate has prevailed on remittances- of funds to the United States, which has imposed a severe tax upon importers and the public, and, if it continues, must diminish imports or -add to their cost. This high rate is due to the fact that we have to remit more to, than we receive from, the United 'States, and consequently the demand for United States funds is greater than the supply. Were we
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able to sell securities in the United States the rates of exchange might easily have been adjusted or normalized, but Canadians were not permitted to do so. The Government did not require during the present year to borrow in the United States, even if we had been permitted, and consequently by such an operation it was not convenient or practical to correct the exchange.
To redress the adverse rate of exchange with the United States, we must lessen our imports from that country, or the United States must buy more from us, or we must sell securities in the United States to the extent of a very substantial proportion of our adverse trade balance. Other considerations-, however, are involved in this matter, to which I shall refer later, but I might be permitted to say that the Government has been diligent in its endeavours to bring about such financial arrangements with the Governments of Great Britain and the United States as would! materially relieve our people of the burden of the present high rates of exchange. I hope that very shortly we shall be in a position to announce the successful conclusion of negotiations which have in view this end. In connection with the exchange problem it might be of interest to state that for the first three months of this calendar year our imports from the United States have decreased below that of the corresponding period of last year by over $36,000,000, while our exports have increased in the same comparative period by about $20,000,000.

[Stage Direction]
The unqualified1 success attending the Victory Loan of last year, as well of previous domestic loans, is of such notalble importance and significance that it calls for more than a passing reference. The large investment made by our citizens in the securities issued by the -Government from time to time- since the beginning of the war is a matter of natural pride to all Canadians. Since December 1, 1915, d'-omestio war loan issues aggregating $746,000,000 have been made, and of which over $700,000,000 was subscribed for by Canadians-, a very tangible evidence of the productive powers of our people, their determination to sustain our army and our commerce by loans- to the State, and their faith 'in the -ability of Canada to honour in the future the financial obligations now so honourably incurred. That Canada possessed such a purchasing power it is needless for m-e to say was hardly entertained by -any person, even the most optimistic.

Last November the fourth war loan was placed upon the market in -Canada. In the case of the three previous loans, for the-ir successful flotation, the Government of the time relied upon newspaper advertising methods alone to secure the required subscriptions, and no extensively organized campaign was- deemed necessary. In .the case of the last loan, ho-w-ever, it was felt that more- vigorous methods should be adopted in order that a -wider response to the appeal should be received from all classes of o-ur population, so that the alb-sorption of the loan would be rapid and that -by spreading the holdings over as -many people as possible, the -subscribers- would be more strongly protected so far as the market price w:a-s concerned.
The Minister of Finance, with the cooperation of some of the most active of the business men of the Dominion, organized a central committee called the Dominion Executive of the Victory Loan Campaign, which in turn organized associated committees in every province. These again created committees in various counties, cities and towns. By addresses, advertisement and canvass, ;by the united efforts of all these countrywide organizations, the results far exceeded -the expectations even o-f those best qualified to anticipate the result of an appeal of this -character. The -bonds were of five, ten and twenty year maturities. The prospectus called- for -an amount of $150,-000,000, but the loan was an open one and the right was reserved to- exceed -subscriptions- above this amount. In response to- the appeal, subscriptions to the amount of $408,000,000 from -approximately 600,000 subscribers, a subscription from about one in every nine of our population, a -subscription of over $58 per capita, -was received. This was slightly better than the results of the Liberty Loan of 1917 in the United States, where some 9,400,000 subscriptions were received, or about one in more than eleven. The subscriptions in -the four western provinces were particularly gratifying, and indicate in these new provinces remarkable accumulation of wealth, which fact is- pleasing to the older sections of the Dominion. The Victory Loan Committee state the subscriptions of A'llberta amounted to $16,515,150; British Columbia, $18,814,700; Saskatchewan., $21,777,050; and Manitoba," $32,326,600. Opportunity was given to the overseas forces to subscribe, and we received over $1,500,000 from soldiers who cashed in their faith in their fight and country.

The total subscription was cut down to an allotment of $398,000,000 of now money, not counting holdings of previous war loans which were convertible and were converted into Victory Loan Bonds to the amount of over $150,000,000. When all the charges are computed and paid, the cost of the loan will approximate II per cent, which is comparatively small in such a large operation and extending over so wide an area. The banks received 1 of 1 per cent as remuneration for their services and to compensate them for the labour entailed in all their branches in taking the subscriptions; issuing temporary receipts'; delivery of the scrip; receiving the five instalments from January to May; transmitting the cash to the Department of Finance; in delivering the bonds to subscribers in exchange for scrip; in paying at par all over Canada the coupons and interest cheques during the whole period covered by the loan.
The probable subscribers of the larger amounts were 'solicited by the agency of a special committee and upon these subscriptions no commission was paid. The local canvassers received i of one per cent on all subscriptions received by them to, compensate them for their time and labour; and finally, the bond dealers and brokers who co-operated most heartily and energetically in the work and who placed the services of themselves and their several staffs at the disposal of the committee were tio be allowed such remuneration as was deemed reasonable by the Minister of Finance. It is estimated that the total charges will amount approximately to $5,000,000, or about II per cent. When the issuing charges for all our other previous loans are considered, it will be found that this may be regarded as exceedingly reasonable.
I wish to acknowledge on behalf of the Minister of Finance and the Government his and their thanks and 'appreciation of the splendid and patriotic services of all the committees and workers whose efforts in a noble cause proved so successful; to the press, also, and to the public spirited citizens who, in an honorary capacity, gave valuable assistance in this great campaign, I desire to publicly and gratefully acknowledge their valuable services. Preparations for the next Victory Loan have already commenced, and the Government have also under advisement the matter of the sale of War Savings Stamps, a borrowing scheme very successfully employed in the United States.

[Stage Direction]
There is a very direct connection not only between our domestic loans and the financing of our war operations, but also with our productions and our overseas ex-poit trade, and I think the matter well worthy of some consideration. Fundamentally trade is the exchange of products, and payment of the purchases of goods abroad must be made by the sale of goods or securities abroad. With us, gold is not a factor in international trade. All are acquainted with the fact that the war has disturbed the natural currents of trade rendering impossible the settlement of international trading accounts in the usual manner. Prior to the war, Canada had a favourable trade balance with Great Britain through the sale of her products and securities in that country, while we have always had an unfavourable trade balance in the United States. We settled the latter in London out of our available credits there, which was of course convenient to the United States because that country always had payments to meet there.
The later stages of the war, however, have materially altered Great Britain's position, and circumstances have compelled her to purchase heavily of war supplies and foodstuffs on this side of the Atlantic, while her exports have been diminishing. She has thus become chiefly a purchasing nation, and is no longer a loaning but a borrowing country. In 1917-18 we had as a matter of fact a favourable merchandise trade balance with Great Britain of about $790,000,000 while with the United States it was unfavourable to the extent of $350,000,000. Normally, we would settle our unfavourable American trade balance with the moneys receivable from Great Britain for her liberal purchases of our high priced commodities. However, owing to the enormous purchases Great Britain Was obliged to make for herself and some of her allies, and so great had been the drain upon her liquid resources in the first three years of the war, that in July, 1917, she was obliged to secure loans or dollar credits for her Canadian purchases, otherwise, she would be obliged to practically cease purchasing here. In that event, commercial disaster would have overtaken us and we would have had- difficulty in financing our war expenditures. It was therefore important that immediate action be taken to meet this new condition of affairs. In order that our industries and our artisans might be employed, that our agriculturists be afforded an export market and encouraged to pro-
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duee, and (that all our people might be paid for their exportable productions, which was of course of vital importance to all classes of our people, arrangements were consummated in midsummer last year whereby the Government of Canada agreed to make advances to Great Britain at the rate of $25,000,000 per month in order that she might purchase in Canada such of our products as she needed and which we had to sell. In fact, advances for cheese and meat products in excess of the agreement were made last y^ar. In addition, and for the same purpose, the Canadian banks agreed to make advances to the British Government, and altogether up to this date have advanced $200,000,000 on the security of Imperial Treasury Bills. Further, the Government of the United States last year agreed to establish credits for British purchases in Canada. These arrangements are still effective and are likely to continue throughout the year. In a word, the Government of Canada and the Canadian banks have been granting credits for Great Britain's purchases in Canada in substantial amounts since midsummer of 1917, otherwise, our overseas trade would have been seriously handicapped. I must point out, however, that while the Government has thus been making advances to assist in the payment of British purchases in Canada, Great Britain has been paying for Canada the upkeep of her troops in Great Britain and France, and sundry Government accounts. These payments by the Imperial Government for Canada nave been to date $100,000,000 less than the payments made for Great Britain by the Canadian Government, and there is that amount to our credit in this open account to-day.
That is strictly the Government's financial position in respect to war and trade for this year. It might be interesting to consider the economic position of the people outside of the Government. The exact position of the people of the country, apart from the Government, is surrounded with additional difficulties. They must meet an adverse balance of merchandise trade with die United States and also the principal and interest of maturities there. They must as well pay for imports from Great Britain, which last year amounted to $81,000,000, notwithstanding we are the creditor country, and they must pay the interest owed by our people to people in Great Britain, and which amounts to about $135,000,000 annually. The combined commitments of the Government and the people are, therefore, abnormal and 
substantial by reason of the conditions I have outlined.	.
Relatively, our position during the whole of the last fiscal year was less onerous than it is at present. In the early part of 1917 Great Britain was able to pay for some of her purchases, and, in addition, Canada was permitted to borrow money from the United States to the extent of $185,000,000, which assisted in reducing our adverse balance with that country. In 1918, as far as one knows at present, we are prohibited from selling securities of any kind in the United States, and to that extent we are ^t a disadvantage this year in the settlement of our American purchases, and, of course, Great Britain is unable to pay directly for any portion of her Canadian purchases.
The experience of all nations during the war teaches us that all problems change as we approach them. We may yet, during the present year, 'be permitted to sell in a restricted way securities in the United States. The United States may buy more from us during this year on account of war and other purposes than she did last year. I believe she will. We may, during the year, and should, as a people, buy less of the United States of non-essential articles. Great Britain may arrange with us to pay in pounds sterling for what merchandise our people buy from her, and what Canadians owe her people for interest, the Government collecting here under suitable arrangements the interest and merchandise accounts due the people of Great Britain by our people, and with it buying additional Canadian products and shipping them overseas. At any rate, there, in rough outline, is the problem of the Canadian people today in carrying on our part of the war, and in part our trade and commerce, and making possible the productions and activities of the manufacturer, farmer, fisherman and lumberman, and such in part is the method employed in bringing about that end.
With these facts before the House, it might be interesting to consider what directly and indirectly are the commitments of the Government for this year. Approximately we must provide:
For Civil Budget ..$230,000,000 For War Expenditure	 425,0(00,000
For advances to the Imperial Government for financing in part our export trade with Great Britain	 325,'000,000
In all	$980,000,000	$980,000,000

To discharge this there will be:
Revenue	$ 2 7 0,0 00,1100
Advances by Great Britain to pay for maintenance of Canadian troops overseas, about.. .. 300,000,000 Unexpended balance of Victory Loan, as of March 31, 1918. 130,000,000
$700,000,000	$700,000,'0'00
leaving a probable balance for
1918-19 of	 $280,000,000
to be provided from loans in Canada or elsewhere if possible. This is not inclusive of our commitments for expenditure on account of the purchase of railway equipment and 'Canadian Northern Railway maturities. The latter we hope to extend upon small payments of principal under powers which we are asking of Parliament this year, and the railway equipment, it is expected, will be financed largely by the issue and sale of equipment securities. The figures which I have given are probably not exhaustive of either income or outgo; I merely wished to show by a few figures, approximately only, the dimensions of the Budget of this country.
I have detained the House perhaps at too great a length in a statement as to ho our war and in part our trade is financed. I wanted to make clear that if we are to continue our part in the war, and maintain our overseas trade at its present dimensions, the people of Canada must loan to the Government the money to accomplish that end. That is, they must, year after year, purchase Victory Bonds. There is no other way of accomplishing it. It cannot be obtained elsewhere. We must rely on our own capita] and labour, so far as one can see, to carry on our present war and trade programme. I cannot too strongly state the imperative necessity of the Government borrowing from our own people, and the imperative duty of our, people to loan to the Government. No person can too strongly impress this view upon our country. This obligation rests upon all classes and upon every citizen. To enable our people to do this, it is necessary that they continue to produce wealth. The production of wealth means an excess of production above our own wants. We must continue to produce, and if possible in greater quantities, by a more effective mobilization and utilization of our man and woman power, notwithstanding the fresh requirements of our army for man-power, and the many other difficulties confronting 80i
us. And we must economize in every way. Primarily, saving is not a question of money. It is rather a question of saving the things that money will buy. The less we consume of that which we produce the greater the surplus we shall have to sell abroad. The more we save of our productions and of our services the better able shall we be-to meet our increasing taxation, and the greater the power of our people to-purchase Government bonds. Of our imports from the United States, there is a. great volume of non-essential commodities, and luxuries. If we all ceased to buy of these, our adverse trade balance with the United States would toe partially redressed, the cost of remittances for our essential imports from the United States would be less, the cost of these essentials would be that much less to our importers and consumers, and a greater surplus would be available for payment of taxation and loans to the Government. We must learn to dispense with luxuries, and possibly with some of the things which we have hitherto regarded as necessities. In order to reduce this class of imports, it may become necessary to control the same by the licensing system. I am merely pointing out that which should be the aim and the purpose of the state and its citizens and which becomes more clear as the war is prolonged. I do not think it can be justly said that the Canadian people have altogether failed in this respect, notwithstanding the many temptations which a war prosperity has brought to us. An investment of over $700,000,000 in Canadian Government securities by Canadians is indisputable evidence of production and thrift, but better still, a token of stability, law and order in the days to come. The increase in our bank deposits is likewise ap evidence of economy on the part of our people. I feel -I am not subjecting myself to sound criticism when I say we can do better, and in very fact we must. In other respects are our people to be commended. -In our expanding trade and commerce one might well have looked for a period of speculation that would have later spelled disaster, but there has been no speculation in lands or stocks, municipalities have curtailed expenditures as they all -should do, building operations have been restricted to our w.ants, our financial institutions occupy a strong position, our currency is upon a sound basis, and the expansion of our industries can hardly be said to be unsound.

[Stage Direction]
I now approach a consideration of the matter of taxation. It is the function of Government to secure from the people, from time to time, such revenue -as will meet ordinary expenditure and as much more as necessity and wisdom dictate. It will always, I presume, be a debatable question what portion of war expenditures should be paid from current taxation, but any principle is subject to variation according to the period over which the war is prolonged, the volume of expenditure, and the population and resources of a country. Again, inevitably there must be wide differences of opinion as to the form and degree of taxation that shall prervail. One might safely say that no system of taxation should be in force which has a repressive effect on production and trade, or as some one has said, no tax should paralyse industry of any kind, hamper enterprise, or breed discontent among our people, but that none should be avoided which are essential to provide the revenue required and that will distribute the incidence of taxation as equitably as conditions and experience dictate. Again, it is claimed and with considerable force that excessive taxation will deplete the source for investment in Government War Bonds which we must possess. It is comparatively easy to enunciate such principles as applicable to taxation, but in the trying circumstances and conditions which confront us it is a difficult task to provide any general scheme of taxation which shall completely fall within the rules I have just outlined. We are confronted by conditions, not theories. Many accepted economic principles of trade and taxation are hy force of conditions impossible of application to-day. It is further to be observed about taxation that whether you increase or decrease any taxation it is becoming exceedingly difficult to determine whether the purposes of revenue shall be accomplished or not. With the limitations and restrictions in export and import trade, and even upon production, throughout the entire world; with embargoes, licenses and fixation of prices; with the transportation agencies of most countries largely under governmental control, and subject t-o traffic priorities; with increasing production costs, increasing wages, and contracting labour markets; with the tremendous demand for raw .materials for war purposes, and with problems of exchange, one would be bold indeed to prophesy the course of the currents of our trade and commerce from day to
	.
day, or the net results and effects of any taxation proposals.
For the reasons which I have just stated, and others, I should not be surprised to find at the end of the fiscal year a considerable reduction in revenue from Customs and Excise as compared with the last year .and upon the present rates. The prohibition of the importation of spirits and beer during the war will alone entail an annual loss to revenue of over $15,000,000. With increasing interest and pension charges, due to war, we must, of necessity, from time to time impose fresh taxation supplement our revenues.
Since Parliament last met and during the recess two taxation measures were enacted hy Order in Council. These relate to the Canadian Pacific railway and to the meatpacking and .cold-storage industry. Copies of these Orders in Council have been laid upon the table of the House, but I might (be permitted, in fact it is perhaps my duty, to state to the House the effect of these taxation measures.
By an Order in Council, which is effective during the war from January 1, 1918, we shall jeeeive from the Canadian Pacific Railway one-half of the net earnings of that company from its railway operations after paymn t of fixed charges and dividends, and as well the income tax on the company's special income received from sources outside of railway earnings. It is further provided that the total amount to be paid each year shall not be less than the amount which the net earnings exceed the earnings fi r the year ending December 31, 1917. due to the increase in freight and passenger rates granted by the Order in Council of December 26, 1917, and further, it shall not be .'ess than the company's net earnings in any year from railway operations, in excess of ten per cent on its common stock up to $7,000,000. We estimate a revenue of $7,000,000 and possibly more from this source this year. In respect of the Order in Council relating to the packing industry, it is provided that the packers shall retain in addition to 7 per cent per -annum upon the invested capital one-half of any excess np to- fifteen per cent, the balance being payable to the Receiver General. The revenue to be derived from this source, is of course dependable on the volume of business carried on during the year by the industry and the profit, which is hardly capable of estimate at the moment.
Mr. MURPHY:: That Order in Council was not retroactive?


Alexander Kenneth Maclean: We also deem it expedient to place a Customs tax of ten cents per pound upon tea. The importations of tea for consumption in Canada amount to about thirty million pounds per year, a per capita consumption of a little more than four pounds per annum. An excise duty of 10 cents per pound shall also be imposed on all tea held by importers and dealers, on the 30th day of April, instant, and on that day unsold, in excess of one thousand pounds. The importations of tea during the past three months have been equal to half the importations for the year 1917.
-The imposition of a specific duty of 10 cents per pound on tea, necessitates changes in the Customs duties upon coffee and chicory, in order to place the taxation upon these articles on a parity 'with the taxation upon tea. The principal change in the taxation upon coffee relates to green coffee. The Customs tariff upon green coffee is, British Preferential Tariff, 2i cents per pound, and General Tariff, 3 cents per pound. It is proposed that the British Preferential Tariff he 5 cents and the General Tariff 7 cents, per pound. The coffee tariff items are covered, by the West Indies Agreement and the Preferential rate for coffee from the West India Islands, which were parties to the agreement, must be at least 20 per cent below the General Tariff rate. This has been provided for in the several tariff changes in respect of coffee. Changes in the Customs rate of duty payable on tobacco, cigars and cigarettes compensating for the increases in the excise tax upon these articles will be submitted.
It is also proposed to increase the duties payable on beverages which require malt, rice or corn in their manufacture and when containing not more than 2j per cent of proof spirit. The present rate of duty upon this commodity is 17i per cent, plus the War Tariff Hate of 7$ per cent, or about 25 per cent ad valorem, and it is proposed to raise the rate of duty to '40 per cent ad valorem.
The resolutions which I shall submit at the close of my remarks will pjpvide for the repeal of the special war tax rates on sleeping car berths, and shall substitute the rate of 10 per cent of the price paid for each berth, with a minimum rate of 25 cents; and for the increase from 5 cents to 10 cents of the tax on parlour car seats; they shall provide for -an excise tax of 1 cent per hundred on matches, or fractional parts thereof; an excise tax of 8 cents on each pack of playing cards; and a specific
TMr. A. K. Maclean. 1
rate of Customs duty of 5 cents per lineal foot upon moving picture films.
The resolutions shall also provide for a special war excise tax of JO per cent upon the selling value of automobiles, jewellery, gramaphones, graphaphones, phonographs, talking machines, mechanical piano and organ players and records, when imported into or manufactured in Canada. The tax upon automobiles is applicable to all imported into or manufactured in Canada and unsold this day. Such are the taxation proposal^, and other than I have stated no tariff changes are proposed.
In conclusion, let me say that we may safely look to the future with courage and fortitude. Happy are our conditions in comparison with those of the belligerent countries of Europe. Armies do not contend for mastery upon our soil. Our undeveloped resources are tremendous. Immigration has been temporarily arrested, but shortly after the war we shall resume our growth of pre-war days and our financial burdens shall not then appear so onerous. We have assumed enormous responsibilities and we shall discharge them in the manner befitting our country, our cause and our race. The future of our country as well as the fate of civilization and democratic institutions will depend upon the result of this war, and no price is too high to pay for victory. We have already played a dis-languished and noble part in the titanic struggle of the warring nations, and- it shall not diminish for the lack of resources to be furnished by our people. We shall face coming events not without anxiety, not without a clear realization of our task, but with a strong resolve to use our strength to the utmost, confident that our Canadian people will patriotically and cheerfully provide for our expenditures, and the ways and means to support and sustain our gallant army in its stand for the political institutions which we cherish and which we pray shall not perish from the earth.



RESOLUTIONS.

[Stage Direction]
I beg to give notice that upon the House resolving itself into committee I shall move the following resolutions:
1.	Resolved, that it is expedient to amend Schedule A to The Customs Tariff, 1907, as amended by Chapter 5 of the Acts of 1914. second session, and by Chapter 3 of the Acts of 1915, and to strike thereout tariff items:-
24, 25, 25a, 26, 27, 28, 28a, 29, 29a, 143, 144, 145, the several enumerations of goods respectively and the several rates of duties of Customs, if any, set opposite each of the said items, and to provide that the following- items, enumerations and rates of duties be inserted in said Schedule A:-

		British		
Tariff	Preferential	Intermediate	Generalitems.	Tariff.	Tariff.	Tariff.24	Chicory, raw or green, per pound	5 cents.	7 cents.	7 cents.25	Chicory, kiln-dried, roasted or ground, per	10 "pound 	8 "	10 "	25a	Coffee, extract of, n.o.p., and substitutes	12 "thereof of all kinds, per pound	9 "	12 "	26	Coffee, roasted or ground, and all imita-	tions thereof and substitutes therefor, including acorn nuts, n.o.p., per pound..	8 "	10 "	10 "27	Coffee, roasted or ground, when not im-	ported direct from the country of growth and production, per pound	8 "	10 "	10 "and 75 p.e.	10 p.c.	10 p.c.28	Coffee, green, imported direct from .the	country of growth and production, and green coffee purchased in bond in the United Kingdom, per pound	5 cents.	7 cents.	7 cents.28a	Tea imported direct from the country of	growth and production, and tea purchased in bond in the United Kingdom,	per pound 	
When in wrappings, cartons or other	10 "	10 "	10packages weighing five pounds or less the weight of the wrappings, cartons or other packages to be included in the weight for duty.	29	Coffee, green, n.o.p., per pound	5 "	7 "	7 "and 1\ p.c.	10 p.c.	10 p.c.29a	Tea, n.o.p., per pound	10 cents.	10 cents.	10 cents.and 10 p.c.	10 p.c.	10 p.c.When in wrappings, cartons or other	packages weighing five pounds or less the weight of the wrappings, cartons or other packages to he included in the weight for duty.	143	Cigars and cigarettes, the weight of	cigars to include bands and ribbons, and the weight of cigarettes to include the paper covering, per pound...	$4.10	* $4.10	$4.10and 25 p.c.	25 p.c.	25 p.c.144	Cut tobacco, per pound	95 cents.	95 cents.	95 cents.145	Manufactured tobacco, n.o.p., and snuff,	per pound 	90 "	90 "	90 "147a	Beverages in the manufacture of which	malt, rice or corn is used when containing not more than two and one-half per centum* of proof spirit	25 p.c.	40 p.c.	40 p.c.657a Cinematograph or moving picture films,	positives, one and on^eighth of an inch in width and over, per linear foot.	3J cents.	5 cents.	5 cents.2.	Resolved, That it is expedient to provide that the provisions of the foregoing resolutions shall be deemed to have come into operation on the first day of CMiay, one thousand nine hundred and eighteen, and to apply and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that day, and! to have also applied to such goods previously imported for which no entry for consumption was made before that day.
1. Resolved, that it is expedient to impose, levy and collect on tobacco and cigars manufactured in Canada the following duties of excise;
(a)	On all chewing and smoking tobacco, fine-cut, cavendish, plug or twist, cut or granulated, of every description,-on tobacco twisted iby hand or reduced into a condition to be consumed or in any manner other than the ordinary mode of drying and1 curing, prepared for sale or consumption, even if prepared without the use of any machine or instrument and without being pressed or sweetened,-and on all fine-cut shorts and refuse scraps, cuttings
and sweepings of tobacco made from raw leaf tobacco or the product in any form, other than in this Act otherwise provided, of raw leaf tobacco, twenty cents per pound; actual weight;
(h)	On common Canada (twist, when made solely from tobacco grown in Canada, and on the farm or premises where grown, by the cultivator duly licensed therefor, or in a licensed tobacco manufactory, twenty cents per pound, actual weight;
(c)	On all snuff made from raw leaf tobacco, or the product in any form of raw leaf tobacco or any substitute for tobacco, ground, dry, scented or otherwise, of all descriptions; when prepared for use, twenty cents per pound, actual weight;
(d)	Snuff flour, when solid or removed for use or consumption, shall pay the same duty as snuff, and shall be put up in packages and stamped in the same manner as herein prescribed for snuff completely manufactured, except (that snuff flour not prepared for use, but which needs to be subjected to further processes, by sifting, pickling, scenting or otherwise, before it is in a condition fit for use or consumption.
[Stage Direction]
may be soldi by one tobaooo manufacturer directly to another tobacco manufacturer, andi without payment of the duty, under such regulations as are provided in that behalf by the Department;
(e)	On cigars of all descriptions, made from raw leaf tobaoco, or any substitute therefor, six dollars per thousand;
(f)	On all cigars, when put up in packages containing less than ten cigars each, seven dollars per thousand ;
(g)	On cigarettes made from raw leaf tobacco
or any substitute therefor, weighing not more than three pounds per thousand, six dollars per thousand;	>
(h)	On cigarettes made from raw leaf tobacco or any substitute therefor, weighing more than three pounds per thousand, eleven dollars per thousand;
(i)	On all foreign raw leaf tobacco, unstemmed, taken out of warehouse for manufacture in any cigar or tobacco manufactory, forty cents per pound, computed according to the standard of leaf tobacco as hereinbefore established;
(j)	On all foreign raw leaf tobaoco, stemmed, taken out of warehouse for manufacture in any cigar or tobacco manufactory, sixty cents per pound, computed according to the standard of leaf tobaoco as hereinbefore established;
2.	In all tobacco manufactories where less than fifty per cent, of Canadian raw leaf tobacco is used, and where ten per cent., or more, of other materials is used, such materials shall be subject to a duty of twenty-three cents per pound actual weight
2 Resolved, that it is expedient to provide that no person shall grow tobacco in Canada in excess of the amount or for purposes other than those mentioned in section three hundred and twenty-five of the Inland Revenue Act without a license, that a fee of two dollars be paid for such license and that a tax of five cents a pound be collected on all tobacco grown with the exception aforesaid.
3.	Resolved, that any enactment founded on the preceding resolutions shall be deemed to have come into force on the first day of May nineteen hundred and eighteen.
Resolved, That it is expedient to amend The Special War Revenue Act, 19sl)5, and to provide that the tax to be paid by purchasers of a berth in a sleeping car be increased to ten per cent of the price for each berth, but in no case shall the tax be less than twenty-five cents for each berth and that the tax for a seat in a pullman or parlour car ibe increased to ten cents for each seat; that the definition of the word '^Consumer" be amended so as to include a person who buys the articles mentioned for any purpose; that medicinal preparations and compositions excepted at the end of section fourteen be limited' to those sold under the name used for them in the publications mentioned in the said section or any preparation manufactured and sold exclusively for the medical profession and on the labels of which no claim is made that the preparation has medicinal or curative powers or any description as to the amount that constitutes a proper dose; that manufacturers and importers of matches and playing cards :be required after the thirtieth day of April, 1918, to affix to each package of matches and playing cards an adhesive stamp of the value of one cent for each one hundred matches or fractional part thereof in a package and of the value of eight cents on each package containing not more 
than fifty-four playing cards, and that such stamps be placed upon all packages of matches and playing cards held by dealers for sale on the first day of July, 1918, and that such stamps need not be affixed to packages of matches or playing cards manufactured for export; that there be levied a war excise tax equal to ten per cent upon automobiles, gramophones, graphophones, phonographs, talking machines, cylinders and records therefor, mechanical piano and organ players and records therefor, articles commonly or commercially known as jewellery, Whether real or imitation, for adornment of the person, when manufactured or imported after the thirtieth day of April, 1918, on the duty paid value when imported and on the price when manufactured and sold, provided that such war excise tax shall not be payable when the articles are manufactured for export or in the case of jewellery where the total amount of jewellery manufactured by any one person does not exceed the value of one thousand dollars in any calendar year; that a war excise tax be collected upon all automobiles and jewellery imported into Canada for sale or manufactured in Canada on or before the thirtieth day of April 19H8, and which on that day have not been sold to bona fide users, of ten per centum of the amount of the duty paid value when imported and of ten per centum of the price when they have been manufactured and sold in Canada, but that no war excise tax be collected upon the same when manufactured for export in accordance with regulations; and that no war excise tax be collected on jewellery imported or manufactured and unsold on the thirtieth day of April, 1918, where the total duty paid value or price of the entire stock of the same held by any one person does not exceed one thousand dollars; and that there be levied a war excise tax of ten cents per pound on all tea entered! at Customs on or before the thirtieth day of April, 1918, and held by importers or dealers and which on that day had not been sold, where the stock of such importers or dealers exceeds one thousand pounds.
Resolved, That it is expedient to amend The Business Profits War Tax Act, 1916, and/ to provide that paragraph (c) of Section three be repealed; that any business having a capital of not less than twenty-five thousand dollars and under fifty thousand dollars shall pay a tax of twenty-five per centum of the amount of the profits exceeding ten per cent per annum upon the capital; that the amount paid or payable under the provisions of Part 1 of The Special War Revenue Act, 1915, and The Income War Tax Act, 1917, shall be deducted from the amount payable under the provisions of the above Act, and that in computing the profits of such no taxpayer shall include any tax paid under the said Acts in the expenses of his business ; that the amount of capital in the excepted business mentioned in Paragraph (a) of section five of The Business Profits War Tax Act, 1916, be reduced from fifty thousand dollars to twenty-five thousand dollars; that dividends paid during the accounting period shall be considered as a reduction of the unimpaired reserve, rest or accumulated profits ; that the provisions of section three of the last mentioned Act be continued in force to the thirty-first day of December, 1918.
Resolved, That it is expedient to amend the Income War Tax Act, 1917, and provide that "dependent child" shall mean a child under

twenty-one years of age and dependent on its parent for support or over twenty-one and dependent on its parent for support on account of physical or mental incapacity; that paragraph (lb) of section three be repealed and that an exemption of two hundred dollars be allowed for each dependent child under sixteen years of age; that paragraph (d) of section three be amended by striking out the words "or from the net earnings''; that subsections one and two of section four be repealed and that it be provided that there shall be assessed, levied and paid upon the income during the preceding year of every person residing or ordinarily resident in Canada or carrying on any business in Canada and upon the income received by any person from any source within Canada the following taxes:-
(a)	two per centum upon all income exceeding one thousand dollars but not exceeding fifteen hundred dollars in the case of unmarried' persons and widows or widowers without dependent children, and exceeding two thousand dollars but not exceeding three thousand dollars in the case of all other persons; four per centum upon all income exceeding fifteen hundred dollars in the case of unmarried persons and widows or widowers without dependent children, and exceeding three thousand dollars in the ease of all other persons;
and in addition thereto,
(b)	two per centum upon the amount by which the income exceeds six thousand dollars and does not exceed ten thousand dollars; and
(c)	five per centum upon 'the amount by which the income exceeds ten thousand dollars and does not exceed twenty thousand dollars; and
(d)	eight per centum of the amount by which the income exceeds twenty thousand dollars and does not exceed thirty thousand dollars ; and
(e)	ten per centum of the amount by which the income exceeds thirty thousand dollars and does not exceed fifty thousand dollars; and
(f)	fifteen per centum of the amount by which the income exceeds fifty thousand1 dollars and does not exceed seventy-five thousand dollars ; and
(g)	twenty per centum of the amount by which the income exceeds seventy-five thousand dollars and does not exceed' one hundred thousand dollars; and
(h)	twenty-five per centum of the amount by which the income exceeds one hundred thousand dollars ; and does not exceed two hundred thousand dollars; and.
(i) thirty per centum of the amount by which the income exceeds two hundred thou-send dollars and1 does not exceed1 four hundred thousand dollars; and
(j)	thirty-five per centum of the amount by which the Income exceeds four hundred thousand dollars and does not exceed six hundred thousand dollars; and
(k) forty per centum of the amount by which the income exceeds six hundred thousand dollars and1 does not exceed eight hundred thousand dollars; ajnd
(l)	forty-five per centum of the amount by which the income exceeds eight hundred thousand dollars and1 does not exceed one million dollars; and
(m)	fifty per centum of the amount by which the income exceeds one million dollars;
and in addition thereto the following surtax,
(n)	five per centum of the tax payable upon income in excess of six thousand dollars but not exceeding ten thousand dollars;
(o)	ten per centum of the tax .payable upon income in excess of ten thousand dollars but not exceeding one hundred thousand dollars;
(p)	fifteen per centum of the tax payable upon income exceeding one hundred thousand dollars but not exceeding two hundred thousand dollars;
(q)	thirty-five per centum of the tax payable upon income exceeding two hundred thousand dollars;
that corporations and joint stock companies, no matter how created or organized, shall pay six per centum upon income exceeding three thousand dollars, hut shall not be liable to pay the supertax; that the minister may permit any corporation or joint stock company the fiscal year of which is not the calendar year, to make a return and to have the tax payable by it computed upon its income for the twelve months ending with its last fiscal year preceding the date of assessment; that section five he amended by exempting the incomes or such portion of the incomes of judges and retired judges as come within the provisions of subsection three of section twenty-seven of the Judges Act and the incomes of incorporated companies whose business and assets are carried on and situate entirely outside Canada.
Mr. A. R. MoMASTER (Brome): Mr. Speaker, my first word must be one of thanks to the Acting Minister of Finance, who so kindly handed me, a few days ago, some of the figures on which he based his statement, and which enables me to deal less inadequately with the financial situation which confronts this country than would otherwise have been the case.
I apprehend that at all times, and more especially at a time like the present, the duty of an Opposition is to submit everything proposed by the Government to the closest and most careful scrutiny, and then to make the observations and the criticisms which occur to them with an eye only to the best interests of the country. In that spirit I shall deal with the statement of the Acting Minister of Finance.
First of all, we were very glad to hear that the health of the Minister of Finance has improved-not the health of the Acting Minister, for he needs no remarks to be made upon his good health; as we say in the province of Quebec, c;a saute aux yeux, it leaps to the eye. We hear through the public press that the Minister of Finance has got as far as Washington, and we hope that while he is there no rude newspaper man -will poke in front of him any reports of the speeches he made at the time of the Reciprocity proposals six years ago, because it might give him a relapse.
The Acting Minister of Finance has dealt with the question of the unfavourable
[Stage Direction]
balance in exchange of trade between us and the United States, and while he was speaking the thought occurred to me that if the Government of this country had not thought it best to limit the profits which the paper makers could have made in Cam ada at this time we might have had a greater development of paper-making here and more news print might have been sold to the United States. After all, the attitude of this Government towards the paper makers of Canada was not altogether fair. This Administration wished to treat the newspapers right, they wished to be kind to the newspapers, and they thought it would be a nice thing to exhibit their kindly feelings at the expense of the newsprint manufacturers. So they offered to the newspapers a continual treat, but instead of paying for the treat themselves they had it paid for by the newspaper manufacturers, who had to supply the newspaper proprietors with newsprint at a certain fixed price, a price which the manufacturers say is below what it costs them to produce +he paper.
As to the loss of revenue because of prohibition I do not believe that the Acting Minister of Finance need be very much disturbed because, speaking for myself, I think that any loss which occurs through prohibiting the importation of wines and spirits into this country, or their manufacture herein, will be more than made up by the increased health and strength and wealth of the Canadian people.
The super-taxes announced were not very alarming, nor the taxes on income, and I say this, speaking for our friends on this [DOT] side: that if the Acting Minister of Finance is attacked by any person for having too heavily taxed those who can best bear taxation, he can look to us for support and encouragement. The money must be found somewhere, and it should be taken from- the pockets of those who have the most of it. We should not tax the poor unless we are compelled to, we should see that the rich pay and pay in large measure. And to the honour of the rich men of this country let me say, that I do not believe there will be any serious objection to income taxes as long as they are applied honestly and fearlessly, and as long as no one who should rightly be taxed: is allowed to escape.
As regards the excise duties on tobacco,
I suppose it is a proper way of raising revenue, but I trust it will not work out that the tobacco for the poor man's pipe will cost him too much. As far as cigarettes are concerned I suppose the President

of the Council will agree with me that the use of cigarettes is a pernicious habit, and therefore that it is auite proper to tax them.
As regards the 10 cents a pound duty on tea, I am sorry to see that a Government which has made such an appeal to the ladies has, in return for their support and admiration, taxed their favourite beverage. Perhaps there is an explanation for it, but I would point out that on tea imported direct from the country of growth and production, and on tea purchased in bond in the United Kingdom, the following tax is imposed: British preferential tariff, 10 cents per pound, intermediate tariff 10 cents; general tariff, 10 cents. Some explanation is needed for the departure from that sound principle-which the Acting Minister of Finance should have learned years ago at the feet of that other great Nova Scotian, the member for Queens and Shelburne (Mr. Fielding)-that there is such -a thing as the British preference in this country. If seems too bad that tea coming from China, for instance, shall pay no more to get into Canada, or no more after coming in, than tea from Ceylon raised by a fellow British subject under the far eastern skies.
'Then, with reference to the duty of 10 per cent on autos: let me express the hope, Mr. Speaker, that this 10 per cent does not apply to farm tractors.
Wilfrid Laurier: Hear, hear.


Mr.   M@: Of course, a farm tractor is an automobile just the same, I presume, as a truck is an automobile. I believe it might have been well to have differentiated between pleasure cars and business cars or utility cars. Surely, when the provinces are, and have been, spending vast sums of money to improve the roads of this country, it is a mistake to tax a truck which is, perhaps bringing in from the country thousands of gallons of milk to our town populations. I think there should have been a differentiation effected there. II have this also to say: as far as I can see this 10 per cent, which applies as well to automobiles coming into the country as to automobiles manufactured in the country, will practically give the whole market over entirely to the manufacturer of Canadian automobiles, because I believe I am right when I say that the present customs tariff on automobiles coming in from the United States amounts to 42} per cent, and if another 10 per cent is added it will make the duty 62} per cent, which ,1 should say, is an absolutely prohibitive duty. I consider that the 10 per

cent which the manufacturer in Canada will be taxed will be very little for him to pay in view of the market being practically given over to him. On these grounds, Mr. Speaker, I question the advisability of the tax as it is presently submitted. There is room, I presume, for the taxation of luxuries; but the taxation of luxuries should be so effected that no increase of protection should be given to the native manufacturer, at any rate not at a time like this.


Mr.  A. K. MAOLEAN@: If the hon. member will permit me, I would like to correct a statement he made a moment ago, so that the country will not be misled. The duty on automobiles does not apply, and is not intended to apply, to motor trucks of any kind.


Mr. McMASTER:: Willi it apply to delivery trucks?


Alexander Kenneth Maclean: No.


Andrew Ross McMaster: If that be so then I have to say that this legislation is very loosely drafted, because the idea I took from it was that " automobile " is a term of wide application, covering pleasure oars, express delivery vans, and isuch automobiles as the large trucks used by the Militia Department on the streets of this city.
Now, my hon. friend made some remarks which he thought were more or less hopeful about our having a favourable balance of trade. He told us that we were selling more to Great Britain than we were buying from her, and that we were buying more from the United States than we were selling to the United States. In the case of Great Britain the balance was favourable to us; in the case of the United States the balance was not favourable to us. I think that before going further, I should remind the House of the very essential fallacy wrapped up in the phrase " favourable balance of trade." Suppose a vessel laden with commodities grown in Canada leaves the port of Montreal for Great Britain, the goods on board being worth $100,000, and that it returns with a cargo of commodities useful to the Canadian people worth $120,000. On the unfavourable balance of trade theory our exports would be represented as $100,000; our imports as $120,000; and our unfavourable balance of trade, $20,000. But, suppose my hypothetical ship is lost on the voyage from Liverpool to Montreal, then the exports from Canada are set down at $100,000, imports into Canada, nil; favourable balance of trade for Canada $100, 000. It is not a wise thing to base any public policy on absurdities of that sort.
What is the situation in regard to our trade? The situation is that we are maintaining an army across the seas, and helping to maintain other armies across the seas, and in consequence our imports have been enormously swollen and our exports still more enormously swollen. To illustrate my argument, I have merely to Tefer to a table dealing with war trade, prepared by the Department of Statistics, containing the exports of certain Canadian commodities having a direct bearing on the war for the last normal year, which ended on the 31st March, 1914, compared with the exports of the same commodities for the fiscal year ended March 31st, 1917. These are the latest figures I have been able to obtain along these lines. The war has swollen both our pxports and imports, first, by greatly enhanced prices, and, secondly, by greatly increased quantities of certain commodities imported and exported for the equipment and provisioning of our army and for the use of our allies. I do not ask the House to follow me in a long list of figures, but there are some rather striking examples of my contention which I think may be of interest to hon. members. In the fiscal year ended March 31, 1914, we exported from Canada $446,000 worth of clothing. I leave the odd hundreds out. For the fiscal year ended March 31, 1917, this item had increased to six and one-third millions of dollars. Eggs jumped from just over $37,000 to just over $1,800,000. Explosives leaped from over $241,000 to over $281,000,000. Gutta percha, which we exported in the year 1914 to the value of $686,000, jumped to over $2,500,000 in 1917. In the year 1914 we exported 15 gasoline launches, worth a little over $9,000; in 1917, we exported 463 launches, worth over $15,000,000. The export of bacon has caused a good deal of interest in this country, and I note that from $3,750,000 in 1914 our exports have jumped to $43,000,000 in 1917, which latter figure, of course, includes the piice of the brine which was pumped into the bacon according to a well known process which occasioned a certain amount of interest throughout the country some months ago.
Exports of beef jumped from over $1,000,000 in 1914 to $5,750,000 in 1917, and canned meats from $95,000 to $1,750,000. Pork, showing the family characteristic, almost kept pace with bacon by increasing in export from over $200,000 to over $2,500,000. Among the metals a vast increase of exports was shown. Exports of aluminium

Toronto to see what sum less than $10,000,000 the people of Canada shall pay to the owners or the pledgees of the stock of the Canadian Northern railway for taking that stock away from them. There was room for a commission, but the commission should have sat for this purpose-to see what sum the owners and the pledgees and other people interested in the Canadian Northern railway should give to the Canadian people for taking their obligations off their hands. I greatly fear that for many years to come we shall find ourselves face to face with grave capital commitments.
I am glad that the Acting Minister of Finance (Mr. A. K. Maclean) has brought forward to-day proposals for the application of allowances, in regard to a man's payments on income tax, in respect to the children which he has. That is only fair and right. It is following sound British precedent. I noticed in Mr. Bonar Law's Budget speech that the British Government bad carried to a higher figure than formerly the exemptions for children.
The next criticism which I have to offer to my hon. friend's speech is that it discloses no proper nor adequate measures of economy.
It has been my lot recently to read a certain number of budget speeches which have from year to year been delivered- in the House, and a certain number of financial criticisms, and with all respect in the world fo-r those members of this Hoarse- who have made speeches and those criticisms, there is a -certain sameness about them. When the Liberals were in p-o-wer their expenditure was denounced in words- eloquent and bitter by the present Minister of Trade and Commerce (Sir George Foster). To-day no longer does he denounce, at any rate in bitter tones, the Government's extravagance; the eloquence has remained, but the bitterness h-a-a gone. Here are his words, uttered when he was financial critic of the Opposition in 1908:
The rapid pace which has been set and the recklessness of the expenditures that have been undertaken have obliterated all the old rules, the old lines in reference to expenditure. Whither are we rushing?
The expenditure which was animadverted to in such eloquent tones amoamted in that year to $76,000,000. In 1911 the present Prime Minister, then the leader of the Opposition, issued a manifesto to the-Canadian people, who were -then called upon to de- -cide which of the two great parties in this country -should direct the country's des-
tinies for the next parliamentary term, and he wrote these m-ost severe words:
The increase in what is known as ordinary controllable expenditures of from $36,000,000 in 1896 to $79,000,000- in 1910 is proof of extravagance beyond any possible defence and establishes a prima facie case of corruption.
It is a sad commentary -upon the value of election promises and upon the frailty of mankind- to- -know that the Administration. of my right hon. friend the present P-rime Minister increased the consolidated fund expenditure- or what we may call the expenditure on current account from $98,000,000 for the year ended March- 31, 1912, to $112,000,000 the succeeding year; the next year it had increased to $127,000,000, the next year to $135,000,000, hack again to $130,000,000 the- next year, leaping up again to $148,000,000 the- next year, .and the expenditure stands at $173,000,000 for the year just closed, exclusive of all war expenditure except pensions and interest on the war debt.
To compare the first four years of -the Conservative Administration with the last four years of the Liberal Administration- of course, in regard to this part of my remarks the Acting Minister of Finance is no more responsible than a babe unborn-we find -that the expenditure of the Conservative Administration exceeded by about 45 per cent that of their predecessors, though the country was certainly prosperous in the last four years of Liberal Administration, and although part of the first four years of the Conservative Administration was passed in war time, when extravagance ceases to be -a fault and becomes -a crime. To those who find it difficult to believe anything disadvantageous concerning the -Conservative party and although the name Conservative has disappeared from political -history we cannot think that -all Conservatives have lost their Identity in the sea of Unionism- and to -those who may object that -my remarks deal only with consolidated revenue account, I need only say that the capital expenditure -accounts of certain spending departments of the Government show the same high, and in my view unjustifiable, increases. In all governments there are forces working for economy and 'forces working for extravagance, and -the history of this country shows in the most plain and unmistakable manner that the forces of economy have been relatively stronger under the administration of Liberal leaders than under the administration of my right hon. friend the present Prime Minister, or those who have preceded him in guiding the affairs of the Conservative party.

But now, face to face with the sternest situation that has ever confronted the Canadian people, let us admit frankly that whatever virtues of thrift and economy our people possess as individuals, these qualities have not been adequately reflected) in the management of the nation's business. Having signalized! the fault, let us see what conditions have led to it.
'In a democracy the people get the Government they deserve, and I ask the question: Why have the Canadian people had extravagant governments? The first cause has been a lack in the Canadian people of a feeling of responsibility for the good' government of their country. Many there have been who have frankly stated that they took no interest in politics; that they were too busy to do so; and what is still more astonishing, some such seemed to take a considerable degree of pride in this shameless sort of selfishness. Perhaps, a feeling of colonialism felt by certain classes in our country, especially in years gone by, has beep responsible in part for this condition. The second cause has been the fact that we were collecting our federal taxes almost altogether through a customs tariff and, excise, and no one knew what he was paying to the State.
These two causes, in some measure, will be removed' by the war. The people of this country are now feeling as they have not felt for years how nearly and closely politics-the science and art of Government- touches' every individual member of the State, and many persons are now learning, as direct taxpayers to the federal authorities, that they have a direct interest in the economical administration of the country's affairs.
But there is a third cause, and I believe a most potent one, consisting in a widespread misapprehension about the surpluses which the governments of this country have declared on current account, or consolidated fund account, for a number of years past.
For the fiscal year 1899-1900, we had a surplus on account of consolidated fund of just a little over $8,000,000; the next year, the surplus was a little over $5,500,-00O; the next year, a little over $7,250,000: the next year that of 1902-3, the surplus had increased to over $14,250,000; the next year it went to $15,000,000; the next year it was almost $8,000,000; the next almost $13,000,000; for nine months of the next year it was almost $16,500,000; the next year it amounted
to almost $19,500,000; but in the year 1908-9, which followed the commercial crisis of the fall of 1907, the surplus was reduced to a little more than $1,000,000; the next year, however, 1909-10, it increased to over $22,000,000; thd next to almost exactly $30,000,000; the next year, 1911-12, to almost $38,000,000; the next year to $56,500,000; the next year, 1913-14, it was almost $36,000,000; the next fiscal year saw the outbreak of the war, and for that year, 1914-15, instead of the usual surplus a deficit of almost $2,500,000 occurred. This was changed, however, the succeeding year, to a surplus of almost $42,000,000, and in the year 1916-17, the surplus amounted to $84,000,000, while for the year just closed it amounted to $85,000,000.
On the face of things, these surpluses demonstrate a truly marvellous condition of national prosperity, but I ask the question : Can we regard these surpluses as an indication of the excess of money furnished for taxation by the people of Canada out of their earnings over and above the necessities of the Government? In other words, during these years is it a fact that after having earned large sums of money the Canadian people have contributed, indirectly it is true, either through Customs duties or excise, such large sums by way of taxes to the Government that the Government has had these surpluses? My answer is: Far from it, because the revenue in these years in which these wonderful surpluses have occurred-in the history of the country the surplus never reached 10 millions until the year 1902,-largely represents taxation on our own borrowings. Perhaps I could better explain what I mean by an illustration-. Let us suppose a man in business has for many years been conducting his affairs at a profit, and in order to provide for his declining years he has been placing in a fund a part of his profits, which he calls his surplus fund. And let us suppose further that experience has taught him that the easiest way of doing so is to put aside each month, in a special account, 5 per cent of his gross receipts. Let us further suppose that it becomes necessary for him to enlarge bis establishment. For that purpose he borrows $10,000. Will he, if he be a prudent business man, regard this sum as a gross receipt and put $500 of it in his special account? Assuredly not, because he knows that no part of it can be treated as revenue. It is capital which he has borrowed, and to put it, ot any part of it, in his surplus fund would


Andrew Ross McMaster: It would be an occasion for deep regret to [(Mr. 'M (Master. ]
those who closely follow and understand the needs of our own soldiers, those of our Allies and of the civil populations overseas, to know that there has been one very serious omission in the able speech delivered this afternoon by the Acting Minister of Finance, and the omission is this: He has announced no policy of taking off the duty on agricultural implements and machinery to increase food production. I take it that it should not be necessary for me to speak at any length on the need of food at this time, but if proof is required it is at hand. In the Canadian Food Bulletin, published by the Canada Food Board, on 28th March of this year, I find a call for greater production from the Prime Minister himself. He wrote:
The campaign for increased production of foodstuffs now launched by the Canada Food Board is of the most vital importance to the victory of the Allied cause. Because of our geographical position the United! Kingdom, the Allied nations are depending on Canada for food as never before. Specific suggestions will be issued from time to time by the Canada Food Board for the guidance of the people; and it is the earnest hope of the Government that every citizen will realize his or her personal individual duty to adopt and carry out these suggestions. (Mere perfunctory observance will not be enough ; the crisis is grave and urgent beyond possibility of exaggeration; and it will only be through an earnest sense of individual responsibility that Canadians will be able in this matter to honour their obligations to their heroic soldiers overseas, who are defending our liberties at a cost besides which any personal inconvenience or discomfort on our part is insignificant.
Was the relative importance of food production altered by the great German offensive which began on the 22nd day of last month? Not, at any rate, in the opinion of Lord Rhondda, the British food controller, who from London, on the 10th of April, cabled the Canada Food Board as follows:
In these stern days it is inspiring to learn that Canada is tackling the food problem with redoubled energy. The terrific pressure on our military front makes it all the more imperative that those behind the lines should strain every nerve to defeat the enemy's avowed object of destroying the British Empire. Germany hoped first to starve the Old 'Country by the submarine campaign and then to smash her land forces. She (has failed to starve us and she will fail to smash us but we cannot achieve victory without food. There never was a time when it was more needed. The Canadian farmer and the Canadian farm hand now have the opportunity to make an effective reply to the enemy's present onslaughts by bending their undivided energies to the increased production of those food supplies for which we depend to such vital extent on your great Dominion.
Our own Dr. Robertson has assured us that the world faces a food situation which

is nothing short of appalling. The increased dependence of our Allies, France, Italy and Belgium, upon us for food production is shown by the following facts: In France the average yearly production of wheat for the five years preceding the war was 317,000,000 bushels. In 1916, the production had fallen to no less than 214,000,000 bushels, and in 1917 the crop was estimated at 161,000,000 bushels. Likewise, in . Italy, the average pre-war production for five years amounted to 183,000,000 bushels. In 1916 this had dropped to 176,000,000 bushels, and in 1917 the estimate was 147,000,000 bushels. In Belgium the average pre-war production was almost 15,000,000 bushels. It fell in 1916 to almost 12,000,000 bushels. The estimate for 1917 only amounted to 9,000,000 bushels. The total reduction in those three countries amounted to over 198,000,000 bushels, representing a reduction from pre-war production of nearly thirty-eight per cent. In view of these facts Canada finds itself one of the most important factors, if not the most important factor, in the food .situation. Supplies from Eastern Europe no longer exist. Supplies from Australia and Africa are too far away to be moved. As Lord Rhondda has said: What we ask from the United States and Canada we cannot procure elsewhere. As between ourselves and the United States we have a far larger exportable surplus of wheat than she has. In the past year our exportable wheat surplus amounted to 154,000,000 bushels, while the United States had only one-third of that amount. Canada is called upon to be a factor in saving a world which is face to face with starvation. She has illimitable quantities of the choicest wheat lands awaiting the plough; she can add enormously to her exports of foodstuffs, especially of grain, in a single year if-and, Mr. Speaker, there is so often an "if"-ishe can command sufficient man power to do the necessary farm work. Face to face with this situation the Government has conscripted for the army men from the farm. The decision has been made, and I have no desire to re-open the question- the responsibility is upon the Government. But I have merely to say this-and I will not use my own words last it be thought that party spirit, or something of that sort, had affected my judgment, but I quote the words of Lord Rhondda-"Unless the Allies in Europe are able to import the necessary supplies for the feeding of their armies and their civil population, victory may slip from our united grasp." God forbid! But 81
if disaster should overtake our armies in the field:, and if that disaster should be due to a failure of food, I am glad that the responsibility is not upon my shoulders. The Food Board has been created in Canada at vast expense. It has issued some rules and regulations, and has distributed some useful information. Whether the board has justified, is justifying, or will justify the immense amount of money spent upon it, is a matter to which it is now too early to dogmatise; we will leave that question for decision to the future. But there is one means of encouraging food production in this country which the Government has refused to adopt, although it is simple and easy. You will remember, Mr. Speaker, the old story of Naaman, the Syrian, and how he came to the Hebrew prophet seeking to be healed of the disease of leprosy, and the prophet said to him: "Go and bathe in the River Jordan and your skin will be again like the skin of a little child." He disdained at first to follow the direction, and why? Because it was too easy, too simple. I ask the Government of the day not to refuse my suggestion on the same ground, that it is too easy and too simple. What is my suggestion? It is this: That all agricultural tools, implements and machinery of all sorts and kinds, from the rake and hoe to the great tractor and thresher, be placed upon the free list, and that either by drawback or otherwise, the manufacturer of such be placed in as good position in respect to his raw material.
I cannot imagine what adequate reason the Government oan offer for withholding its consent to this proposal. It cannot be that the Government fears the lack of revenue, because with two such Ministers of Finance, one acting in Canada and the other in the United States, we can face the future with a certain degree of confidence, and the Government cannot be anxious about the loss of revenue which might be incurred by placing these useful articles on the free list. A Government which is borrowing by the hundred million, and which has presented to us a budget for war purposes alone of $500,000,000, cannot baulk at a mere two million dollar loss of revenue, for that is all the duty realized at the Canadian Customs houses from the entry of agricultural implements during the past year. If there is any reason for refusing my request, it must be based on some other consideration than the loss of revenue. Can the manufacturers of such implements complain of the proposal? If they complain,

The clock we have pushed forward For gardening after tea;
But as for farming implements-
We can't admit THEM free.
What opposes this needed reform? What are the forces impeding the freest possible access to tools which are necessary aids to greater production? They are two: first, the attitude of the .agricultural implement men; second, the attitude of certain of the big interests of this country.
Let us deal with the first; the objection of the .agricultural .implement manufacturers. The question of free .agricultural implements is not a new one. It was discussed very fully in the debates of the session of 1812-13. On that occasion the hon. member for Brantford (Mr. Cockshutt) spoke as follows:
Speaking for myself and. for my own interests I would he prepared to say that if we got all our raw materials at any equally reduced duty, either no duty or a dtoty commensurate with the amounts knocked off implements, we ooulfl afford-there is no question about that-to reduce the duty on agricultural implements, hut it would be at the cost of displacing probably 100,000 men in the Dominion of Canada in all these implement works and their tributary industries that supply them with raiw materials.
These avowals made by the hon. member for Brantford go far along the line advocated by toe, though they do not go the whole way; and he has very prudently and properly attempted to. .speak for no other than himself and his own interests. In this connection I have two points to submit to the House: first, that the agricultural implement business has reached the stage when, given raw materials, duty free, it can .stand and should .be made to stand upon its awn feet; second, that the fear of displacing 100,000 men in tributary industries is grossly exaggerated, if not altogether unfounded.
As 'to the first point. The number of employees who were engaged on salary or on wages in the agricultural implement business in 1915, according to the postal census of that year, was 7,609. The value of the raw materials used in that year was almost $6,000,000; the value of the products was over $13,372,506, and the exports amounted to over $3,500,000. The war must have greatly affected the export business of this trade, because during 1914 almost $8,000,000 worth of agricultural implements had been exported. Even in 1915, a year of war, the exported product was about one-fifth of the whole, which indicates that the industry is native to the soil, is soundly organized, properly .managed-, and needs nothing more than a fair field and no favour for success.
[Mr. (MdMaster.l
As .to the second point raised by the member for Brantford, the probable displacing of 100,000 men, can it be said that 100,000 men are employed in those industries which make the raw material which enters into the machinery .made by the manufacturers of agricultural implements? I do not think so.
I do not think so because, according to the Government census of 1915, there were only 59,361 persons engaged in that year in the steel and iron industry, and they certainly could, not all be displaced by reason of the loss of soine custom of the agricultural implement manufacturers. Secondly, although the implement manufacturers are good1 customers of the iron and steel manufacturers, they are not their only customers-far from that. As stated before, the raw materials which in 1915 *went into agricultural implements amounted to almost $6,000,000. Would I he wrong in assuming that 80 per cent of this, or say, about $5,000,000, consisted of iron and steel products in some form or another? I am not an expert on this matter, hut as a representative of an agricultural community I am able to look a plough in the face and tell it from a harrow, and it would appear to me that most of these agricultural implements were made of metal, and that the wooden parts represented- a very small proportion of the value of the whole. Perhaps- I may take 80 per cent as a fair working basis as to the proportion of iron and steel products which go into the making of agricultural implements. From the investigations I have made, I do not believe that more than one-fifth of the iron and steel manufactured in this country goes into making agricultural implements. In other words, I do not believe the agricultural implement manufacturers- are customers for more than one-fifth of the iron and steel produced in this country.
Before we leave this question, there is this third consideration: The duties on the raw materials entering into agricultural implements- are very low. Most of this raw material will be found in one or another of the following schedules. I might just say, en passant, that it would- be interesting to know what principles, if any, underlaid the tariff. It seems to he the strangest sort of hodgepodge of all kinds and conditions of things that one can imagine.
Item 379 reads:
Rolled iron or steel angle beams, channels, angles and other rolled shapes or sections of Iron or steel, not punched-, drilled or further manufactured than rolled-, weighing not less

than 35 pounds per lineal yard, not being flat, oval, or round shapes, and not being railway bars or rails, per ton, British preferential, ?2; intermediate, $2.75 ; general, $3.
That is a specific chity. There is to be added to that, under duties which were added a year or so ago for alleged war purposes, British preferential, 5 per cent, intermediate and general, 7i per cent.
Item 386 reads:
Rolled iron or steel in bars, bands, hoops, scrolls, strips, sheet or plate, of any size, thickness or width, galvanised or coated with any material or not, and steel blanks for the manufacture of milling cutters, when of greater value than 3 \ cents per pound, British preferential, free, intermediate, 5 per cent.; general, 5 per cent.
To that would have to be added British preferential, 5 per cent; intermediate and general, 7i per Cent.
Item 396 reads:
'Seamless steel tubing valued at not less than 3 J cents per pound, adopted for use in the manufacture of agricultural implements, British preferential, free; intermediate, 5 per cent.; general, 5 per cent.
The duty is now British preferential, 5 per cent; intermediate and general, 121 per cent.
Item 412 reads:
Iron or steel nuts, washers, rivets and bolts, with or without threads, nut, bolt and hinge blanks, and tee and strip hinges of all sorts1, n.o.p., per hundred pounds, British preferential, 75 cents; intermediate, 75 cents; general, 75 cents.
There is to be added to that British preferential, 10 per cent; intermediate, 20 per cent, and general 25 per cent. Now, of course, you will have to add an additional 5 per cent duty on these articles if they come from the British Isles and an additional 71 per cent if they come from elsewhere.
Item 444 reads:
Mould boards or shares or plough plates, land sides and other plates for agricultural implements when cut to shape from rolled plates of steel and not moulded, punched, polished, or otherwise manufactured, British preferential free, intermediate, free, general, free.
The duty will now be British preferential, 5 per cent; intermediate, 71, and general, 71. It would seem to me reasonable to argue that the removal of these duties cannot have that injurious effect dreaded by the >hon. member for Brantford (Mr. Cock-shutt) when he was dealing with this matter a year or two ago. It would appear to me that the economic case for free agricultural implements with which to help win the war, is absolute, complete and sound.


Mr. COCKSHUTT:: Will the hon. member kindly state the date of ithe Hansard from which he is quoting?
Mr. lMoMASTER: For some weeks past I have been carrying a copy of the hon. gentleman's remarks around with me in my pocket. The hon. member for Brantford addressed the words which I have quoted to the House and which are reported in volume 6 of Hansard of 1912 at page 10,512. I have also carried around with me some other words of the hon. member which are to be found at page 10,517, and I think that the House will,he interested in hearing them. The hon. member said:
The quality of the manufactured goods turned out by Canadian manufacturers is of the best, and the fact that they have competed in the markets of the world against all competitors shows that they are able to compete with the world in quality and in price.
If that is the fact, I would think it well that the farmers of this country should' have the benefit of free agricultural implements in order that they may grow more food and, in that way, help to win the war.
I now propose to deal with the attitude which II believe has been assumed by the big interests of this country to the proposal for the introduction of free agricultural implements. I do not think I am breaking any confidences or saying anything that is not known to the world pretty generally when I say that the presence of stalwart radicals in the Borden Administration of to-day is viewed by the large interests of this country with a certain degree of perturbation, if not of fear; and of course, the attitude of the large interests is not at all due to the character of the representatives in the Borden Administration. That, of course, would cause them only joy and confidence. (It is the economic views-
Sir 6AM HUGHlEiS: Might I correct the hen. member? 1 understood this was the Borden-Rowell administration.


Andrew Ross McMaster: I shall not be deflected from an economic discussion by any pleasing, agreeable and humorous pleasantry of the honourable and gallant member for Victoria (Sir Sam Hughes).
The attitude of the big interests in this country in regard to free agricultural implements is not unlike the attitude - they assumed over reciprocity. Though the interests of the protected manufacturers of this country were safeguarded in the most ample manner through the care of the hon. member for Shelburne and Queens (Mr. COMMONS
Fielding) and others of the Administration of that day, the financial and industrial interests of this country thought they saw in reciprocity the entering of the thin edge of the wedge into what they regarded as their tariff privileges, and therefore they opposed reciprocity and opposed it in a most interesting manner. It can hest be illustrated by a reference to a story in Holy Writ. You will remember, Mr. Speaker, that when Paul and his companion Silas were travelling around the country preaching the gospel, they came to a place called Ephesus, where there was a great temple of Diana of the Ephesians, and they were so successful in their preaching that the business of the people there who made little images of Diana fell off, and a man Demetrius called together the association of craftsmen of that city and said: This man Paul and this man Silas are hurting our business. Let us put a stop to it. Did they go out into the market place and lay complaints against these two men for hurting their business? Not for a moment. They raised the loyalty cry. They went out into the market place and for the space of two hours they cried, " Great is Diana of the Ephesians," and they raised a riot so that Paul and Silas got into trouble. That was one way to stop competition. In the same way the large interests of this country, in the summer of 1911, did not go out into the market places of Canada and say: These Liberals are going to hurt our business. They could mrt say that, because it was not true to begin with. So they raised the loyalty cry so as to hurt the Liberals who were pressing for reciprocity, a measure which, I believe, would have been of great benefit to the Canadian people, and I know that some hon. gentlemen opposite share in that view. The whirl-a-gig of time brings round its revenges. Those who supported the Conservative opposition of that day, and whose life blood was opposition to the very name of reciprocity, saw that same party when it came into office take the duty off wheat, wheat flour and semolina-the very keystone of the antireciprocity arch. The attitude- of the big interests which opposed free agricultural implements is not unlike the attitude assumed by some manufacturers in this country in the days of 1896 when certain reforms in a downward direction were effected by those in charge of the tariff affairs of that day. You will remember how that stalwart old war-horse of the Conservative party, Sir Charles Tupper, [IMr. MoMaster.]
said that the sorrowful wail of the manufacturers was heard abroad in the land, and we know that after a reduction had been made in certain duties and after the party which made those reductions was able to go on with its work, there was a great era not only of general prosperity but of manufacturing prosperity in Canada; our manufacturers never made greater strides than they did between 1896 and 1911.


Mr RICHARDSON:: Will the hon. gentleman tell us what the total reductions in the tariff by the Liberal party, after 1896, averaged?


Andrew Ross McMaster: I am always willing to oblige, and I happen to have carried those figures around in my pocket also. I am not prepared, perhaps, to give my hon. friend his answer just as he would like it, but I am sure he will be glad to let me give the answer* as I like it. In order to help the farmers of this country, cream separators, which had been protected before 1896, were placed on the free list, and what makes me believe in sound economics for this country is that cream separator factories grew up in Canada even though cream separators were put on the free list. Then there was Indian corn. Before 1896 *that was dutiable at the rate of 71 cents per bushel except when used for distillation purposes. The staunch temperance element in the present Administration was not present in the Conservative Administration prior to 1896, and consequently you could ge't Indian corn in free if you wanted to make whisky out of it, but if you wanted it for feeding hogs or cattle you had to pay a duty of 7) cents a bushel. That duty ' was taken off, and Indian corn allowed to come in free. Pig iron, which was one of the basic raw materials for a great number of manufactured articles, had been taxed under the old tariff at four dollars per ton. Under the new general tariff it was taxed at $2.50 per ton; under the preferential tariff, which was in force up to the 30th of June, 1898, it was taxed at $2.18| per ton, and after the 1st of July of that	year at	$1.87| per ton.
There was also a reduction in other matters, not as much as I would like-I am very much of the kidney of the hon. member for Springfield (Mr. Richardson), and should have liked to see my friends go a little further. But I say this: If I wish to go to Toronto do I join a number of men who are going in the direction of Montreal or do I attach myself to a number of men who are going in the direction of Toronto,

even though they are not going as fast as I would like to have them go?


Mr. RICHARDSON:: I should like to say that a study of the politics of this country for the past twenty-five or thirty years convinces me that more reductions were actually secured from the high-priest Tories than from the low-tariff Liberals.


Andrew Ross McMaster: I would imagine that the applause to that sentiment was somewhat local. I would doubt very much if it came from those representing manufacturing interests in the splendid old province of Ontario. But there were a great many reductions made; duties running up as high as fifty and sixty and iseventy per cent were reduced to ad valorem duties not running over thirty-five per cent. It must not be forgotten that there was also the British preference, and without being unduly antagonistic to the hon. member for Springfield, whose views on many questions do not differ very largely from my own, I would remind him that this British preference was fought in the most strenuous way by those high priests of Toryism from whom he states he received so many tariff favours, and they fought it because they said: You are interfering with the market which should be reserved for the Canadian manufacturer.
I would also like to ask my hon. friend from Springfield (Mr. Richardson) and other staunch free traders on the other side of the House, whether the reciprocity agreement was not a great step in the right direction, and whether the Liberal Adminis-* -tration of 1911, who adopted that policy and went down fighting for it, were not entitled to the sympathy of those who, we will say, hold sound economic views on tariff questions? The fears of the manufacturers of 1896 proved groundless. I would think, and hope, that the fears of the large interests in this country would prove groundless in regard to the introduction of free agricultural implements.
But let me note the very pleasant situation in which we find ourselves to-day in discussing economic matters, especially when these economic matters deal with the United States. You will remember that a few years ago if you discussed economic matters in connection with the United States with some sections of our people you frequently placed your loyalty as a British subject in jeopardy. But, now, how different it is! We find the Prime Minister himself coming before the House and in gracious fashion thanking the United States
for having sold so many steel plates to us at a price no higher than they were charging their own people.


Charles Murphy: And they are going to New York to consult the Finance Minister.


Andrew Ross McMaster: They have always gone to New York when it suited their purposes. It is only the other day that the right hon. Minister of Trade and Commerce (Sir George Foster) told us that the United States and ourselves must fight this war as one economic unit. Six years ago, the friends of these hon. gentlemen were saying that if we adopted a certain trade proposition we would become an economic unit with the United States and then away with the Constitution, the Throne would tumble, and the Stars and Stripes would be substituted for the British flag. Really it is now very pleasant to be able to discuss economic questions without placing one's reputation for loyalty in jeopardy.


Sir SAM HUGHES:: Is it not very pleasant to see Old Glory flying side by side with the British flag and the French flag? They were not flying together then.


Andrew Ross McMaster: It is splendid, and I do say for the political party with which I have always been associated, and with which I am associated yet, that we have never attempted to make political capital in the past hy endeavouring to raise antiAmerican sentiment on the North American continent.
I respectfully suggest that it may very well happen that the fears of those who believe that their own best interests, and, indeed, who perhaps sincerely believe that the best interests of the country are served by the maintenance of artificial security through the operation of a protective tariff, are groundless. I know what the reply of these gentlemen will be, and it will be this: ' We know our own business much 'better than any professional man who happens to be a member of Parliament, and we and not he muist be the judge of what is best for us." In reply to this, may I make this observation? The federal reserve banks, created by President Wilson, have been a great success and have enormously benefited the United States banking system, but the bankers, before the law creating these federal reserve banks was actually placed upon the statute-book, almost unanimously condemned the proposal. They thought they knew banking much better than President Wilson, but President Wilson and his advisers knew what was best

. reconstruction of the tariff policy I ain doing what is absolutely right.
I have endeavoured in my remarks to place before this House the serious financial situation with which this country is confronted. I have pleaded for economy, and 1 have advocated with all the force I possess the removal of the duties on agricultural implements, not only as it measure of justice to the agricultural interests in this country, 'but as a war measure. I have endeavoured to show that without a return to sound economic principles a most menacing future is before us. I have not painted the future in too dark colours. I have unbounded confidence in the ability, strength, industry and intelligence of the Canadian people. The future is not bright; the hill of difficulty is before us, but I believe that we can win through if we are a united people.
We on this side of the House have felt a great deal of pleasure this session. Why, Mt. Speaker? Because we have found some things which we had anticipated would occur have not happened. We had heard of a celebrated white horse. We had heard that this white horse was given to kicking, to rearing and biting. The horse was brought out, though not with the consent of the whole House. It required the united efforts of twenty-one men to bring that horse out of the stable. When the horse came out, we were pleased to find that it was a much maligned animal, that its behaviour was a great deal better than we had been led to suppose. Instead of rearing and kicking at us, the only kicks it gave were side kicks directed at the Minister of Justice; and it breathed kindly words about the gallant 22nd battalion. We found that this horse was not nearly such a vicious animal as we had thought he was.
There is something else that has delighted ns in this House. That is the spirit of union which has been shown by members on the other side. We reciprocate those feelings. We believe that this nation will fall if divided; but we do not believe it will fall, because we believe that it will not be divided. We have a difficult future in front of us; we have a long hill to climb, but we believe that that hill can be climbed; we believe that, with unity, with the spirit of courage and perseverance, the difficulties which confront the 'Canadian people can be overcome.


Sir HERBERT AMES (St. Antoine):: Mr. Speaker, we have, for the past hour, been listening to an address which reminds the older members of the House of ante-bellum days, when the good old discussions on the relative merits of tariff and free trade were frequent every session, and when a large part of the time of members of the House was taken up in considering which system was the more beneficial for the people of Canada.
1 think we were all pleased this afternoon when the Acting Minister of Finance (Mr. A. K. Maclean) announced that there would be no tariff changes, not that the Acting Minister of Finance has not been asked to make tariff changes, because requests have come to him to make alterations in the tariff, but the Acting Minister of Finance, as the mouthieee of the Government, believes that this is not the time when nonessential questions that are likely to divide us should be thrown into the arena of this House.
1 have been waiting for an amendment to be moved by the hon. member for Brome (Mr. McMaster)inasmuch as I have presumed that, after spending an hour in elaborating an idea, he would test the will of the House in respect to his * proposals. He has not, however, seen fit to do so, although possibly an amendment along the lines he suggests may yet come from the other side. I trust it may not. I feel that it would, be very much like what Hinden-burg at present is trying to do, namely, to drive in a wedge between the point of contact of the allied armies.


An hon. MEMBER:: It cannot be done.


Herbert Brown Ames: The line has bent, but has not broken, overseas, and I think I can assure the member for Brome that if he endeavours to make an attack upon the point of contact where he thinks the two forces can be forced asunder, he will make a mistake sc far as this side is concerned.
Now, I am going to ask hon. members to come back to the subject matter that was presented so earnestly and so ably thiB afternoon by the Acting Minister of Finance.
I think we need, upon many of the matters that he has laid before us, the very best counsel, the very deepest thought, the very closest consideration; and I trust that we may not be diverted from the great issues which he has laid before us to-day.
I was in this House when the Budget speech in the early part of 1914 was delivered, and I could not refrain from contrasting that occasion when I heard the

Budget speech being delivered to-day. The Finance Minister in the early part of 1914 in delivering his Budget speech, spoke of the prosperity of Canada. He had delivered a budget which had brought him congratulation, and which contained in it no cause for alarm. He had shown the House, I remember, that the total expenses of the year, on revenue and capital account combined, had been $163,000,000, and that entire sum had been met by the collections of that year, and that we had not added one dollar to our debt, nay more, we had decreased our debt between 1911 and 1914. Canada was in a thoroughly sound and healthy condition, financially speaking. It was well that it was so, for we were destined shortly to be submitted to a trial greater than this nation had ever before been called upon to endure. It was well that we were financially sound in the early part of 1914, because the great war came upon us that summer, and found us in that respect as in many others, ready. When Parliament met in August, 1914, we had a short session, but a very momentous one. We were under the cloud of a great menace, possibly a disaster. Parliament wasted no time in debate, I can assure you, in that session. We passed the necessary appropriation, $50,000,000, the amount we thought sufficient at that time to enable us to raise our first fighting force. We passed other legislation to enable the Government to be carried on and to cope successfully with the situation, and we adjourned within two weeks. Parliament at that time gave its pledge, and gave it unanimously, that in so far as Canada was concerned, we were in the war for all we were worth, and, that we would put into it all the men, money, munitions and food that was necessary to the extent of our ability, and we have kept that pledge. Qur forces have grown from 50,000 to 100,000, from 100,000 to 250,000, from 250,000 to 500,000, each increase with the consent of Parliament, one step after another. To raise, equip, train, transport and maintain an army such as we have had and1 still have in the field; to care for the dependents of the soldiers and to look after those in need of pensions; to carry on all the other activities of the war, and at the same time to keep the regular functions of Government in operation, is an immense task. In our war record stupendous figures may be found. In the first year of the war we spent $60,000,000 for war purposes; in the second year, $166,000,000; in the third year, $306,000,000; in the fourth year $348,000,000-a constantly mounting expenditure; a total to the end of March, 1918, of no less than $880,000,000. If any one had predicted in the war session of 1914 .that within three and a half years this war would cost us $880,000,000, that- man would have been told by every financier in the country that Canada would be bankrupt long before any such sum could be raised. Yet as war needs came we have sanctioned one appropriation Bill after the other, each year meeting larger requirements - $50,000,000,	$100,000,000,
$250,000,000, $500,000,000; four successive war Bills aggregating $900,000,000, and we have had before the House this session another war Bill for $500,000,000, making a total of $1,400,000,000 voted by Parliament for war purposes since the outbreak of hostilities in 1914.
At the risk of laying before the House figures which are easily accessible to all and of repeating facts that all have heard, I purpose briefly to run over the financial history of the war to date so far as Canada is concerned. I do' this because I feel that, as a preliminary step to the consideration of the measures which the Finance Minister will base on his Budget of to-day, it is desirable that we should' be reminded of the various milestones which we have passed during the last four years; that we should realize what obstacles we have met and surmounted; that we should be able intelligently to pass in review those things which we have accomplished. To do that will make it possible for us more wisely to deal with legislation and more courageously to look into the future.
When Parliament assembled six months after the outbreak of the war the outlook was far from encouraging. There had -been throughout the country a dislocation of business, a great uncertainty as to. what might happen. All our borrowing was suddenly cut off, and Canada, wbicb had been a debtor country ever since Confederation, found herself no longer the happy possessor of moneys pouring in at the rateof a million dollars a day. Our customs revenues' 'greatly declined. We found ourselves faoe to face with a diminishing income and) an increasing expenditure. A demand was made- that public works should cease; I remember that I myself supported that demand. We now recognize that the Government did wisely in not suddenly putting to an end the public enterprises being prosecuted on capital account. These were continued in order that men might be able to find employment, that contractors might be kept solvent, that

she needed. We then turned to the United States, but the United States at that time was not at war, and it would have been an unfriendly act had the United States lent to Canada money to be expended in arms and ammunition to fight a nation with whom the United States was not then at war. While, however, the letter of the law could not be broken, there was a way in which the spirit of the law might be evaded. We were able to borrow from the United States on the understanding that the money thus secured would not be spent for war purposes. We, of course, used that money for purposes of peaceful development, but we were enabled to that extent to set free other moneys for purposes of war. We borrowed $45,000,000 in New York and paid it back within two years, and then, by the Public Service Loan of 19,16, we borrowed $75,000,000 more. It was not long before the United States decided that- they could lend us no more money. They too went into the war and we, .shut off from Great Britain and from America, found it necessary to fall back upon our own resources. Canada appealed in confidence to her own people, and she did not appeal in vain. Then began that wonderful career of Canadian domestic borrowing, a performance we have every reason to be proud of.
Our first Canadian loan was floated in November of 1915. We called for $50,000,000 and were very timorous as to whether that sum would he raised; that was shown by the fact that we got the banks to underwrite it; But when the subscriptions came to be opened we found they totalled $100,000,000, eighty millions of which came from the Canadian people and only twenty millions from the banks.
Eleven months later it was necessary to float another loan, and it was again to the Canadian people we turned in October of 1916. The second Canadian war loan called for $100,000,000 and you all remember that $201,000,000 was subscribed.
Seven months went by and again we appealed to our people to help us finance the war, and in March of 1917 the third Canadian war loan of $150,000,000 was issued and $265,000,000 was subscribed by our people; nothing whatever was taken or asked from the banks. When certain conversions had been made it was found as a result of that loan that 70 per cent of that $265,000,000 was new money which the Canadian people had loaned to us for carrying on the war.
Needless to say, the Finance Minister and the Government were encouraged at 
the splendid manner in which the Canadian people on three successive occasions, had responded to the appeal that had been made to them to put their savings in the hands oi the Government for war purposes. Then the fourth, the great Victory Loan, was launched. We have heard this afternoon from the Acting Minister of Finance of the preparations that were made, of how widespread and extensive and intelligent they were, of how it became possible to bring the necessities of the Government and the advantages of the loan under the notice of practically every man, woman and child in Canada. Nominally the loan was for $150,000,000; that was the sum that was asked of the Canadian people. It was known, however, and generally admitted that the Government would take whatever sum was subscribed; there was nb limit to the amount they were prepared to receive. The Victory Loan brought in $398,000,000 of new money besides about $150,000,000 of conversions which, of course, do not count as new money.
Let me recapitulate for a moment the history of those loans because I think when we see them in their magnitude and in their completeness we shall realize that they give us cause for congratulation and ground for hope. We put confidence in our own people, and that confidence we found to be well placed. Of our entire outstanding securities, $75,000,000 of the war debt is in the hands of Canadians, or 85 per cent of the whole. Just think what that will mean after the war. We may have hard times and it may be difficult for the Government to finance in years to come after the war is over, but our war debt is not held by a stranger nation that can take us by the throat and make us pay whether we will or not. Our war loans will be held by our own Canadian people with whom we can treat and from whom we can always be sure of sympathetic consideration.
Now I want to call the attention of the House to a remarkable feature of these loans1-a feature which I think gives us the greatest of hope for the future, and that is the ever-widening distribution among the people of Canada of our securities. To the first loan one person out of [DOT] every three hundred of our population subscribed; that is, about one-fortieth of the families of Canada may be said to- have bought a bond.	To the second loan
one person in two hundred and thirty of our population subscribed, and to the third loan one in one hundred and ninety. To the last loan one

in ten of our population subscribed; in other words, computing five persons- to a family, it would mean that in every other home throughout Canada there has lodged a bond of the Victory Loan. The average subscription for the second and third loans was $6,000; that means there must have been a great many large subscribers and that the earlier loans' must have been mainly taken up by the capitalists. Bat the average subscription to the victory loan was $500, showing that there must have been tens of thousands of small subscribers in order to bring the average down to that figure. It we compare this record with that of the American loans I think we have cause for congratulation. The second great American Liberty Loan-we cannot speak of the third because it will not be completed until the end of this week-was for three billion dollars-twenty times our loan of $150,000,000. One to twenty does not adequately represent the difference between the wealth of the United States and that of Canada. It should be far easier for the United States to raise three billions than it is for us to raise one hundred and fifty millions, and yet we find that while their loan was over-subscribed -only 54 per cent, our loan was oveT-subscribed 180 per cent. One in eleven of their population subscribed to their loan, and one in ten to our loan. But lest we might be unduly conceited comparing ourselves with others on this same continent, we have only to cast our eyes across the seas and note what is being done in the Motherland when they appeal to their people to take up their borrowings. The British loan of 1917 had eight million buyers, a little better than one in six of the entire population, which means pretty nearly a bond for every home in England. The next time we float a loan in Canada we shall have the British standard to endeavour to measure up to.
Just here and now may I put in a word with Tespect to the next loan that Canada must float. -She will need every ounce of strength she has to raise the money required. -She will need the hearty co-operation of every member of this House in his own constituency to explain to his people the financial condition of Canada, to arrange for the widest possible publication of the needs of the case, and every man here should feel that this summer his duty lies in his own constituency to help in every conceivable way in making the next great loan that will be financed in Canada a great success.
We have been listening this afternoon to some new taxation proposals. Each successive budget since the war commenced has brought in new methods of taxation. In the new budget some of the present taxes have been increased and new ones have been added. The taxation that we have had in the last four years has in the main been just, based upon the principle of not reducing the productivity of Canadian enterprise, but it is not entirely without criticism, as I shall venture to suggest before I take my seat. We are now called upon to consent to greater taxation, and exercising the time honoured privilege ever since Magna Oharta of a member of an assembly such as this, we shall one and all criticise these taxation proposals if we see fit. Our criticism of them and our counsel regarding them will, I think, be wiser if we briefly go over together the previous steps that have led up to these proposals, because knowing what has already been done we shall perhaps be more ready and willing to do what is necessary in the future.
War taxation is always heavier than other taxation and that for two reasons. Usually in war time there is greater prosperity, there is more money going from hand to hand, and also in war time -there is a greater willingness on the part of the people to give, and give liberally, of their means when required for the defence of the State. Therefore, taxes which in peace time would be resented by mu people are accepted willingly at this time, especially if they are satisfied that the burden is being distributed impartially.
When our first war Parliament met very little additional taxation w-as proposed. The war had only commenced and the Minister of Finance had had very little time to prepare for the raising of additional revenue. All that was done to bring in increased revenue w-as to make a few changes in the excise.
In the next war Parliament we found that the Minister of Finance had had time to carefully study the situation and he came into the House with thoroughly considered proposals designed to increase the public revenue. The War Appropriation Bill, brought down in February, 1915, called for $100,000,000. The minister's estimate of the total requirements for the year, current and war, was $285,000,000. The revenue in sight was $135,000,000. So that in the second year of the war, the Minister of Finance looked forward to- a deficit that had to be overcome of $150,000,000. The measures that were resorted to to increase the rev-



declarations that I had been hoping to hear were not uttered. It will be a disappointment to some of our people if the business tax is allowed to remain another year as it is. II think it is excessive as amended last session, and I cannot but feel that the Government were stampeded then when they increased the rates of that tax. I am making no plea for individuals, I am not asking that the money which reaches an individual should be in any way exempted from the full taxation that it to-day bears. The plea that I am making is in the national interest, not in the interest of the individual; tax him as heavily as you like. But the members of this Government and the members of the House must look forward; they must remember that the day is coming when this war will end; they must remember that the day is coming when they will need that every industrial enterprise in this country shall be solvent, be able to pay its debts, be able to continue to employ its workmen, and be able to find places for the thousands of returned soldiers that are coming back to us. There will necessarily be after this war a tremendous readjustment; there will necessarily be a considerable deflation. Where- are the industries of Canada to obtain the additional capital that they will require after the war to enable them to readjust themselves to post-war conditions?' They cannot get it in Great Britain; there will be no more capital coming from Great Britain for some years to come. They will not get it from the United States because the United States will also probably have absorbed nearly all its liquid capital in the'enormous loans that they are now placing with their people. They will not get it from our banks in Canada, became our banks after the war will be making arrangements for deflation, and they are not going to allow any money to be put into bricks and mortar-that we may be sure of. Where are our business firms going to get money that is necessary to niake the readjustments that must be made after the war? There is only one place they can get it: they must save it now as they go along; consequently if the business profits tax is so excessive that it does not permit a corporation to retain a reason-^ able amount of undistributed capital so as to be strong after the war, and to make the necessary adjustments, that corporation will then be at a tremendous disadvantage. My contention is that the sliding scale of the business profits tax is too abrupt; it is far more onerous than the American business profits tax.

If, for example, you had two firms on opposite sides of the Detroit river, one at Windsor and one at Detroit, and each had a capital of $300,000, and those two firms each made 25 per cent profit on a year's business, the firm on the Canadian side would pay $24,750 in taxes, or one-third of its total profits, and the firm on the American side would pay $12,150, or one-sixth of what it had made.
What is going to happen after the war? American and Canadian firms will be called upon to compete in the markets of the world. American firms have already had two years' start. They had two years before they were taxed at all during which they made enormous war profits and laid aside great sums of money. Hereafter they can put -aside each year twice as much as we can. Of these. two firms, the American company would have $400,000 capital at the end of three years, and the Canadian $360,000. If we are going to compete in the markets of the world with our friends to the .south of us we must permit our industries to have the same chance to live that they have. What I point out is this: In Canada the state takes one-quarter of all the profits between 7 and 15 per cent. In the United States, if a corporation can show that they have been making seven, eight, or nine per cent in pre-war times they are allowed exemption to that amount. On profits between 9 and 15 per cent they would only have to pay 20 per cent, against Canada's 25 per cent; between 15 and 20 per cent, the American rate of taxation is 25 per cent, or one-half that in Canada for the same percentage. The rate in Canada for profits of 20 per cent and over is 75 per cent, in the United States 35 per cent for profits of 20 to 25 per cent. Consequently it will be seen that we take away from our Canadian firms under certain conditions twice as much as would be taken in the United States under similar conditions. Only the other day I saw the statement of a business firm in which this significant clause occurred: "We have during die last year declared dividends on our preferred and common stock, but the tax we have paid the Government is a larger sum than those dividends combined."
- Now, my contention is this:	Earnings
should pay taxes at their destination, not at their source. If you take these dividends and tax them before they are distributed while they are still in the hands of the corporation, they can be used to increase its.

productivity and the productivity of the country at large. That it is not the place to tax them excessively. When these dividends have been distributed, when they come to you and to me and reach their final destination, tax them then as heavily as you like, because so long as these dividends are undistributed in the coffers of the corporation they are used1 for the public good in increasing the production of the country. But when they come to me,
I can do anything I like with them, I can spend them in any frivolous way I want to. It is proper for the Government to say: we are going to take such a large amount of your dividends, which are your own exclusive personal property, that you will not be able to indulge in these frivolities, but that money will have to go for war purposes. That is fair to my mind. But, in my judgment, it is unwise to tax too heavily undistributed earnings of industrial enterprises of the country.
I have even another proposal to make to the Government, a proposal that I wish other ministers were present to listen to. It is this: If you cannot see your way clear to reduce in any way the severity of that schedule where it takes 50 and 75 per cent, then permit a company to take part of the money which it would pay you in taxation, half of it, let us say, and invest it in Government bonds. You get the money immediately just the same for war purposes. Let these bonds be registered bonds if you like; let them be non-interest bearing bonds for the time. Make it impossible for these bonds to be disposed of unless the minister's permission is given. Now, what do I mean by that? I mean just this: that these business firms, who will have to make industrial readjustments after the war will feel that if they go to the minister and show him that that money will be used in necessary alterations to their plants, the minister will release these bonds and allow them to be sold for the credit of the company. In that way, a company will feei that it has something to fall back upon, and that it will be able, after the war, to find that capital which it cannot find in England or the United States, or secure from the banks of Canada. It would thus be able to get a certain portion of the capital required for its development.
As regards income tax, I have only a few observations to make. Until the war came, the Federal Government always relied upon indirect taxation for its revenue. The business war profits tax and the. income tax were the first real measures we have
82}
had of direct taxation. We used to leave direct taxation to the provinces. I believe British Columbia is the only province which has really imposed that tax to an extent that the people feel. The war has forced upon ns the direct tax, and we are likely hereafter to secure a very large portion of our revenues from such taxation. Last year, w'hen we met here, we passed the income tax. At that time the United States was considering amendments to their Act. Since Parliament adjourned a year ago, the United States have passed an amended income tax, and I "was glad to-day to see that the Acting Minister of Finance was proposing to modify our income tax very much along the same lines as the American income tax of October, 1917. I wonder if he realizes what it is going to mean to reduce his exemption from $3,000 to $2,000, in the case of married men, and from $1,500 to $1,000 in the case of single men? I think our exemption has been too high. I .have many a time said from the public platform that unless a man was earning $10 a day every working day of the year, the income tax would not touch him. That is quite true. A single man has had to make $5 a day in order to pay income tax. Now, we are going to tax incomes from. $2,000 upwards. In addition to that, there is to be an exemption for each child under the ages where they cannot work. What did the United States find when they reduced their exemption from. $4,000 to $2,000 in the case of married men., and from $3,000 to $1,000 in the case of single men? They found that it multiplied the number of contributors eight times. Our income tax at the present time will touch only about one per cent of our whole population. I very much doubt whether there will be one hundred thousand people paying such a tax this year under the legislation passed last year. You will have eight times as many under the new proposals, if our experience is the same as the United States. And that is right, because the experience of every one who has touched the great heart of the Canadian people at this time since the war began is that the people as a whole are sympathetic. I have had experience with the Patriotic Fund for four years, and I know that we get thousands of subscriptions from people making less than $10 a day, and I know that the. people are ready and willing to bear their fair share of the war taxation, and the widening of the base of taxation suggested this afternoon will meet, I think,


Mr. O. TURGEON (Gloucester):: Mr. Speaker, in rising to make the remarks which I believe it is my duty to make on the present occasion, I wish to say that at this hour I intend to be as brief as possible. I wish to express a few sentiments which it has been my pleasant duty to express in four Parliaments in succession before this one which it has been my privilege to attend as a member of the House of Commons. In facing the House to-night I find myself in circumstances quite different from those in which I have been during the last eighteen years I have sat in this House. In former years, sitting on the same side as the acting Minister of Finance (Mr. A. K. Maclean), I was always ready to stand by him and to applaud his remarks which were in favour of free trade or tariff reform for Canada. To-day I find that he has taken another position; that he is in the new Government called the "Union Government." I have no doubt that, impelled by conscientious motives, the Acting Minister of Finance and some others of our friends have left our revered leader and the Liberal party on this side in older

duce no munitions for the Allies, we could send another half million men to strengthen the man-power of the Allies. These are conditions which we must' bear in mind when we seek to throw a wet blanket on the patriotism of the people of Canada, and more particularly on that of one nationality.
Like my revered leader, I am for the prosecution of the war. If in his vision of the future he had been listened to by the majority of the electors, Canada would perhaps be in a better position now than she is to assist the Allies, even with man-power. To-day, with all my desire to see every young man go who possibly can go to the assistance of our Canadian soldiers, to reinforce them, and to reinforce the armies of the Allies, we are in a position now where we cannot possibly do that which our patriotism inspired us to do at the outbreak of the war. In the beginning of the war it was only manhood that was required. There was food in every country at war. France was provided with food for the year to come, and England had provided for her necessities. They were in such a position that there was no immediate danger of food scarcity or lack of production. We have sent our men, or we might say that they have gone in spite of us, impelled by their patriotism. There was no want in the first period of the war. We thought, as t'he people of England thought, that the war would last six months or a year, and we did not make the necessary provision at once for food production. But the war has lasted for four years, and it threatens to last another year or two. God only knows if by that time we shall have succeeded in driving the Hun out of Belgium and France. Unfortunately, everything points to the conclusion that we have a long and arduous task before us.
The latest regulations to be issued summoning every young man from 20 to 22 years of age will, especially at this time of the year, prove a serious impediment to the production of food for the Allies. I am not worrying so much about Canada, although we shall suffer as a result of the want of help for the farmers. It will not be the Canadian people who will suffer the most, it will be the allied aimies and the civilian population of the allied countries that will suffer if there is a shortage of food.
That position will affect, more or less, certain portions of the country. In Canada there is not only production of food from the farm, but there is also production of food from the sea. In the Maritime Prov-['Mr. Turgeon.]
inces, as the Acting Minister of Finance knows, we produce food not only from the soil, but from the sea, and that sea food is just as much needed to-day, for the sustenance of our Canadian soldiers and of the British and French armies, as is the wheat and the barley which is grown in the West.
Let me describe the situation which will be created in my constituency by the fact that all the young men of from 20 to 22 years will be taken away by conscription m the course of a few days. We have in that county what is known as the Gloucester Fishing Fleet, composed of some two hundred and fifty-six vessels of an average of twenty or thirty tons each. This fleet is manned by from eleven to twelve hundred men from the county of Gloucester, and the tribunals sitting in the county have heretofore exempted every young man so engaged during the fishing season" in order to maintain that fleet complete, and so that the production of fish might go on unimpaired, and those exemptions have been sustained. The idea was to continue the obtaining by this fleet of from four hundred to five hundred thousand quintals of cod and other fish for the use of the Canadian and British soldiers, that being the quantity secured last year and the year previous. Very often the crews ,of those vessels in the fishing fleet consist of four or five men, two or three young men of a family with the father, and perhaps some of their neighbours. There are hundreds of these young men, who, after having been exempted in the past because their aid was necessary in the production of food, will be called upon in a day or two to join up. The greater part of the crews of the fishing fleet will then have to remain ashore, and the Allies will be deprived of an immense quantity of food from this part of the Maritime Provinces which would serve to sustain our Canadian soldiers for a month.
I waited upon the Minister of Militia (Major-General Mewburn) in connection with the matter, and I must say that I was received with great sympathy. However,
I obtained no promise from him, and there is not in the statement made by him to the House to-day any indication that the conscripting of these young men will be delayed in order to facilitate food production during the coming season. The Minister of Militia has in his possession a petition from the fishermen and the people engaged in the fishing industry in Gloucester county, which I only received yesterday, urging the Government to exempt, for

the period of the fishing season, the young men to whom I have alluded. In presenting the petition of those fishermen I am not pleading the cause of slackers. Eleven hundred of these young Acadians, members of the same families as those for whom I am now pleading, have already gone voluntarily to the war. Every one of the young men in the fishing fleet has a brother or a cousin at the front; those who have remained at home have done so in order to carry on the necessary industries of the country, and to keep up the production of food, which is just as vital for the Empire as it is for Canada to-day. I am not now opposing the law which is now in force.
It has gone into effect, and the young men for whom I am asking consideration are willing to submit to it-; all they wish is to be exempted until the fishing season is over. The Minister of Militia, when he made his statement on conscription to-day, said that the calling of men from the farm would be deferred as late as possible until the seeding was over. But how is he going to arrange for the necessary 'labour when the harvest time comes and the young men who in ordinary times have helped in that harvest are not available bv reason of having gone to the front? In the ease of the fishing industry we would like, as I already said, to have the services of the young men, who form such an important part of the fishing fleet, retained during the continuance of the present season. The season usually lasts until about the 15th of September, but if their calling up was deferred until the 1st of September these young men would then be willing to go as quickly as they could be sent to the assistance of their brothers and cousins. In addition to the petition which I yesterday presented to the minister from the people of Caraquet, I received the following telegram on the same subject from Shippigan:
Strict enforcement of Conscription here ties up fishing fleet with heavy expenses already involved ; if no compromise by judicious selection locality and trade will suffer severely.
Signed: A. J. Trudel, parish priest,
A. D. Chiasson, merchant,
G. D. Leriche.
In dealing with the tariff question we should not only bear in mind the present needs of the country, but also pay due regard to future requirements when the war is over. We must be prepared for the future and put ourselves in a position to meet the conditions that will arise after peace is concluded. We should so place ourselves that when the munition factories are no longer operating we may direct the
efforts of the working people employed in them into other industrial channels, and so be to stand the transition period between the close of the munition factories and the opening of other industries. We must be prepared. For that very reason, we should also be prepared to secure the good will of other nations. Free trade, or low tariff, has been the basic principle of the prosperity of the British Empire. Her prosperity and happiness have been sustained by the freedom of her institutions which in turn have been sustained by the principle . of free trade. Free trade creates mutual interest, and mutual interest creates good understanding between nations. Even nations on the Allied side have made a mistake during this war in seeking to effect an economic combination against the enemy countries after the war. While we are fighting for liberty and justice in the world, we are bound to win. We have done this from the beginning, we have done it voluntarily, as was so eloquently said a few days ago in this House by one of the greatest orators of the United States, Mr. Samuel Gompers. He said that Canada was not bound to enter this war, that Australia was not compelled to enter this war, and that South Africa did not have to go into this war. We have all gone into it voluntarily because the British Empire was exposed to danger. Canada, South Africa, Australia and New Zealand have gone voluntarily into this war because of sentiment and interest in behalf of the British Empire, and' not because the British Empire imposed compulsion upon its daughter nations,
That sentiment of generosity towards our Crown was not created by blood and iron, it was not even by conscription; it was merely by the breadth of their love for the Empire that millions of subjects blended into one common soul, under the smile of Providence, to fight for the maintenance of British institutions, liberty and justice all over the world. It is in recognition of this sentiment that Canada to a man has gone freely and voluntarily to the help of the Empire, and that same principle of freedom and justice must be maintained during the war and after the war. Let us not make the mistake of desiring to establish again after the war protection against the nations which we are now fighting. That	mistake	may perhaps have
been	made at the Paris Economic
Conference held two years ago, when, owing to the influence of the men favouring protection on the British as well as on

the French side, it was decided to wage economic war against the Central Empires after the war. That decision has given the Kaiser and Prussian plutocracy the chance to make their people feel that after the war they will have to fight the allied nations to maintain their economic existence. Eet us not repeat that mistake to-day. Every nation will be welcome to the principles of justice and equality all over the world through democracy. We are talking and writing of democracy these days, yet we have been on many 'occasions introducing Prussian methods into this country. While the exigencies of war compel a certain centralization of authority, and an apparent lessening of democracy, v e must at the same time be on guard against this tendency holding sway after the war is over.
There is another tendency which exists in the present Cabinet, and which existed,
I may say, in the late Government. As my right hon. leader said, this is the same old Government; there has been some new blood introduced into it, but it is the same Government. To-day we see our friends who have left our side and gone over to the other side proclaiming the very doctrine that they fought against until the last day of the last session of Parliament. On the other side of the House every hon. member who rises to speak on behalf of the future success of our armies seems to take pleasure in saying that they have no consideration for the constitution of Canada. The other day my dearest friend on the other side, the Minister of Public Works (Mr. Carvell) whom I regret not to see in his seat to-night-a friend with whom I have co-operated ever since we have been in Parliament together, who has had no more sincere and devoted follower than his humble servant the member for Gloucester -said that if -it was necessary to win the war to puncture the Constitution he was prepared to do it. My hon. friend was not prepared to do it during last session or previous sessions. I am sure that the Acting Minister of Finance was never in a mood to transgress the Constitution. Yet the Constitution was transgressed when the Order in Council was passed taking from the provinces the right of issuing securities and putting control in this matter into the hands of the Federal Government. My hon. friend the Acting Minister of Finance and all the members of the old Government know that when I criticize this action of the Government it is not a new inspiration with me. They know that for the last ten years I have always been advocating the 
maintenance of every clause of our Constitution.
I find it almost incredible that certain gentlemen from, the western provinces who have deserted! the Liberal party have deserted also their belief in the principle that provincial rights should !be maintained-a principle which they advocated so eloquently and so forcibly when they were at the head of affairs in their respective provinces of Saskatchewan and Alberta. No condition created by the war could possibly justify the course taken by the Government in this respect. Conferences of representatives from the provinces have been held in the interest of production, and good results have been obtained from, them. Why was not a conference held in this, case? I do not say that the Federal Government should not be able to control, as far as possible, the borrowing facilities of the different provinces, but I do submit that the matter should have been discussed at a conference with the premiers of the different provinces. The Confederation which was brought about by the efforts of such great men as Sir John A. Macdonald, Brown, Howe, and others, will last as long as the British Empire lasts, but only by providing that every principle embodied in our constitution is respected can we have absolute harmony and absolute agreement between different races and creeds within our country.
Reference was made during the last election campaign to the province of Quebec.
I do not represent a Quebec constituency, but I am a native of that province. When I left college I went to another French section of the community, and have devoted my lifetime to extending the principles which brought about Confederation. The French Acadian people in Our part of the country have lived in harmony and happiness ever since Confederation. When I hear it said that the people of Quebec have not been loyal to the Empire in this war,
I feel sometimes that I cannot but resent the suggestion as much as if I were still living in that province. I feel on the subject as a Canadian, if not as a QuebeceT, and also as a citizen of the Maritime Provinces, where the French minority receives,
I must say, generous treatment at the hands of the majority. If any nationality in the Maritime Provinces has declared special devotion to British institutions, it is the French-Acadian population. I affirm that my admiration for British institutions is not surpassed by that of any British-born in this country. I am here as a Canadian, as a Frenchman, as a Catholic, protected

by the British flag, and I resent the attitude taken during the last election by certain gentlemen with regard to the province of Quebec.
It. has ibeen suggested that the people of Quebec are not loyal because they have not enlisted as numerously as the people of the other provinces. There is only one reason for that state of things. Every Canadian knows that that condition is due to the fact that the Nationalist school was established in 1909 and 1910-and the doctrines of that school were made the chief topic in the province of Quebec during the elections of 1911 by the Conservative party in order that they might win. They sowed the seeds of discord, of disloyalty, using their own money and their own friends for that purpose. In twenty-two or twenty-three constituencies Nationalists were returned in the elections of 1911, having been inspired by disloyal sentiments; having been educated to the theory that we owed nothing to England and that we should not send one man across the seas for the defence of the Empire at any time ot under any conditions.
I lay it at the door of the leaders of the Conservative party that they favoured and encouraged that school of disloyalty in Canada. I admit that it was a school of many attractions and many allurements. Its chief exponent was one of the ablest men Canada ever produced, one of the greatest orators the French Canadian people ever heard, a man with a most versatile pen. They took advantage of his talent; they even paid him to disseminate his doctrine in the province of Quebec. Doubtless these false doctrines appealed to many when a young speaker went through the back settlements of Quebec-Drummond and Arthabaska for instance-and told the people that Laurier wanted to take their children and send them off to fight in the army and navy of England. Even the Minister of Trade and Commerce (Sir George Foster) sent a famous telegram to Drummond and Arthabaska- and he has since had time to repent and to be haunted by remorse for having encouraged such a doctrine.
I lay upon the Government all the blame for all the results that that school may have brought about in Canada, because the morning after the election, when they were able to secure the reins of power in Canada with the assistance of those twenty-two or twenty-three Nationalists who were elected because of 'their doctrine that Canada should not participate in the wars of the Empire, my right hon. friend (Sir
Robert Borden), as a reward for the doc-' trine which they had propagated in the province of Quebec, rushed those men, one after another, as vacancies occurred, into the Cabinet or upon the bench or upon various commissions. To-day, my hon. friends opposite say that the people of Quebec have not been as loyal as they should be. Separate the Nationalist element from the people of the province of Quebec, and the other half of the people of Quebec were as faithful and generous in their response to voluntary enlistment in the beginning of the war as the people of any other province of Canada.
It has been stated on many occasions, and I have seen it stated in the press of the western provinces, that the French Canadian people of the Maritime Provinces have enlisted more freely than the French Canadian people of Quebec. There is a good reason for that. It is that the Nationalist doctrine did not take root amongst the French Canadian people of the Maritime Provinces. They resisted it. I appeal to-day to my colleagues from New Brunswick, the hon. member for Westmorland (Mr. Copp) and the others who may be here. 1 regret that the Minister of Public Works (Mr. Carvell) is not in the House.
I say that amongst all those men who have worked to stem the tide of Nationalism in New Brunswick the member for Gloucester (Mr. Turgeon) has been one of the chief instruments. I have been assisted by my younger colleague, the hon. member for Restigouche .and Madawaska (Mr. Michaud). The people of New Brunswick have paid no heed to the doctrine of Bourassa, because we Liberals, knowing the danger of that school, stemmed the tide at once. For that reason the French Canadian people of the Maritime Provinces have enlisted as freely as the English-speaking people of those and the other provinces. The reason why the French Canadian people of Quebec have not enlisted so freely is because they have been corrupted by that .school which has been the mainstay of the Government.. It was stated only a few days ago by the ex-Minister of Militia (Sir Sam Hughes) that, had it not been for Mr. Lavergne and Mr. Bourassa, his friends would not have been in power in 1911.
The Conscription Bill which we opposed is now the law of the land. My right hon. friend the leader of the Opposition stated that the moment it became the law of the land it would be respected by himself and by the people of Quebec, and whatever incidents may have taken place since then

it is easy now to see that the people of Quebec at large are accepting the conscription -daw as patriotically as the people of any other race in Canada. We can see now that my honoured leader, owing to his energy, owing to his vision of the future, owing to his ambition to create harmony in this country, was right when he took that stand against the Nationalists of 1911, and to-day, owing to his constant efforts, he has stamped out from the province of Quebec that Nationalist inspiration, and not a single Nationalist was returned at the last election. There have come into this House sixty-two members from the province of Quebec, every one a straight Liberal, at all times opposed to the doctrine of Bourassa and the Nationalist party. The right hon. leader of the Opposition has been able to redeem the province of Quebec from the state into which it had been misled by the Nationalists with the assistance of the Conservative party; he has been able to bring Quebec back to the condition in which it was in time past. And for that reason alone, if for no other consideration, our hon. friends who, from conscientious motives have left this side of the House to follow the leader of the Government, should cross over to this side of the House and support the leader of the Opposition.
'Canada will live as long as the British Empire lives, and I hope that will be as long as the world exists. We have a great future before use. Peoples of different races and creeds have been placed here to live together in harmony, in happiness. It is only lately that that harmony and that happiness have been destroyed. Let us hope that that harmony will be renewed and that it will continue for all time to come. I have, with great regret, read on many occasions in many newspapers the statement that we should have one flag, one school and but one language. Confederation has made Canada a country of two languages, and that ie bound to be the case -as long as the British Empire exists. What are tho-se languages? We have the English language, the language of Shakespeare and -Milton who have given it lofty aims; the language of Edmund Burke, of Daniel 0 Connell, of Gladstone who have given it eloquence to stir up the masses, to impel the Governments and Parliaments of the British Empire in the establishment of justice, equality and democracy throughout the world; the language of Adam Smith in regard to trade and commerce which has reached every shore of every ocean, which has penetrated throughout every part of 
every country where there is a store or a bank, or a shop, the language which always leaves in its train the impression of moral character and fraternity. That is the beauty of the English language. The other is the French language, the language of love and affection, the language of the arts, the international language to-day, the language of international treaties, the language in which is written the treaty ceding" Canada to England with all the privileges of the French people as to language and religion, the language in which will be written the treaty of peace when peace is declared, I hope, for all time to come.
If the British nation has been able to expand its trade and commerce to such an extent that it has become the greatest industrial and commercial nation of the world, and if the French nation, with a language expressing more sentiment than words can tell, has been able To become the most artistic nation of the world-if these two nations have been able to become the two greatest nations of the world, what a great nation might not Canada become if there was harmony between those speaking different languages? Canada has immense natural resources, of the mine, of the forest, and of the soil, and great water powers. The future of Canada ought to appeal to every Canadian here. It will surpass in prosperity that of any other country in the world. I think of her future as that great British-Canadian, Joseph Howe, thought of Canada at the time of Confederation, when he predicted that in the West our resources would bring a population and lead to such a development that perhaps the seat of the Empire might be centred in Canada. But even if that never comes, we shall be able to help maintain here the principles of liberty and of democracy with the assistance of the United States. It is said by some that after the war Canada -should join with the United States and that these two countries should remain apart from the rest of the world, far removed from all its dangers. Canada,
I repeat, has a future, and in my judgment it will better serve the purposes of humanity by remaining a part of the British Empire than by joining in with the United States with its one hundred millions of people. A magnificent destiny awaits Canada if we will but take advantage of our opportunities. Immigration will pour into this country after the war, and we shall have a population which will be imbued with- sentiments of justice and liberty- liberty and justice for your neighbour and

for your neighbour-nation too. We shall have here a nation ready to put an end, if necessary, to troubles that may arise in the different countries of Europe. Do not let us think that our country will be a nation of idleness or indifference after the war. It has a mission in connection with the future development of all other nations. I have always stood firm in my belief in the Tight hon. leader of the Liberal party, stood firm when we have been under the lash, if I may say so, during the last six months, and it is because I realize that he is possessed of the very sentiments that the greatest statesmen of the Empire have expressed on different occasions since the war began. General Jan C. Smuts is a great British statesman, not of Great Britain, not of Canada, not of Australia, but of South Africa, and he was so much admired at the War Conference in London last year that he was made a member of the War Council. Speaking at the banquet of the House of Lords and Commons in London recently, he said:
I pray that you may have the clearness of vision and purpose, and the strength of soul in the coming days which will be even more necessary than strength of arms. It will depend largely upon us whether in the present struggle the prize is achieved or whether the world shall once more be plunged into disaster. The prize is . within our grasp, if we have the strength of soul to see the thing through until victory crowns the efforts of our brave men in the field.
Further on in the same speech he expressed sentiments in harmony with the sentiment which ought to prevail in Canada. He said:
Even nations which have fought against the British Empire like my own, must feel that their interests, their language and their religion are as safe and secure under the British flag as are those of the children of your own blood. It is only in proportion as this is realized that you will fulfil the true mission which is yours. Therefore, it seems to me that there is only one solution, and that is the solution supplied by our past traditions of freedom, self-government and fullest development.
Those words attracted not only the attention of his audience, but the next morning the Daily Telegraph, of London, in an encomium upon the eloquent words of this great statesman, had this to say of another great statesman whom we all know and admire:
There is one other great Imperial statesman who will certainly applaud and endorse that statement-Sir Wilfrid Laurier. It is exactly the point upon which he has always laid stress when Imperial Federationalists have seemed to press forward at too rapid a pace.
If the views of this statesman, so eloquently expressed, as to the future greatness of the Empire, have been acclaimed by the British Empire, and if the sentiments of that other great imperial statesman, Sir Wilfrid Laurier, so nobly expressed on different occasions, have evoked the admiration and applause of the people of the British Empire, I say, Mr. Speaker, that I am willing to stand as proudly by Sir Wilfrid Laurier to-day as a good Canadian and British subject as a citizen of South Africa is proud to stand by General Jan Christian Smuts. I recognize in Sir Wilfrid Laurier the firm upholder of freedom, justice and equality in Canada. Sir Wilfrid Laurier has always been in Canada, in his vision of the future, in his conception of the high destiny of this country, in his aspirations for the welfare of Canada, and in his ambition * to see British principles and British institutions established more firmly all over the world, what Jan Christian Smuts has
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been in South Africa.
In conclusion, permit me to ask pardon for having kept you so long. I had not expected to detain the House at such great length when I rose to speak. This is an occasion when sentiments have to be expressed, and I thought I should take advantage of the indulgence granted me to express the views which I hold on some of the questions which are engaging our attention to-day. I thank you, Mr. Speaker, and the House most cordially and I hope that it will not be necessary for me to again trespass at such length upon your time.
On the motion of Mr. A. K. Maclean the House adjourned at 12 o'clock midnight.
Wednesday, May 1, 1918.