1923-06-26

AGRICULTURAL CONDITIONS

[Stage Direction]
Mr. ANDREW McMASTER (Brome) moved concurrence of the House in the fourth, fifth, sixth and seventh reports of the committee charged with the investigation into agricultural conditions in Canada.
He said: I would just like to ask the House to grant me permission to postpone any remarks I have to offer until I see whether the reports are open to criticism. I take it that informally moving the concurrence of the House in these reports I do not exhaust my right to speak.
Right Hon. ARTHUR MEIGHEN (Leader
of the Opposition): I do not know what the object would be of the House adopting now four reports just recently presented, certainly ill-digested, so far as the House is concerned, if digested or read at all. If legislation is contemplated this session, then there would be some object in a discussion now of the merits of the reports. But if no legislation is in view-and we had the intimation yesterday there was not-it seems to me that we are not using very well the short time that remains in discussing these four reports. I do not make these remarks in any spirit of antagonism to the reports, because I am frank to admit I am doubtful whether I have read them all. I know I have read a good deal of them; but I venture to say that a great number, if not the vast majority in this House, have not read any part of them. I would think it would be better to defer consideration of them, until we were in a position to legislate, if legislation was thought desirable. We are not in such a position now.
Motion agreed to.

[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister, for the Minister of Marine
and Fisheries) moved that the House go into committee of the whole to-morrow to consider a certain proposed resolution concerning advances to the Corporation of the Harbour Commissioners of Montreal.
Motion agreed to.

[Stage Direction]
On the Notice of Motion:
The Minister of Finance-In Committee of the Whole on Bill No. 230 entitled " An Act to amend The Special War Revenue Act, 1915," the Minister of Finance will move:-
That in section one of this Bill there be inserted aftei clause (iii) of subsection two the following:-
" and every adhesive stamp affixed to such cheque shall be cancelled by the bank at which the cheque is payable at or before the time of payment."
And he will move:-
4.i 64
War Revenue Act
[Stage Direction]
That in section six of said Bill, the third paragraph of subsection one of section nineteen BBB be struck out and the following substituted therefor:-
" Provided that the consumption or sales tax specified in this section shall not be payable on goods exported; oi on goods sold by a licensed manufacturer or producer to another licensed manufacturer or producer if the goods are to be used in, wrought Into, or attached to articles to be manufactured or produced for sale and which are articles subject to the consumption or sales tax, or on goods imported by a licensed manufacturer or producer if the goods are to be used in, wrought into, or attached to articles to be manufactured or produced for sale and which are articles subject to the consumption or sales tax; or on goods imported by a licensed wholesaler or jobber whose sales are to be accounted for under the provisions of subsection (7); or on goods sold by a licensed manufacturer or producer to a licensed wholesaler or jobber whose sales are to be accounted for under the provisions of subsection seven of this section."
Mr. FIELDING:: This is a motion for consideration in committee. It does not call for action at this moment.


Mr. MEIGHEN:: Has the usual notice been given of a motion to go into committee on this resolution?


William Stevens Fielding: It will be considered in Committee of Ways and Means. This is a proposed amendment that could be moved in Committee of Ways and Means without notice, but I thought it better to put it on the Order Paper.


Arthur Meighen: It should be moved in committee on the bill.


William Stevens Fielding: I think my right hon. friend is right. It will be taken up in committee after the second reading of the bill, and not in Committee of Ways and Means.


Arthur Meighen: It will be pretty hard to keep up with all these amendments to the budget.


William Stevens Fielding: Yes.


Arthur Meighen: We shall have to take some schooling in arithmetic.


William Stevens Fielding: My right hon. friend will recollect that at an earlier stage he asked me how many amendments there would be, and I said as many as were found necessary to make things right.


Arthur Meighen: There is no budget to which so many amendments have been necessary as the budget of the present Minister of Finance. It seems to be a matter of continuous amendment throughout the session.


William Stevens Fielding: Every budget which has to deal with such a variety of things will be open to the same comment
[Mr Mackenzie King,!


Arthur Meighen: There has been the same variety of things covered by budgets for the last twenty years.
Notice of motion stands.



DOMINION LANDS ACT AMENDMENT BILL

[Stage Direction]
House again in Committee on Bill No. 222, to amend the Dominion Lands Act, Mr. Gordon in the chair.
On section 2-Transfer of holders of letters patent in pre-emption and purchased homestead area to another homestead, by provincial certificate.
Mr. STEWART (Argenteuil):: At the request of the hon. member for Vancouver Centre (Mr. Stevens), this clause stood, and I did not make any explanation at the time in connection with it. The explanation is that for some considerable time, the provinces of Manitoba, Saskatchewan and Alberta have made representations asking that individuals who have homesteaded in the southern areas known as the drier areas of those provinces be given the privilege of securing a second homestead if they were desirous of doing so, in the northern area of the particular province, where more fertile lands were available. To meet this, we have embodied in this clause a provision that where an individual has had a homestead and has made failure owing to no fault of his own, but rather to climatic conditions that exist in those areas, he be given an opportunity to take a homestead in the northern area of the province under the provisions of the Dominion Lands Act. It is necessary that he be armed with the certificate from the provincial government showing that in their opinion he is entitled to consideration. We have confined this matter to the area south of township 31, not including all the district formerly known as the pre-emption area across the two provinces. That is all we propose to do in the matter. I may assure the committee that we propose to make a careful inquiry to make sure that we are not being imposed upon, and to confine our operations absolutely to those who have been unsuccessful in this particular area.


Mr. KELLNER:: How does the minister intend to dispose of the lands that are being vacated?


Charles A. Stewart: If the land owned by the individual is unencumbered it will revert to the Crown. This section is designed to cover the case of the individual who has failed in due course and loses the land he homesteaded within the boundary described in this section.

Dominion Lands Act


Mr. CALDWELL:: If the original homestead is mortgaged does the government propose to assume the obligations in respect of that land?


Charles A. Stewart: No.


Thomas Wakem Caldwell: How is it intended to meet such a situation? If the land reverts to the government, I presume from the minister's answer, it will be unencumbered, but what about the homestead on which there is a mortgage?


Charles A. Stewart: There is no difficulty in relation to the man whose title is clear; but the government will certainly not assume the obligations on encumbered property.


Thomas Wakem Caldwell: I should hope not.


Charles A. Stewart: This is
rather for the purpose of assisting the individual who has failed and who has to surrender his homestead. If a man loses his homestead by mortgage or otherwise, we do not assume the responsibility for those obligations, but we assist him to settle in the northern portion of the province rather than have him go out of the country altogether, as unfortunately too many do. A large number of men in such circumstances go South, and this is intended to retain them in Canada.


Arthur Meighen: I certainly favour the
working out of a plan for granting second homesteads or, in other words, giving a second opportunity to those who are in the dry areas. The opening up of these dry areas was one among other mistakes of the former government -I mean the next antecedent one in which the Minister of Finance (Mr. Fielding) was then in the same office. The lands were opened up for homesteading when they should not have been, and they have been a source of disappointment and penury ever since. I realize the minister's difficulty in now trying to find some remedy for the consequences of that mistake, but while I fully appreciate that difficulty I do not think he has met it very well. The hon. member for Victoria and Carleton (Mr. Caldwell) mentioned a point which, in my judgment, is not as important as another one that I shall suggest later on. Still it has not been answered. Suppose a man has his homestead in the dry area and* it is'mortgaged-this can be taken to be the normal condition, for I fancy that if the homestead were not mortgaged that would indicate that the party could not get a mortgage on it; such has been the history of the district, the man would be compelled to mortgage the property if he could-we assume,
therefore, that the homestead is mortgaged. This, of course, puts a premium on the individual's leaving and going North. The Government does not get his homestead; it certainly cannot step in and defeat the mortgagee of whatever asset he has in the homestead, little as it may be. Consequently the land will simply be foreclosed and become the property of the mortgagee. The difference between the man who has his land clear and the man who has not such a title to it is that in the one case the government gets the land and in the other the mortgagee gets it. I presume the minister intends to let the fellow with the mortgage have a second homestead, because if he does not then the legislation might as well be wiped out; for I should think that nearly all the homesteads would be mortgaged, and those who hav$ mortgaged and failed are those who need the second homestead. The minister has not said whether he purposes to let those whose land is mortgaged get a second homestead. If he does he is putting the country in the position of losing the first homestead altogether and turning it over to the mortgagee.
The second point is this. It is stated that any one can get a second homestead who has a certificate from the provincial government showing that he has failed at farming througl no fault of his own but through adverse cir cumstances. But the minister has his officer! all through the districts; he has homestead inspectors1-and I can remember some of the criticism that was offered in regard to the number of them when the vote to pay them was passed. Why should they not report on the condition and history of these homesteads? Why should the provincial government be asked to give any certificate? The provincial government will simply have to appoint another set of officers, putting additional taxation on the people; no other result can follow. They will be obliged to have another set of homestead inspectors to examine all these cases and that means a squadron of them. But even aside from the question of expense to the public, which will be very considerable, it is not right for one government to rest on the responsibility of another, it is not consistent with our system of government at all. This government should use its own judgment on the advice of its officers in this matter as in anything of a similar nature. I suggest to the minister, therefore, that he wipe out that provision. I would rather s'ee something done that removes the question of discretion altogether; in fact I think that otherwise the minister will get into interminable wrangles and utterly ines-
Dominion Lands Act

capable conditions of unfairness and partiality. He cannot help it. Throughout the length and breadth of the country farmers can be selected in hundreds, yes, thousands, who have failed, not through any fault of their own at all, and not in this particular area. Farmers all over Canada have failed because of continual visitations of drought, continual visitations of hail and frost and one misfortune or another; and what answer can the minister give those men who come and say that they are just as entitled to relief as the farmers over there to the west? They will say, " You give relief to these men on this especial ground; very well, apply it to us in the same way." And what answer can the minister give? I have not the least doubt, although none of this area is in the province of Manitoba, that the Manitoba government could certify to hundreds and thousands who have failed through no fault of their own, who perhaps succeeded for a time and now are worth nothing. How can the minister refuse them new homesteads? On these grounds I do not think the minister's relief is an efficient working out of the problem. In my judgment it would have been better to have simply declared certain areas to be homestead areas and then said to those men: Select new homesteads there. In this case, I am free to admit, there would be some unfairness to those outside.


Charles A. Stewart: You would have exactly the same difficulty.


Arthur Meighen: No, because those are areas that never should have been opened. And you do not rest upon the favour of a provincial government, you rest simply upon the cold, bald fact that areas were opened that should not have been opened, and you say to the men who went in there "Go and take homesteads somewhere else." Let me repeat; I object to a government shifting its responsibility on to another government. Let it take its own responsibility. But I am free to admit that if ever a government should shift responsibility it is this one.


Mr. MACLEAN (York):: The debate so far has brought up a question which I imagine will be discussed on the adoption of the report of the Agricultural Conditions committee-the creation of a national land bank for the relief of the farmers of the West. If that is so, there will have to be some discussion later on in regard to it, and perhaps the Government will announce a policy which, besides allowing farmers to re-homestead, will give them a measure of relief such as the farmers have in the United States,

through a national bank credit system with the credit of the nation behind it. So this is only a partial measure. It must go further, it must be supplemented by giving the farmer a better system of credit. This bill really ignores the main issue, which is a land bank system similar to what they have adopted in the United States to enable the farmer to get on his feet financially. We ought to have such a system in this country.


Charles A. Stewart: Mr. Chairman, I would remind my hon. friend from South York (Mr. Maclean) that this is not a question of banking.


William Findlay Maclean: It is.


Charles A. Stewart: I beg my hon. friend's pardon, it is a question of giving relief to certain areas, whereas the question of banking would cover the whole Dominion.
My right hon. friend (Mr. Meighen) states that there are certain well defined areas on which we should offer individuals another choice of a free homestead to give them a fresh start. There is absolutely not a particle of difference in the proposal embodied in this section and what he suggested a moment ago in criticism of this bill. We are told that mistakes were made by former governments. Well, I do not know whether we should criticise former governments for what the3' have done in this respect. I know I have had a good deal of anxiety in regard to the southern area of Alberta and that in all efforts to alleviate the distress of the people in that territory the two governments have worked hand in hand. It is not suggested that we should put upon the provincial government the responsibility of saying who shall and who shall not have homesteads, but inasmuch as the western provinces are claiming their natural resources, we thought it only right that if any individual was to be given a homestead the provincial government should be informed of the fact. It is for this reason that the provincial government is being brought into the matter at all.


Arthur Meighen: What is the reason?


Charles A. Stewart: In every
effort that has been made for the alleviation of distress in these areas the two governments have acted together, practically.


Arthur Meighen: No.


Charles A. Stewart: I beg my right hon. friend's pardon. As an instance, take the distribution of seed grain.

Dominion Lands Act


Arthur Meighen: The two governments have co-operated, I do not object to that; but the Dominion government never acted on the responsibility of the provincial government. The Dominion government, for example, did not give seed grain relief to a man recommended for it by the provincial government.


Charles A. Stewart: I beg my right hon. friend's pardon, they did.


Arthur Meighen: No.


Charles A. Stewart: They did it in Alberta. The practice has been followed for the last six years. Not only that, but relief has been distributed by the provincial officers to the homesteaders.


Arthur Meighen: That may be, but the provincial government does it on its own responsibility. We did not make a condition that the man should be recommended by the provincial government, we took the responsibility ourselves.


Charles A. Stewart: That is the result of what you did do.


Arthur Meighen: No, it is not. I think I ought to know.


Charles A. Stewart: For instance, by whose authority did you advance seed grain to a homesteader? True, the provincial government were advancing it to those with unpatented land, but you took the word of the provincial officer, you advanced the amount of grain, your own officer purchased the grain and put it in your elevators. I know what I am talking about.


Arthur Meighen: No. If the minister looks at the law he will see he is mistaken. I administered the act and know what was done. We decided on our own responsibility whether an unpatented homesteader needed seed grain or not, we did not rely upon the recommendation of the provincial government. We made arrangements by passing legislation providing that the banks should advance the money in the first place and we guaranteed five per cent.


Charles A. Stewart: So did the province.


Arthur Meighen: Very well. That shows we did not collect it through the province.


Charles A. Stewart: Every application passed through the hands of the provincial authorities. I am speaking of the practice in recent years.


Arthur Meighen: It was not the practice under me.


Charles A. Stewart: But that is aside from the question. By this clause it is simply intended that the provincial government shall be consulted and that we shall . accept their certificate.


Arthur Meighen: But you cannot grant a homestead without their certificate.


Charles A. Stewart: We are
anxious to have their co-operation to clean up a very difficult situation. I admit everything my right hon. friend has said about the difficulty. It would be very much easier for the government not to do anything at all- and perhaps it would be fairer taking all things into consideration. The very fact that a person who has selected land in this particular territory has made a failure-I admit my right hon. friend's argument-is not a good reason why he should be given a preference over the man who has tried in some other territory and has made a like failure. But we have a difficult situation to deal with. I am not unmindful of the difficulties at all, I see every one of those presented by my right hon. friend, but rather than have the people across the line we thought it well to devise ways and means to enable them to make a fresh start in the northern portion of the province if they were desirous of going there. And if any individual is to be given a privilege, it seems only reasonable that the provincial authorities should at least be consulted in the matter.
Not that they are to step in and shoulder any of our responsibility. We are not delegating any of our responsibility to the provincial government. My own idea with respect to the settlement of this vexed question would be if possible to move the settlers off these very dry areas and return these areas again to ranching lands. In doing that, of course, regard must be had to obligations that are already upon the lands-mortgage obligations, school bonds, and so on. I am speaking now of lands which cannot be irrigated. There is a demand that the department try to solve the problem and we are prepared to make an effort. I do not anticipate that a very large number of people will take advantage of the legislation. For instance, a man who has a mortgage on his land is not going to relinquish that land unless he thinks there is no chance of his making good. It is my experience, after eight years of intimate knowledge of the conditions affecting the people who live in these localities, that they invari-
Dominion Lands Act

ably stay until they have to leave-and their leaving means that there is no equity left in the property at all.


Mr. MILLAR:: I am veiy glad indeed that the minister has undertaken to solve this very difficult problem; it has been a nightmare to banks, merchants and provincial and federal governments for some time. Undoubtedly there are areas that should never have been taken from the rancher-good ranching districts that were destroyed to make a very poor farming district. In 1914 I had occasion to travel over some five hundred miles of this dry area for the purpose of gathering some information and looking into the facts. You will remember that 1914 was a very dry season, but some of the farmers in that district had good crops. I inquired why it was that one farmer had a good crop while perhaps fifty or one hundred round about had nothing, and I found that the men on the farms that had given a good return had been doing their work in a scientific way and had conserved all the moisture that was humanly possible to conserve. Now, it might appear from that experience that the difference was simply a case of good farming as against poor farming, but I believe that is not so. The year 1914 followed several comparatively wet years, and there was some moisture to conserve. Subsequently there were a number of dry years-up to two years ago we had had four or five dry years- with the result that there was no moisture to conserve; the subsoil was as dry as powder. That leads me to believe that in these dry areas, no matter how well the soil is farmed, it is impossible to attain success. A great many of the people who settled in those districts came in with considerable amount of money; their buildings are comparatively new and in many instances are better buildings than those we find in the older areas. For that reason I think it is well that opportunity should be given to those who wish to do so to move to areas where they can succeed.
With a part of what the right hon. leader of the Opposition (Mr. Meighen) said I must agree, namely, that it would be wiser to base any action taken on the conditions affecting each individual farmer in the area in which he resides. If it is simply a case of the farmer failing through no fault of his own, why, you would have applications made from all over the country. But the difference is this:	Many farmers are living on
land where, if the economic conditions were made right, they could succeed. They are 
living on land that can be profitably worked and which can reasonably be expected in the future to yield a fair return. On the other hand, those who live in these arid districts are on land where no farmer, be he ever so good, could possibly succeed. In 1915 the crop in these arid districts was an [DOT] enormous one, perhaps the greatest that western Canada ever saw-fifty, and even sixty bushels to the acre being not uncommon. The extent of the crop was almost unbelievable. And perhaps that was one of the worst things that could have happened to some of the farmers there, because it gave them hope; they believed they could go to almost any extent in their schemes of expansion, and they hung on year after year for three or four or five years. If another good crop comes, the same thing will happen again, but any temporary measure of success in a given year simply prolongs the agony. It does seem to me that farmers living in these arid districts where it will always be impossible for them to succeed should be entitled to a new homestead, if they take it within a specified time. Of course, the door should not be left open, after this regulation is passed, to those living in other parts of the country to move to another homestead after they have tried one in the arid district for say six months. It should apply, however, to those who settled in these arid districts in good faith. The minister has said he does not think that very many are likely to take advantage of this opportunity. Well, the reason for that is not that the chances of success under their present conditions are good, but simply that they have invested their all. To my mind they would be well advised to take advantage of this opportunity and accept new homesteads.


Donald Ferdinand Kellner: I hestitate to criticise
this legislation, because I suppose it applies to all the prairie provinces, but I doubt whether it is going to be very beneficial to the province with which I am best acquainted, Alberta. It seems to me that this is the way it will work out: Four or five of these homesteaders will go up in the north part of the province and get a desirable piece of land; then they will get after the provincial government for schools and after the municipality for roads, and neither of these organizations will be prepared to accede to their requests. I do not think there is any need for the adoption of this course. I am quite convinced that these people could go up to that north country and either buy or rent land much cheaper than they could get a homestead to-day. The legislation may be all right theoretically, but I very much doubt whether

Board of Audit
it will work out when an attempt is made to put it into practice. I would also point out to the minister that the day cannot be much longer delayed when he will have to give consideration to the demand for the return to the western provinces of their natural resources. Every acre that the government disposes of will simply add to the barrier existing between the Dominion government and the provinces -when that day of reckoning comes.


Arthur Meighen: Perhaps the minister will tell us how close that " day of reckoning " is that the hon. member refers to.


Charles A. Stewart: So far as
the minister is concerned it might happen tomorrow. I am not, however, speaking for the government in that regard.


Arthur Meighen: It is just as likely to
happen to-morrow as it was eighteen months ago.
Bill reported, read the third time and
passed.



BOARD OF AUDIT

[Stage Direction]
House again in committee on Bill No. 243, to constitute a Board of Audit.
William Stevens Fielding: When this bill was about to be reported last evening I mentioned that there was a small amendment of a purely formal character which I was unable to find at the moment. It is simply this: I move to add as paragraph 17 the following:-
Any expenditure necessary to carry out the provisions of this act shall be made out of any unappropriated moneys forming part of the Consolidated Revenue Fund.
That is the usual course.


[Stage Direction]
Amendment agreed to.
Mr. GOOD:: There are no copies of the bill distributed as yet, Mr. Chairman.


William Stevens Fielding: I think the bill must be found on the files. It has been printed for several days. The bill is simply a transcript of the resolution which was on the order paper for some days.
Bill reported, read the third time and passed.



BOUNTIES ON MANILA FIBRE

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance) moved the second reading of Bill No. 188, to repeal the acts respecting bounties on manufactures from manila fibre in Canada.
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Gordon in the chair.
On section 1-Bounties on binder twine and cordage repealed.
William Charles Good: Would the minister state
briefly the purpose and effect of this legislation?


William Stevens Fielding: The Act which it is proposed to repeal was passed some years ago, arising out of a then existing condition in relation to the export of manila fibre from the Philippine Islands. At that time an ad-* vantage was given to the United States and for compensation this bounty act was then passed. In later years the condition has entirely changed and no bounty has been paid for some years. It is practically a dead issue, but we thought it better to have the act repealed.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance) moved the second reading of Bill No. 189 respecting the payment of bounties on copper bars or rods.
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Gordon in the chair.
On section 1-Short title.
William Stevens Fielding: This matter was very fully considered when the resolution was before the House and I do not think any further explanation is required at this stage.


[Stage Direction]
Section agreed to.
On section 3-Limitation.
Mr. McMASTER:: I beg in connection
with clause 3 to move an amendment by adding a clause 3A. I regret that I have not had an opportunity to prepare a copy for the Minister of Finance, but I will send over my original to him forthwith.
I am utterly opposed to this bounty business. I think it is eminently unsound. I think the business men who want to start business in this country, if they have got a meritorious proposition should reap the benefits and run the risks. In this case we encourage people to ask the state to help. The state runs the risk while others receive all the benefits. That being the case I move:
That the following paragraph be added to paragraph 3 to be known as paragraph 3A:
3A. Any amount so paid out shall be considered as advances by way of loan to those receiving the same and shall be repayable to the Crown as follows: One-fifth of the amount received on the 1st
Bounties on Copper Bars

day of July, 1930; one-fifth on the 1st day of July, 1931; one-fifth on the 1st day of July, 1932; one-fifth on the 1st day of July, 1933; one-fifth on the 1st day of July. 1934; with interest on any overdue instalment at the rate of six per cent per annum. Any failure to pay any instalment when the same falls due shall cause subsequent instalments at the option of the Governor in Council to become due.
Now, if there is any merit in the bounty system the amendment gives to these people who want to make copper bars an opportunity of using the public money without interest for some considerable time, but the interest of the public will be protected to this extent: If the proposal works out well and the company that receives this bounty continues in existence, one of the first charges upon it will be the repayment to the people of the amount advanced by the state. We have seen, in connection with the bounties that were paid on iron and steel in Nova Scotia, the company re-organized from time to time on fictitious capital, and we have seen them from time to time paying dividends on that fictitious capital, thus capitalizing again the benefits that the people gave them. I wish, if possible, to avoid such an eventuality, and, therefore, I humbly and respectfully submit this resolution for the approval of the House.


William Stevens Fielding: One of the rules of the House is that an amendment must be relevant. I submit that this amendment does not come within that rule. The House has already resolved that certain bounties, certain grants of money, shall be made under the conditions specified. The hon. gentleman's amendment entirely negatives that proposition. The amendment proposes that the grant be converted into a loan. I submit, therefore, that it is not relevant and is not in order.


Arthur Meighen: I do not know that I have any special interest in the amendment, but I have in the rules of the House. I take very direct exception to the appeal of the Minister of Finance. I cannot conceive of anything that is more relevant than the present amendment. The House has resolved that aid be given, that grants be made, to this industry, but that does not in the least restrict the power of the committee to amend the bill pursuant thereto. If that be so, what is the use of having first a resolution and then a bill-why not just have the one? Both are subject to amendment. The grant is made but the amendment makes it subject to return, that is all.


William Stevens Fielding: Oh, no.


Arthur Meighen: For my part I cannot see that there is any objection to it so far as the rules are concerned. When it comes to the merits of the resolution I will have something else to say.


William Stevens Fielding: I am sorry to say that I cannot agree with my right hon. friend. I say the amendment must be relevant. The House has already decided that it is going to make these grants-as gifts if you like to make use of that term. Whether it is wise or not is another question. The House has decided it will grant these bounties by way of gift and my hon. friend has moved that it be converted into a loan. I submit the amendment is not relevant. I do not think the right exists to make any such amendment to any measure of this kind. The amendment must be subject to the rule of relevancy, and my impression is that it is not relevant to the bill at all.


Arthur Meighen: I think the minister is wrong in his statement as to the amendment not being relevant. I cannot really see a ground for argument even. The minister argues that the House has decided to make this grant. What the House has done has been to resolve that it is expedient to bring in a bill. That is all the House has done and here is the bill. The amendment is as relevant as anything can be.


William Stevens Fielding: The bill is for the purpose of granting bounties. The amendment projmses that the bounties be converted into loans. That is entirely negative of the purpose which the House has already resolved.


Andrew Ross McMaster: May I submit this,
speaking to the point of order: If instead of moving this amendment I had moved that the bounties be reduced to a point where they would have been merely equivalent to the value of the use of the money for the time this company will have it, would that have been held out of order? I hardly think so.


William Stevens Fielding: I would say that a motion to reduce the bounties would be entirely within the rule of the House as to relevancy, and would be in order.


Arthur Meighen: The argument would
apply just the same.


William Stevens Fielding: No.


Arthur Meighen: The House has resolved to introduce a bill to grant bounties of a

Bounties on Copper Bars
certain amount. That is all the House has done. Here is the bill, we can amend it just as we like.


Mr. POWER:: I submit that the amendment introduced by my hon. friend from Brome amounts to a reduction of the bounty. He proposes that there should be no interest paid for five years. Therefore there is a gift of the interest for that period, and the amendment only proposes a reduction of the bounty.


The CHAIRMAN:: I think the well-known rule is that in committee a very wide discretion in the matter of amendments is allowed, in fact each clause of a bill or resolution may be negatived by a vote. While the amendment varies the nature of the grant and makes it rather a loan than a bounty, I feel that it is in order and may be considered.


William Stevens Fielding: The hon. member for
Brome alluded to the bounties on iron and steel. He said that the company concerned had seen fit to make certain issues of capital, to declare certain dividends and so forth. All of this is probably correct. Whether or not it is wise to grant bounties is a debatable question; nevertheless in my judgment, but for those bounties there would have been no steel industry in Cape Breton.


William Findlay Maclean: I should like to ask whether the copper rods upon which this bounty is to be given are to be made from copper produced in the nickel mines of Canada, say at Sudbury?


William Stevens Fielding: They are to be made
from copper mined in Canada, that is all I can say.


William Findlay Maclean: I should like to
point out that in the current Blackwood's Magazine, a leading Conservative organ in Great Britain, this month there is an ar-12 noon, tide which states that the fact that immense quantities of copper, which were more or less controlled by British firms, got to Germany during the war was a scandal. Among the things which went to Germany throughout the war was the product of the nickel mines of Canada. I happened to draw attention to that fact some years ago, blit nothing was done. Now is the time to correct that mistake in connection with the copper mines of Sudbury. There is something else worth pointing out:	The people of Canada
are entitled to know the content of precious metals in these ores such as platinum, palladium, iridium, and so forth. The companies that will get the benefit of this bounty may be producing these ores, but notwithstanding the fact that the Ontario and
Federal governments, and the public, have asked to know the content of precious metals they are still in the dark on the subject. I insist on the government refusing to give a bounty now to any copper mines in this country unless the owners disclose the actual content of precious metals in their ores. This matter has been an outstanding scandal as far as Canada is concerned, and in saying this I am only repeating what I have said heretofore, namely, that people outside of this country or our own companies who refine that copper ore or nickel ore have never yet disclosed the content of precious metals, including platinum, in that ore. Surely we are entitled to have that information.


George Newcombe Gordon: I would draw the hon. member's attention to the fact that the clause which he is discussing at the present time refers strictly to payment or non-payment of bounties.


William Findlay Maclean: And I say that there should be no payment to any company which refuses to disclose the precious metal content in the ore. That is the scandal of the war that has not been disclosed yet. As a matter of fact, Germany had an unlimited supply of Canadian copper, nickel, platinum and several other metals, and the country never knew that Germany was getting it.


Mr. EVANS:: I oppose the revival of the bounty system. The people of this country are overtaxed already. We have a precedent :n the steel industry to which we granted bounties in former years. The Minister of Finance declares that we would have had no steel industry but for the bounty. I think he is entirely m:staken; I can well remember the lime when we were granting, I think, $7 a ton bounty on steel rails that were used in this country, and the Nova Scotia Steel Company at that time was cutting prices against the whole world on steel rails. While we, with a bounty added, were paying $39 a ton for steel rails which we used on the Transcontinental, similar rails were being delivered in the southern Punjab at $24 a ton. I maintain that the steel industry did not need thac bounty; I maintain that the copper industry will not need this bounty, and until any company can show us the need for a bounty of this kind, I shall strenuously oppose it.


Arthur Meighen: I have a great deal of sympathy with the hon. member (Mr. Evans), and I think the minister should show to the committee, first of all, that unless something is done, there will not be the industry, and that what he proposes has a reasonable
Bounties on Copper Bars

chance of producing the industry and the extent of it, so that hon. members will know whether the country is going to get any benefit therefrom. Of course he will say that if there is no industry, there will be no bounty; out we do not like passing purely futile legislation. If there is a reasonable chance ot the industry going ahead under this bounty and the industry is of such magnitude as to make this worth while, I favour it. I would prefer to see the matter dealt with in another way. But one way is better than no way. I do not want to have my vote or any influence I have stand in the way of the revival of any industry in this country. Next, the minister should show that the plan suggested by the hon. member for Brome (Mr. McMaster) in his amendment, will not produce the industry. The minister at lease owes an explanation to the committee, because if the amendment will produce the industry, the hon. member for Brome is right in his amendment. We should not do anything more than is essential to achieve our ends in the public interest, and if they will be achieved by a loan without interest for seven years, that is a great deal better than making a money grant. The minister should show to the committee that such is futile, it that is his belief.


William Stevens Fielding: It is not always easy to prove a negative, nor is it always easy to prove an affirmative. I cannot give the right hon. member an absolute assurance that this bounty will create the industry. All I can my is that the people most actively promoting it have assured me that the business will oe done. I can give no assurance beyond that. I think they are acting in good faith, and that this bounty will create the copper industry in the way the industry is described. I am bound to give to the right hon. gentleman and the committee any information as it comes to me.
As to the effect of the amendment of the hon. member for Brome, if my right hon. friend asks me if I can give him any assurance that this will not be satisfactory, I have never before heard such a proposal, and I cannot tell what view will be taken of the amendment. My judgment is that they will not move a foot if this amendment is passed, but I cannot guarantee that such will be the case.


William Findlay Maclean: I should like to press for an answer to my question whether the government, in view of the statements I have made and statements heretofore made in

other quarters, are going to take such means as to compel companies to whom this bounty is given to disclose the actual content of precious metals and nickel in those ores. Are we to have that or not? And are we to subsidize those companies in view of the disclosures that have been made? If such a provision is inserted, I shall be glad to support the motion. If the minister consults the Department of Mines, he will find that they do not know the value of the precious metal content in those copper ores, and that, as regards Ontario, that has never been disclosed. Those metals are subject to taxation there, and the Department of Mines and the Department of Finance of this country ought to insist on these facts being disclosed before any bounty is given to any company, and especially to companies outside of Canada.


William Stevens Fielding: My hon. friend is referring to the question of companies refusing to disclose something during the war. I cannot answer that, as I had nothing to do with the administration of those affairs during the war. I know there was a great deal of talk of shipments of nickel to Germany during the war. I understand that was investigated by the government of the day, and that they were satisfied that the law was observed and that there was nothing wrong. So far as I know, companies have never been asked to disclose this, and I know of no reason why they should be asked.


William Findlay Maclean: Are we still to continue in the position that we are not to know what the content is? Now is the time, if we are to bonus those comp|imies, to compel them to disclose the content of precious metals, or the minister should produce a report from the Department of Mines showing that there is not a large content of precious metals in those ores. If that department says that there is not a large content of precious metals, I will accept the statement. I want an answer now to my question, and I will direct the attention of the government to the statement in Blackwood's of this month that those metals-and it is claimed that this is the scandal of the war-went to Germany throughout the war; that they were supplied largely by British and American firms, and that they came, as a matter of fact, from Canada. That has never yet been proved. When the question is up and we are subsidizing those companies with bounties, parliament ought to make this condition, that any company that gets ia bounty on copper rods that come out of, say, our nickel mines, should be compelled to tell us how much of

Bounties on Copper Bars
precious metals is in those ores. This may give the government a source of taxation. We want systems of taxation as well as bounties in this country, and if outside companies control our mines, if they are taking these metals out of the country, and if Sir Alfred Mond, of the late British government, for years has taken the nickel of this country in matte form over to Wales and treated it and taken out those precious metals from our ores, that ought to be disclosed. Sir Alfred Mond has never disclosed that, and he has defied disclosure of it. His agents in this country have been very active to hide the fact from us. I ask the minister to insist on those companies disclosing the whole content of the ores from which they get these rods.


Mr. GRAHAM:: I think it is nearly time in this country that we should cease harking back to the war about everything. The question is not what we have done. We have done our duty pretty well, we have had many troubles and trials during the war, and the people are now looking to see what we are going to do and not at what has been done. I do not think anything is gained by discussing these old issues, no matter on which side we may be. This is the situation in connection with the copper industry and something should be done to meet it. The raw copper of British Columbia goes to-day to the United States, where a large quantity is required. It is refined there and we buy it back again. That is a condition of things which even free traders would not, I suppose, care to have continue. We have an abundant supply of raw copper in this country, but the new companies that undertake to develop this industry cannot stand up against the outside competition of old and well-established businesses in a country like the United States. Concerning any other question there might be greater room for differences of opinion; but this is a case in which we are developing an industry that gets its raw material from the bowels of the earth, that raw material being of no value in its undeveloped state. I think, therefore, that it is well that we should do something to develop this potential asset. I believe in aiding this industry, which has for its object the development of one of our greatest national assets in the way of natural products. Under the present law, a manufacturer, say, of copper bars, can get his raw material free of duty, but if he attempts to manufacture a partly finished product to a further stage and sell it to his neighbour in Canada, though that neighbour lives across the street, he has to pay a duty on his importation. A man three
miles from him, on the American side of the line, can send the manufactured article to the purchaser in Canada free of duty. This is an anomalous situation, and as a matter of fact, under present conditions, instead of giving the natural products of Canada a square deal our legislation is absolutely against them in favour of the American manufactured article, as well as the American raw material. I cannot see anything inconsistent with straight business methods in doing what the government proposes to do in order that the copper industry of Canada may be developed, and those who are manufacturing further products of the copper mines may be given a chance at least equal to that enjoyed by the American who can send in his goods now free of charge.


Mr. HUMPHREY:: I realize that this is a debatable question and I do not wish to touch upon any disputable point to-day. The principal arguments that have been advanced in favour of the amendment of the hon. member for Brome (Mr. McMaster) have reference to the taxation that will be imposed upon the people by granting a bounty to the copper industry. The question is also asked by the leader of the Opposition (Mr. Meighen) as to what benefit the country will derive from the granting of this bounty. Laying aside the principle involved in the matter of his bonus, I think that it is good business for the Dominion of Canada to grant such a bonus, and I offer this opinion not from any particular point of view, but from the point of view of business generally. If any hon. member were interested in a business proposition by means of which, through the investment of $200,000 a year, he would derive a revenue of three and a half or four million dollars, there can be no question whatever that he would consider it excellent business. Well, that is precisely analogous to the present case; by the investment of $200,000 a year we shall save to the people of Canada between three and four million dollars which now goes to the United States. By granting this small concession we shall establish an industry in Canada providing returns such as I have stated, besides employment for from 1,000 to 2,000 persons who are now idle. I believe that hon. gentlemen will take this question into consideration favourably, purely from the business point of view, and altogether irrespective of the principle involved in the granting of a bonus. This parliament to-day is legislating for the welfare of the Dominion as a whole, and I consider that this is one instance in which it might do something to help a particular industry and, further than that, the whole country. The
Bounties on Copper Bars

taxation that will be incurred in connection with the bounty will, in my opinion, be greatly offset by the increased benefits that will be derived in the way of added revenue and greater prosperity, particularly to the province of British Columbia and the other provinces that are interested in copper mining.


William Charles Good: I am afraid the hon. member who has spoken (Mr. Humphrey) has fallen a victim to that hoary fallacy about keeping money at home. I do not think many hon. members will attach great importance to that argument. As to the amendment, it seems to me to be worthy of very serious consideration, even from the standpoint of the government. Personally, I do not believe in tjhe bounty system, but, as I have said on a previous occasion, if we are bound to give some sort of assistance to industry it is a better form than tariff protection. Looking at the matter solely from the standpoint of those who believe in giving assistance to industry, it seems to me that the amendment is well worth considering. Because there will be no re-payment coming from the company until, I believe, 1931, and by that time, if there is anything in the proposition at all, the industry will have been well established, and will be well able to repay the money advanced to them. I do not suppose that the Minister of Finance would recommend the bounty unless there were reasonable prospect of the industry becoming established. Surely it would be very poor policy to grant a bounty if there were no prospects of permanent success. But if there is such a prospect then by 1931 the company will be established and can afford then to pay back to the people of Canada the small advance that will be made. I do wish to commend to the House, therefore, a sympathetic consideration of the amendment.


Arthur Meighen: Something of evidence
has been given to the committee as to the need of the bounty; I am thoroughly convinced of that myself. But I think the minister owes it to the committee to give us some information, and I really do not know why he has not got it, to show how the figures are arrived at. I can recall in connection with the lead bounties how the figures were arrived at, the basis of making the bounty being the equivalent of the handicap under which the industry would suffer were it existing. Surely the corresponding information should be forthcoming here. It seems to me that the committee is entitled to that information. Just what is the disadvantage that the industry would be at, without the bounty, as compared with its competitor? If there is
EMr. Humphrey.]
any substantial disadvantage there will be no industry; we all know that by long and bitter experience. The theories in regard to all these things are fine, but their application is a different matter. How many people support those theories only until it comes to a question of their application?-the application shows them to be utterly futile. But we should have that information.
I have not the slightest sympathy with all the talk about a crime having been committed against this country in the export of nickel or any other of our minerals' during the war. I had peculiarly to do with the export of nickel from the-beginning to the end of the war, and I know the entire system adopted and the result. I would not contend for a moment that there was not a modicum of failure, but I do not think that in anything we undertook during the war was the success so complete as in the case of the control of the export of nickel. No matter what anyone may say in Blackwood's or any other magazine on the subject, he is simply talking rubbish for the sake of getting entry into the paper and probably making some money for himself.
As to the composition of our metals, while I have not gone over all of them seriatim, I do not doubt that the content of every metal that has been discovered in this country can be ascertained by examination of the records and reports of our Mines department. There is not the slightest doubt as to the ore covered by this bill. I guarantee that every detail of its composition has been on record for years in the Mines department. There is nothing to be found out in that regard, and I do not see that the subject affects the merits of the bill, but on the point where it does, I should like more information besides that given by the hon. member for Kootenay West (Mr. Humphrey) and the hon. Minister of Railways (Mr. Graham) in order to show that this is the right amount as nearly as we can tell that will overcome the handicap under which the industry would labour were it existent without the bonus.


William Stevens Fielding: If the hon. gentleman
will specify substantially and clearly any information he wants, and if that information is available, I shall have a great deal of pleasure in getting it for him. I can only say that we have adopted these figures after discussion with the promoters of the industry. Of course, it is not what they want. They want more. But we believe that on these rates the industry will be established. That is our reason for proposing them.

Bounties on Copper Bars


Sir HENRY DRAYTON:: I became somewhat familiar with this matter about two or three years ago. I do not think there is any dispute that it does seem to be ridiculous that the brass manufacturer-the man who is manufacturing the product of the copper- although he uses Canadian copper, as a result of the present protective tariff-which in this instance is not protective at all but is a tax upon the Canadian producer-is worse off than if he moved his plant to Buffalo. That is, as a result of the duty on the raw material of copper, given for the purpose of aiding the first industry, the production of copper itself, unaccompanied by proper compensatory duties upon the more finished article, while it gives an apparent protective duty of 10 per cent to the brass manufacturer, it actually leaves him at a disadvantage of 2 per cent. Therefore, although we have a duty on the raw material, we are getting the benefit of the first process only, the extraction of the copper from the ground. Those were the figures two years ago, and I am quite confident they are the figures to-day. Consequently, where we ought to have large employment of labour in connection with all the different processes of this industry, we are just simply producing the raw material. I take it that my hon. friend has had those figures before him and has calculated what he could do in order to offset the difference.
I might say that the result of it all comes from an accident. Things are overlooked from time to time. There used to be no duty whatever upon the by-products of copper. We had no industry in connection with them. When the war came we had to have these by-products. There was no competition when the industry started and those engaged in it had the further protection given by the 7| per cent customs tax imposed for war purposes. It is by reason of the tax being cancelled that we are in this position to-day, because while reductions have been made on the import duties, on the other hand the striking off of that tax, which before gave the industry a net protection of 5 per cent, leaves it in a position where it is at a disadvantage to the extent of from 2 to 2| per cent. I do not think there is very much doubt about these figures. Of course, I should like to see the fullest information given, but, speaking frankly, I can see absolutely no reason why this industry should not be bonused.


Mr. GOULD:: I am not yet clear as to why we should have to subsidize this industry. We have practically a monopoly of copper,



REVISED

[Stage Direction]
because we are told that the United States must get her main supply from Canada. Therefore it seems to me that having this monopoly we can charge the United States a high price for any material she requires. The question asked by the right hon. leader of the Opposition is the sort 'of question we have been asking many times in reference to tariff and other matters, that is: What is the reason for the disability, and what is its extent? The question is asked in regard to this proposed bounty, but it is unanswered. A similar question has been asked to my own certain knowledge during the last four years in regard to all the tariff items that have come before this House. But it always remains unanswered. The people would like to have a satisfactory answer. In all cases it does appear that the cards are absolutely stacked against the people. Indeed, it is demonstrated by the fact that this and similar questions asked by the representatives of the people remain unanswered. The Minister of Railways (Mr. Graham) stated that we should not be always referring to the war period. I quite agree with him. But in almost the very next sentence the hon. gentleman stated that the highly organized industries of the United States would force Canadian industry out of business were it not protected. This is getting to be quite as common a warning as references to the war years; or quite as common as the remark by the Minister of Finance (Mr. Fielding), who invariably retorts to certain objections, " Well, we have precedent for this; you people did it; consequently we are doing it."
Mr. VIEN:: If the remark is true why doss my hon. friend object to our repeating it until he understands it?


Oliver Robert Gould: Well, until those who have the spending of the money produce evidence that we are wrong, we are entitled to our opinion; and the people of Canada have on many occasions spoken in favour of the opinions which we express.


Thomas Vien: Not yesterday.


Oliver Robert Gould: No, not yesterday, but Ontario is just a small part of Canada.


Thomas Wakem Caldwell: That was not a federal issue.


Oliver Robert Gould: I approve of the amendment which is before the committee, on the principle that those who receive these subsidies shall consider the amount advanced to them in the nature of a loan and that it shall be



EDITION

[Stage Direction]
Bounty on Hemp
[Stage Direction]
repaid to the people of Canada. That will be one factor at least in restoring confidence in the minds of the people.
Mr. FORKE:: I wish to say just a word in regard to the suggestion that if certain things are not done certain people will have to go out of business. I have had perhaps more experience this session than I otherwise would have had because of the position I have occupied in this group, and the most disheartening thing I have met with has been the continuous stream of people I have had up in my room who have told me it is impossible for them to carry on business in Canada unless they get a little more protection. Now, the psychological effect of that statement, repeated over and over again, is that those who make it themselves finally come to believe it. If the manufacturers and business men would only recognize their own ability, would only recognize the virility and industry and intelligence of the people of this country and attempt to put their businesses on a paying basis, they would succeed much faster than they will by this everlasting cry of " a little more protection." I do not think the amendment offered by the member for Brome (Mr. McMaster) is at all out of place. If this industry is going to be a paying proposition, they will have four or five years to repay the amount now advanced; why should the people of Canada not at least get their money back? I am prepared to support the amendment.
Amendment (Mr. McMaster) negatived: Yeas, 42; Nays, 77.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance) moved the second reading of Bill No. 215, respecting the payment of bounties on certain manufactures of hemp.
Motion agreed to and the House went into committee on the bill, Mr. Gordon in the chair.
On section 3-Limitation.
Andrew Ross McMaster: I desire to propose the same amendment to this clause which I proposed in connection with the bounties on copper. The same principles apply, and I do not propose to detain the committee in arguing the point.


George Newcombe Gordon: Mr. McMaster moves: that the following paragraph be added to paragraph 3, to be known as paragraph 3A:
[Mr. Gould.l
3A. The payments so made shall be considered as advances by way of loan and the amounts so paid to those receiving the same shall be repayable by them to the Crown as follows: One-fifth on the 1st day of July, 1935; one-fifth, on the first day of July, 1936; one-fifth on the 1st day of July, 1937; two-fifths on the 1st day of July, 1938; with interest on any overdue instalment at the rate of six per cent per annum. Any failure to pay any instalment when the same falls due shall cause subsequent instalments at the option of the Governor in Council to become due.


Mr. McMURRAY:: The object of this bill is to establish in western Canada very largely and in the province of Manitoba particularly, I believe a new industry for the growing of hemp and its manufacture into binder twine. I understand that an experienced man from the north of Ireland, where this industry has been developed as highly probably as in any other part of the world, came to Canada some years ago and made investigations as to the possibility of growing this hemp in Manitoba. I understand that it was established to his entire satisfaction that hemp of the very finest quality could be grown there, of a quality equal to that which the factories in the north of Ireland had been purchasing from Russia before the war. Hemp has been grown in the West for some three years. I have seen it growing, and while I do not know anything about its quality I know that it grows very readily and very high. I have been assured by this gentleman from Ireland that this hemp is of the very best quality and will produce the very finest twine when manufactured. Another feature of the situation is that the twine which we use in Canada is very largely manufactured outside of Canada, manufactured practically by one company ,the International Harvester Company, a large American corporation with a vast capital. Twine has gone up in western Canada to a very high and unusual price, and is more or less absolutely in the control of this company. The object of this bill is to create a new industry. I agree that there is a proper place for_ the granting of bounties and subsidies. This is a new concern with a reasonable prospect of being successful. I would be opposed to the granting of a bounty if there was not a reasonable prospect of success.


Andrew Ross McMaster: May I ask a question?
If there is a reasonable chance of success why should it be objected to that the industry should repay to the state the amount which the state is now advancing to it?


Edward James McMurray: I will answer my hon. friend as I proceed with my argument. We have western Canada in the grip of this monopoly I spoke of. We have a field out

Bounty on Hemp
there for the building up of a magnificent industry. We have a large market in western Canada for binder twine, one of the largest markets in the world. The great trouble with our manufactures in Canada has been that their market has been limited as compared with the United States, and for that reason on account of the greater overhead expense they were unable to compete with the American factories. But for this binder twine industry we should have a field as large as that of the United States, and one in which we can compete against them successfully. There is I think no doubt at all that this industry will succeed if the bounty is large enough in the first instance to enable them to compete against this monopoly that now holds the people of western Canada in thrall.
The establishment of such an industry should have the following effects: First there should be a reduction in the price of twine for the farmers of western Canada. My hon. friend from Springfield (Mr. Hoey), speaking the other day alleged that he believed that this would create a rate war between this new company and the monopoly in the United States, and that in his opinion the price of binder twine would be lower in western Canada for a number of years to come. He apparently was solicitous of the welfare of these capitalists who propose to come to Canada and establish this industry. They were quite willing to come to this country and risk some four or five million dollars in establishing such an industry. Their experts had come over here and looked over the field and were satisfied the industry would succeed if given a reasonable opportunity. I do not know on what ground my hon. friend sets up his opinion against that of these experienced men who had investigated the matter. I was rather surprised with his argument. I would have thought that a reduction in the price of twine to the farmers in western Canada would have appealed to him, and I was rather surprised that he set up his opinion against those of these experts who had looked over the field.


Mr. HOEY:: Does not my hon. friend see where his reasoning is leading him to? When the price is reduced and the hemp factory is in jeopardy we will have a demand for a protective tariff on binder twine coming to this country from the United States.


Edward James McMurray: My hon. friend is setting up his opinion against that of the experts who looked over the ground and on whose opinion these capitalists were willing to risk four or five million dollars in this industry.
279J


Robert Alexander Hoey: Anticipating protection.


Edward James McMurray: There is a large field for this industry. In that respect it stands out from most other manufactures in this country. It will have a larger field in which to sell its product than its competitor in the United States. Now what will this do for Canada? Annually there is going out of this country from fifteen to sixteen million dollars for binder twine purchased at an exorbitantly high rate. Supposing this new industry did not lower the price of twine, this fifteen or sixteen million dollars would remain in Canada and help to build up industries in this country, and would give labour to thousands of our own people here. One lion, member immediately opposite me suggested the other day that we should give a bounty to the farmer who grew the hemp. The farmer who grows the hemp is in an entirely satisfactory condition, and this industry will mean giving him another markef right at his own door in which he can sell his products. If he can get more for the production of hemp than he can for the wheat he produces he will grow hemp; if he cannot get a price for his hemp equal to that he gets for his wheat he will not grow the hemp. So what we are really doing is to bring a market right to the fanner's own door.


Mr. WOODSWORTH:: Does not that same argument apply to the manufacturer of hemp -that if he could secure an adequate return he would produce?


Edward James McMurray: The argument is this: The industry will be fighting against the monopoly in the United States, something my hon. friend is always prepared to fight. We have an abundance of cheap power that could be used in the manufacture of hemp :nto twine. The production of hemp will also assist in giving a diversified crop production on the farms of western Canada. The lands surrounding the city of Winnipeg are more or less fallowed and infested with weeds. The production of hemp will take the place of summer fallowing very largely and will be exceedingly profitable. By reason of the cheap power to be had by the manufacturing industry, by reason of the closeness of the market, by reason of the fact that the hemp manufactured will be produced on farming lands in western Canada and should be sold to the manufacturer at a cheaper price than it can be produced for on the higher priced lands of the United States, I believe this industry should succeed against the competition of the United States.
Bounty on Hemp


Mr. SPENCER:: Why is the land surrounding Winnipeg polluted with weeds?


Edward James McMurray: Because the farmers of western Canada have not been farming properly.


Henry Elvins Spencer: Does not my hon. friend
realize that flax is the worst possible thing to pollute the land?


Edward James McMurray: My hon. friend represents a farming community but he has a most indefinite idea of what is produced upon a farm. Flax grows about two and a half feet high, and hemp eight or ten feet high; they are two different products altogether. In addition to what I have already said as to why we should encourage this industry there is the fact that employment will be given to the working people of western Canada. For that reason this legislation should have the support of the hon. member for Centre Winnipeg (Mr. Woodsworth) and the hon. member for South Winnipeg (Mr. Hudson), as it will have the effect of bringing to Winnipeg, or to the immediate environments of that city, a large enterprise which will take care of our working people there the year round. This proposition is a very desirable thing and should be supported not only by the members for Winnipeg, but by all the farming representatives from western Canada. I appeal to these hon. members to support a bill that will bring to the west a concern that should free them from the monopoly from which they are now suffering by reason of the International Harvester Company. I appeal to them to endorse a proposition which will create a market for a large acreage of hemp produced in the West, will assist in better farming methods, will keep millions and millions of dollars in this country, and will have the effect of freeing us from the domination of the United States. The farther we can advance along this line the better it will be. In the interest of some of our needs' in the future it may be very desirable that we should have industries in this country that will render us absolutely independent of the United States.


Mr. GARLAND (Bow River):: What about the binder twine manufacturing plant at Brantford?


Edward James McMurray: That is a small plant
and does not, I believe, sell binder twine in western Canada at all. It is so insignificant that this great monopoly does not bother to fight it. But if a real competitor comes into the field then you may expect to see a war in connection with the sale of binder twine.

In reply to the very fair and reasonable proposition advanced by my hon. friend from Brome (Mr. McMaster) I have this to say by way of argument:	We are to-day fighting a powerful monopoly. The manufacturers who propose to establish themselves in Canada contemplate investing a very large sum, probably some four or five million dollars. There is every prospect of success as I view the matter. Still, these men are going into a very hard fight, and I think it is only fair, in view of the benefit to be derived by our working people and the farmers of Canada as a whole, that they should receive some encouragement when they are undertaking to establish a new concern. It is not like making a new establishment in a line which has been in existence for some time; these men are venturing into a new field. And while the prospects look good, difficulties' may arise. If the promoters are willing to undertake the risk why should we not support them to a reasonable extent? The proposed bounty is not extravagant in its nature; in fact it is rather small. If I have any quarrel with the government, or with the minister, as I said before, it is that it is not proposed to give a bounty of such a character that assurance may be made doubly sure even from the very commencement. The bounty is small; it is not given for a lengthy period of time; it is on a sliding scale. Nevertheless the prospects for success are very bright. There is an opportunity here of establishing in western Canada an industry that will be indigenous to the country, that will stabilize conditions in the west, that will stimulate the farmer, that will provide employment for our people-in a word the proposition is one that should have the support of every western representative in the House.


Arthur Meighen: I could hardly be expected to let the opportunity pass of making a few observations on the speech of the hon. member for North Winnipeg.
At one o'clock the committee took recess.
The committee resumed at 3 o'clock.


Arthur Meighen: 
James Shaver Woodsworth: Are many of the
protected industries in this country not managed from the United States?


Arthur Meighen: Not by any means, not
to the extent of an almost infinitesimal fraction. They are Canadian industries; American capital may be in them, but they are not part of a big American ring.


Mr. JACOBS:: What about the Imperial
Oil Company?


Arthur Meighen: The Imperial Oil Company is, in the main, a Canadian company. How funny it is to see hon. gentlemen to your right rise! If such is the case, why do they not pursue their policy past binder twine and get us into such a shape that we shall have to give bounties to everything raised in this Dominion? I thought hon. gentlemen to my left would be slow to rise.


Mr. PRITCHARD:: Is it true that we are buying binder twine cheaper than we did before the duty was removed and the wages were increased?


Arthur Meighen: It is not. Binder twine
is cheaper than it was four years ago; most things are; but it is much dearer than it was when w7e had the 12 per cent duty. I think it is dearer this year than it was last. As I say, out of this very school stands the prophet who declares that we are landed now in the grip of an American monopoly. He is not far from the fact; substantially he is within the truth, and out of this school stands one who says we are making in Canada 10 per cent of this big staple article of consumption by the people of this Dominion. Yes, I suppoit the legislation. I will support any such effort, however feeble, and I only hope at least a measure of success will result from it.


John Pritchard: I am quite interested in the remarks of the leader of the Opposition (Mr. Meighen). Some of us have memories that reach back to those years when binder twine was 17 cents a pound, when we had a protective duty and dear labour.


Arthur Meighen: When was that?


John Pritchard: That was when we
built a binder twine factory ourselves, and that is what they told us at the time it was 17 cents a pound, that these corporations he is talking about would force us down to a cost of 6 cents a pound and put us out of business. What happened at that time? Many men went into the business, and

if many of the farmers had put all their money into the business at that time, they would have made more money than they would in farming. The price of binder twine came down to 6 cents, and we succeeded in meeting that. My opinion is that no industiy starting in this country, in which it has an opportunity of making good, has a right to receive protection from other industries. Such industries have a right to stand on their own feet without any support. 1 am in entire support of the amendment. We have been carrying on too long this system of subsidizing infant industries in order to establish them, and I do not know how long it takes to get some of them established. We are apparently undertaking to carry more and more of these industries; this must stop some time, and my opinion is that we should stop it right now. We have been bonusing our railways; indeed in all our smaller towns-for instance, in my own town, we have been giving any amount of money to industries, and what has happened? The money has gone and the industry has gone. I am opposed to the continuation of granting bonuses; I am opposed to this particular one, and I will support the amendment.


James Shaver Woodsworth: I regret I cannot agree with the argument put forward by the hon. member for North AVinnipeg (Mr. Mu-Murray). I am aware that considerable pressure is being brought to bear from Winnipeg to have this particular matter go through; yet I cannot see how this case differs from hundreds of others that might be brought up from different parts of the country. I note, in the circular sent out by the Winnipeg Board of Trade one of the statements in favour of this matter is that this will be a source of revenue to the federal government by establishing an additional industry which will be subject to taxation. Possibly that is what has' appealed to the Minister of Finance. But I would submit that from the standpoint of good business, so far as the federal government is concerned, we may have to wait a very considerable time before any money secured in the form of taxation upon this industry will equal what will be expended in the proposed bonus. I think we can all agree with the member for North Winnipeg when he speaks about the fertility of the western plains, and the possibility of producing raw material in great abundance, there. I have very little doubt that is true. We can also agree, I think, that there is a splendid local market; undoubtedly the western fanners consume a great deal more of

Bounty on Hemp
these articles than are required elsewhere in this country. Still further, we all know that Winnipeg has cheap power and for that reason production should be carried on without a very heavy expenditure. But all these reasons would seem to show that this is a good business proposition, and if it is I cannot see why those who are interested in investing money should not come into the country without any other encouragement. We are told that if the prices are lowered the farmers will benefit, but I fail to see anything in the bill which will in any way ensure that the prices will be lowered, or that the alleged monopoly will be broken. We are also informed that this industry will be a very great benefit to the labouring classes. Well, if reasonable wages are paid and if there is steady work it may be advantageous to them. But there is no indication whatever that the rights of the labour people in this regard will be respected in this industry any more than they have been in any other industry.
We have been told that British capital is willing to come in and invest in this country. Let me remind hon. members that the statement was also made in the committee on Banking and Commerce that our banks have plenty of money to lend. If this is such a good thing and if the securities are going to be so sound there is no particular reason why British capital should not come in and the Canadian banks should not help to finance the institution while it is producing.
I would also suggest, that there are other alternatives which the government might consider. Some of us are very much interested in municipal or provincial enterprises. I cannot see why something of this kind should not be encouraged -in the same way as are those enterprises. Or why not, one might ask, bonus the farmers' co-operative societies that are already engaged in various types of productive industry, and if there is any benefit in the undertaking let those societies reap it? I might go so far as to suggest that there are some labour organizations which, if sufficiently bonused, could guarantee to carry on an industry of this kind. These are some of the alternatives to bonusing a group of British capitalists in the way proposed.
With regard to the amendment, I confess I am almost at a loss to know how to vote. As I am opposed to the principle of granting bonuses i't seems rather strange to support a motion granting in any form a privilege of this kind. On the other hand, until such time as we have greater control over our industry, and so long as private industry is the rule, I am willing to try experiments. It may be
in this instance a good thing to give this particular private industry an opportunity to develop. But more than that, I am rather anxious to test the bona tides of those who are putting forward this proposition, on the ground that it is in the general interest.
I submit that if this is indeed in the public welfare no group of men should hesitate to take the position that if the public advances money it should be in the shape of a loan which should have the first claim on the industry. For that reason I propose to support the amendment.


John Evans: I am opposed to the granting of this bounty on the same ground that I oppose other bounties. No industry has been benefited, or has benefited this country, that has been established artificially. The history of bounties in Canada is just as sorry a spectacle, just as much a delusion and a fallacy as any other form of the old Nationa. Policy which was adopted by the Libera government from its predecessors in 1897 There has been a cry in this House against Americans benefiting by the exploitation of our natural resources. The bounties of 1897 and 1899, however, were given entirely to American promoters. The two companies established at Cape Breton and Sault Ste. Marie -were formed for the benefit of American promoters. In one case where money was given for the establishment of a plant, no steel was rolled until years afterwards. These two companies received many millions of Canadian money, the Sydney company, $6,500,000 and the Algoma company $2,600,000. What benefit did the Canadian people derive from those grants? Did we get steel any cheaper, or did our railway constructors get their rails at any lower rate? No. We paid from $11 to $13 a ton higher for our rails during that period than did any other country in the world; we could have secured them that much cheaper outside had we free trade. The bounties that were given to those two companies during those years more than paid the whole of the wages which the industries paid out to their employees. There was another bounty paid these mills in the years 1901 and 1902, but it was not until 1904 that one ingot was rolled in either of them. Why our government to-day is so eager to create monopolies by the granting of bounties and bonuses as well as tariff protection and the placing of embargoes on the export of raw material is more than I can understand. The steel bounties present one of the worst exhibitions of corruption and graft, and these bounties which the government now proposes but finds it hard to excuse, are likely to lead
43X2
Bounty on Hemp

to similar evils. The right hon. leader of the Opposition (Mr. Meighen) I think is mistaken in some of the statements he has made. In 1898 the duty was taken off binder twine. We had an understanding about that time with the United States regarding manila from the Philippines, under which no undue import advantages were to be granted to their manufacturers as against ours. But I think the American manufacturers had an advantage of one-eighth of a cent per pound over ours, and we were reimbursing our manufacturers at the time to that extent, perhaps more. But during this period we never got twine in the West under 13, 14, 15 and 16 cents a pound. I am speaking of the early years of my settlement there. Before the war the farmers, under free trade, were getting twine as low as 7 and 8 cents a pound. I know this personally because I bought twine every season for over thirty years. I make the assertion that last year we could have bought twine at least 2 cents a pound cheaper had there been free trade in this commodity. Nominally twine is on the free list, but it is hedged about with such customs regulations that it can hardly be said to enter free. Last year an effort was made to bring the anti-dumping clause into force on an importation of twine by the United Farmers of Ontario, but it failed. That we are in the grip of an American monopoly in respect to this industry is simply a myth. If there is any industry languishing in this country it is not owing to free trade; the cause must be looked for elsewhere, and it is to be found in the fallacy of the National Policy, which advances the price of everything we have to buy and thus forces our cost of production out of line with that of other countries.
The best protection our manufacturers can have, and which this new industry in the West ought to cultivate, is a national sentiment. There is no doubt that our manufacturers have alienated this sentiment until to-day they find themselves more and more at a disadvantage under the tariff system. A truly national policy of "Canada for the Canadians, with fair play for all," is the best protection that our manufacturers can have. I say, let us be done with the whole system of tariff protection, bonuses and bounties.


Mr. MOTHERWELL:: Mr. Chairman, the importance of the proposed legislation is my only justification for spending even five minutes in discussing it. I have a good deal of sympathy with my western friends who look with misgiving at anything resembling protection. I remember when this proposal was brought to my attention a year ago last Febru-

ary I loked at it askance because I realized that what we do as a matter of course provincially in the West is looked upon as straight protection when done by the federal authorities. In analyzing the activities of the provincial governments of the West, I naturally am led to review those of my own province of Saskatchewan, where we have given assistance to various industries, very much to their advantage. I have never taken the ground that no kind of assistance should be given industry for fear it might be called protection. It seems to me that this system is the least objectionable form of protection, because it is terminable, while the other kind that we dislike so much is apparently interminable. That is the great difference between the two.
Let me cite some of the things we have been doing in Saskatchewan. For instance, we have for many years given money at 3 per cent to our co-operative creamery, we have given it office accommodation, and we have been paying the freight on cream to the central plant. All this is in the nature of subsidies, bounties or assistance. But as a result we have the satisfaction to-day of having established one of the best co-operative creameries and cold storage plants anywhere in the Dominion. It having been developed into a successful undertaking, assistance has been withdrawn. Then again, we have two stockyard companies in the province to each of which we have granted a straight bonus of $25,000. My hon. friends from the West thought that was all right. How is it altogether wrong when we come down here and do exactly the same thing federally in connection with the hemp industry? A third instance is the substantial grant or bonus which the Saskatchewan government gave towards the building of telephone lines.


Oliver Robert Gould: Is it not a fact that while the hon. minister was a member of the Saskatchewan government it passed a law prohibiting municipalities from granting bonuses or subsidies to induce industries to locate within their boundaries?


William Richard Motherwell: I think that was in connection with the railways.


Oliver Robert Gould: Also in connection with mills and such like.


William Richard Motherwell: There may be occasions when municipal bodies should not be subject to the temptation of competing with one another for the establishment of industries. But there is not such competition between provinces. The Saskatchewan govern-

Bounty on Hemp
ment also gave an initial grant at the time the co-operative elevator company was established, and since then, until quite recently at least, the trading account has been guaranteed by the provincial authorities all the way from 75 per cent down.


Mr. KNOX:: Were not these grants by the provincial government made to publicly owned utilities?


William Richard Motherwell: Certainly not, they are co-operative institutions owned by the people. The principle of this form of assistance has been recognized times without number and has never been condemned in Saskatchewan. I can understand my hon. friends' feelings in regard to this matter, because I know that the environment here is different to what we are accustomed to in Saskatchewan. Here we are suspected of sinister designs upon the Treasury when we suggest any form of assistance to industry, while the same thing could be done by the western provinces and be thought perfectly all right. For these reasons, Mr. Chairman, I have no hesitation in supporting the establishment and encouragement of this new industry. Why is it necessary to develop it? It has been developed up to the present to the extent of only ten per cent of our requirements. Our demands for binder twine alone, leaving out the other cordage commodities, have grown annually. We have grown this year to be the largest wheat export country in the world; we are the second largest wheat producing country. Surely, therefore, we should not any longer have to depend on a foreign country for our binder twine. When we first went into the West we had to make our own binding material out of straw. The proposal now is to make our own binder twine through the production of a commodity called hemp fibre, something that is indigenous to this country. Something that can be manufactured here. A band of Winnipeg men have put over $100,000 of their own capital into experiments connected with the growing of hemp. These experiments, carried on without aid for about fifteen years, were on two occasions almost on the point of success, but something always happened. It does seem to me, therefore, that if any industry deserves assistance of this kind it is the hemp industry. I recall the time during the war when there was a dearth of twine; our shipping was in jeopardy; the raw material had to come from the Philippines and in some instances from Mexico. It is true that the twine was being manufactured in the United States, but they had to depend very
largely upon foreign countries for their raw material, and even if those countries were friendly, the dangers of the sea were great. I have been impressed with the importance of the production of two things within our own country: One is fuel and the other is twine, and the production of both in Canada is possible. I see that the right hon. leader of the Opposition (Mr. Meighen) is smiling now; he thinks I am advocating his fad, protection. But it is a terminable kind of protection. There are certain kinds of medicine, like strychnine, for example, which are beneficial if taken in small quantities, but which if taken in larger doses will knock you out. I propose that we take the medicinal dose, something that will do us good, not something that will kill us. The question has1 been asked, why does this industry not start up of its own volition.


Andrew Ross McMaster: Hear, hear.


William Richard Motherwell: I wonder if the
hon. member for Brome ever had anything to do with starting an industry, even as small as this.


Andrew Ross McMaster: I started my own law.


William Richard Motherwell: That is quite a
different proposition; there are certain advantages there that do away with the need for any kind of assistance. Now, at the annual meetings of the Dairy Association in Saskatchewan I used to warn the farmers that as soon as their industry began to be self-sustaining, as soon as it could stand on its own feet, their assistance would be lessened or withdrawn. I used to say at Saskatoon: We are going to take a certain amount of assistance off this year; we are going to stop paying the express to the central creameries, and next year we are going to stop assisting you in the matter of office staff and office accommodation." It was all right so long as they knew that these curtailments were coming; and it always brought them to time when I would say to them: "You do not want to be in the same category as the eastern manufacturer, wanting this assistance forever." When I would say that they would immediately come across and agree to let the assistance drop. That is what we propose here. We have had two indications this year that these bounties are terminable. They may come along and ask that the bounty be further extended, but surely we can have backbone enough to say nay to them. Take the question of the flax bounty. If I were to give my candid opinion, I think we should have extended that bounty for 'another year, but
Bounty on Hemp

rather than put ourselves in the position of being led on by this bounty proposition, we terminated the flax bounty which was being paid to the institution at Guelph. So with the bounty on oil; that has been adjusted so that it will disappear, I think, at the end of another year. We must either assist this hemp industry in some legitimate way, in some way that we can see the end of, or *we shall have to go on forever buying our twine from foreign countries. Which do we prefer?
I remember the time when we could take out almost in one car the whole binder twine requirements of Saskatchewan, but since that time the requirement has never ceased to grow, and I am confident that it will keep on growing larger and larger as the country becomes1 settled. The question is, are we to continue buying our binder twine from another country and running the chance of going without it at some critical time, or are we to develop a Commodity that can be produced right in Canada? For many years I found that the soil on my own farm was so rich that it would not grow wheat to maturity in time to escape the frost. In many districts in northern Saskatchewan and Manitoba it is not good business to grow wheat, but it may be an exceedingly profitable business to grow hemp. I am satisfied that hemp can be produced in northern Alberta as well as in the southern part of the province by irrigation; that flax seed and flax fibre can also be successfully produced in those districts, and that this industry may ultimately be developed in Manitoba and in the entire West-right to the Pacific, if you like. When I became interested in this product last year I gave instructions to the Director of Experimental Farms to try out the growing of hemp in all the experimental farms, and it was found that it could be grown in every province. I say there is no reason why, when this industry gets well established, it cannot be extended all over Canada. When I had the painful opportunity of reading the speech of the hon. member for Springfield (Mr. Hoey) on this question, he made what seemed to me to be the strongest possible argument for this bounty: he suggested that the price of International twine would be so cut that the new institution would be put out of business. Well, if no assistance were given, that is what would happen, and that is exactly the justification for the assistance. In the early days of an enterprise like this, when the overhead is large and the turnover is small, the cost per pound must be excessive, and if you are

going to get into competition with an old-established institution like the International Harvester Company, they can cut their price by two or three cents and beat you out. Under those circumstances, unless a business were enormously strong it would soon have to close its doors. That is not a dream; that is not protectionist theory; it is something that anybody can realize would happen if you start something that comes into competition with an institution that has been long established and has attained full growth. I do not think I can give my hon. friends any better illustration than this: If you take an immature farm animal-a calf, a pig, or a foal -and put it in the same pen with a full grown animal and leave it to rustle for itself, how do you think it will flourish? With these illustrations I will sit down as the weather is getting rather warm.


John Evans: I should like to make one
correction as the minister has created a false impression. Where help has been given to an industry in Saskatchewan it has always been a public owned utility organized to help the people help themselves. It is this creating monopolies that will in the end fleece the people that we object to.


William Richard Motherwell: I do not understand my hon. friend. In the little telephone companies that were organized it was the individuals w}io benefited. It was not a giant monopoly, and this is not a giant monopoly. We are simply encouraging new capital to come to Canada to engage in a new industry that my hon. friend and thousands of others require in this country.


John Evans: It is not to be publicly
owned.


William Richard Motherwell: I prefer making
my own product. If we are going to buy everything abroad we shall soon not be able to buy what we want at home.


Arthur Meighen: There is nothing that so cheers the heart of the old battle-scarred veteran as the sight of a young, vigorous and belligerent recruit coming to his aid. I welcome the adhesion even of the Minister of Agriculture (Mr. Motherwell). I do not need any memory at all to recall the part the hon. gentleman played when in the ranks of the foe. There dins in my ears even now the battle cry against special privilege that rang through the Progressive press and from Farmer and Progressive and Liberal platforms in western Canada. Special privilege was the curse of the nation, special privilege was

Bounty on Hemp
something against which every righteous man, every honest man, strikes his blow. And in that battle right in the ranks, yes, in the very front, stood the hon. Minister of Agriculture, and if he did not carry the flag or .ride a horse he at least beat the drum. But protection now is all right so long as it is mild. He finds that he cannot enter the lists now against special privilege because it is borne in upon him that all t'he while he was crying out himself and his newspapers crying behind him, we were giving special privilege ourselves, he says. This town and that town, this province and that province were given special privileges even while we were in the midst of a crusade against it, and what he says is quite true. That'is just what they were doing. There is not a town to-day in all western Canada that lives up for a day of the three hundred and sixty-five to any free trade principle or any antispecial privilege principle-not one of them. Every one of them gives special advantages in the interests of the home town, and if we do it in the case of one town in competition against the other, who is going to say that it is wrong to do it when it is competition between one nation against the other? Consequently the whole failure, yes, the whole futility and utter nonsense of the crusade is borne back into the mind of the Minister of Agriculture. So he stands and professes his faith now; yea he says, though we were sinning against the faith then, even while we were singing the psalms of free trade, I prefer now to come right out into the open and do something so long as it is of a mild type and purely medicinal, and purely for new industries. I was against all protection, he says, because they went and applied it after the industry grew up, but here is a case, he says, where we need a new industry. We need a new binder twine industry in this country. Yes, we have to start it in order that we may not be dependent upon the binder twine industry of the United States. It never seemed to dawn on him that the industry he wants to recreate is the industry that he by his theory destroyed.


William Richard Motherwell: No. It never grew
its raw material.


Arthur Meighen: Oh, but it made its
finished product, and it is the finished product we are interested in.


William Richard Motherwell: More interested in
the raw material.


Arthur Meighen: Then it is not that the
minister wants binder twine. He wants hemp, is that it? I thought we had to have our
binder twine industry in order to have it made right here at home and not be dependent upon a foreign country for our supply. That is what he was arguing, certainly it was.


William Richard Motherwell: Get the hemp and
you will get the binder twine.


Arthur Meighen: I am afraid the minister had better stand on the ground he was on. It is a whole lot better than the ground he is being jerked to now. Certainly we want our binder twine. Everybody wants that.
I want to answer what the hon. member for Saskatoon (Mr. Evans) says. It is too frequent a practice to give from some recollection reservoir bold and unstudied figures as to what was paid in days gone by for various articles. I took the trouble to get from authoritative sources that I am prepared to show to any member of this House the wholesale average prices of binder twine through all these years, and I have them year by year. It is the wholesale prices that determine the effect of the policy. You may at a certain period have a costlier system of distribution than at another, you may in earlier times in western Canada have had a costlier distribution of binder twine; it is the wholesale prices, however, that are the test of the value of the policy in so far as you judge the value by the results. Now the figures are these, and I ask hon. gentlemen to recall that it was in 1897 that the Minister of Finance reduced the duty from 12i to 10 cents and in 1898 that he wiped it all away. Consequently we would expect in 1899 the great benefit to the consumer to be most marked. Now I will read the figures. In 1895 the average wholesale price -this is for 500 feet of binder twine, and the rest would be in proportion-was 6 cents; 1896, 5f cents; 1897, 6 cents; 1898, 5i cents; 1899, 9 cents. That was the first year of free trade in binder twine.


Andrew Ross McMaster: Has the right hon.
leader of the Opposition got comparative prices of the raw material for those years? That is very necessary to have, because yom raw material may have gone up in price.


Arthur Meighen: No, I have not the
comparative prices of raw material. I thought I was answering direct contradictions as to the value of the finished product; that is what I was answering. But if the test is to be switched to raw material I am prepared to get the figures on that too. In 1899 the average price was 9 cents; 1900, Hi cents; 1901, 7i cents; 1902, 11 cents;
Bounty on Hemp

1903, 10] cents; 1904, 10] cents; 1905, 9] cents, 1906, 10 cents; 1907, 9f cents; 1908, 8i cents; 1909, 7J cents; 1910, 7] cents; 1911, 6] cents; 1912, 7] cents; 1913, 9| cents, 1914, 9 cents; 1915, 7-f cents; 1916, 9| cents; 1917, 15#; 1918, 23.1 cents; 1919, 21] cents. These latter were war-time years and are not a fair criterion. But the period before the war would be a fair criterion, and in so far as the value of the product and the cost to the consumer is to be the test of the wisdom of the policy I wonder what is the lesson of these figures that I now produce. What do they show? Out of twenty-five binder twine factories-I have not the exact number immediately at hand-at least fifteen went into bankruptcy. They were not merged in some other concern, they went into bankruptcy. Some three or four of them were destroyed by fire, and were never rebuilt. Two or three others went into other lines of production mainly, continued to produce a small fraction of binder twine for a while and stopped; and at the time these figures were compiled there were three binder twine factories left in this Dominion-three that, in my judgment, were kept here and operated on a small scale, on such a scale that it is now described by the Minister of Agriculture as an extinguishment of the industry which, we are told, is to be recreated in this Dominion, the three being maintained so that the people of the country would not see the lesson as respects the duties on binder twine. It is because of these results of the industry, accompanied by these results to the consumer, that the government now puts its hand into the strychnine bottle and produces a little grain in the hope that they will be able to get it down with those whom they have misled for years in this House. "Yes," the Minister of Agriculture says, "We are determined this will only be temporary. Did we not adhere to that in connection with the bounties on oil? Did we not adhere to it, even against my best judgment, ' in connection with the bounties on linens and on flax? ' Yes, they adhered to it and lost the linen industry, and to-day it is in process of emigration to the United States. I think the case of oil is practically the same, showing that these are not the proper methods by which to place the producer in Canada on a level with the competitor in another country; and surely common sense teaches us that unless you do that, your industry of whatever kind -be it agriculture, be it industrial, be it mercantile-it will go where it can get its best results for its investment. You have got to have conditions where you will have equal

results for your investment here with those in another country, and you must continue those conditions or you will not have that industry. The government now is only bringing in this method of doing it because it has not the courage to swing right about, and do in respect of binder twine what it is doing with respect to artificial silks. I wonder whether it is right to have the "strychnine system" in connection with binder twine and -shall I call it?-the continuous and immortal arsenic system in connection with silk.


Andrew Ross McMaster: Both poisons.


Arthur Meighen: Both poisons, yes. The Minister of Agriculture chooses the medicine, apparently, according to the character of the particular applicant to the government. I hesitated somewhat to define what the test was which the Minister of Agriculture adopted, and I venture to say that if he dares to do it he will hesitate a great deal more than I do.


John Millar: Was it not true that after a goodly number of these binder twine factories went out of existence the output of the few, at least in some years, exceeded the output from the many?


Arthur Meighen: I would not deny that it was a fact that the output from the few, in a sporadic year or two, did, for special reasons. I knew the reasons at the time and I can give them to the hon. gentleman from memory. They were because of the excessive demand in the factories to the south, demands for special purposes far away. Those were fortuitous and exceptional circumstances. The demand for binder twine has multiplied six times since the days when the duties were removed. We are now only producing ten per cent of the demand, and the industry is in a condition where it must be given rebirth at the hands of the Minister of Finance and the Minister of Agriculture.


Mr. SALES:: The right hon. leader of the Opposition has quoted an increase to 9 cents in 1899, but if my right hon. friend takes 1911 he will see that the price was 6J cents.


Arthur Meighen: That is right.


Thomas Sales: It has been as high as 11 cents, and even in the war year of 1915 it was 7f cents. If the right hon. gentleman will explain the reason for these fluctuations it might help to clear the situation.


Arthur Meighen: Fluctuations are inevitable, but the lowest average by far was before the duty was removed. The highest

Bounty on Hemp
average was after that. The fluctuations would doubtless be due to circumstances such as suggested by the hon. member for Brome 'Mr. McMaster). But when you get the average always higher after the duty was removed than it was before, it is pretty hard to deduce from that an argument that the removal of the duty was a great relief to the consumer.


Thomas Sales: It is equally unfair to deduce that the raise to nine cents in 1899, was due to binder twine being put on the free list.


Arthur Meighen: I did not say that.


Thomas Sales: With regard to the binder twine industry as it exists to-day I had the pleasure of visiting Brantford. I know they have increased their plant from time to time.
I have talked with the manager there and he does not want any protection. The right lion, leader of the Opposition smiles.


Arthur Meighen: You know why that was done?


Thomas Sales: I can quote the manager's own words. He said "Our industry is growing faster than we can take care of it." So that instead of being in a dying state, as the leader of the Opposition would lead us to believe, it is in a very flourishing condition.


Arthur Meighen: Supplying only ten per
cent of the Canadian market.


Mr. MILNE:: We heard from the hon. member for North Winnipeg (Mr. McMurray), about the International Harvester combine.
The government at the present time
4 p.m. are maintaining a tariff wall to protect that huge combine, and yet in a very few weeks they propose spending millions of dollars to smash it. This looks to me rather like folly, but perhaps I am not viewing things in the right light. I have some figures here that might be of interest to the leader of the Opposition. I secured these figures from the Bureau of Statistics and they give the index price of certain materials. Taking 100 as the index figure for 1913 it is interesting to know that binder twine is one of the lowest, standing at 130. I will read the index price of the products of a few other industries and see where they stand. Machinery stands at 170.2; that is the index figure for 1922. Fibrous textile products stand at 140.9; building and construction materials at 165.1; binder twine at 130.5; coal oil at 125.4; hardware 186.3. These figures, it seems to me, show that the free trade product is the lowest in price compared with other commodities we have here. If the
idea is to cheapen the products we have to buy, the government are taking the wrong course with respect to the binder twine industry, the profit of which is the lowest in the list of manufactured articles which I have read.


Samuel William Jacobs: I was somewhat interested in the vigorous remarks of the leader of the Opposition (Mr. Meighen) when he painted this doleful picture about the passing of the twine industry by the action of the Liberal government in 1897. I should like to ascertain from him, seeing that his government was in power from 1911 to 1921, what steps that government took to correct the trouble which was brought about by the Liberal party in 1897.


Arthur Meighen: We were continually being met by a free trade crusade engineered partly by the hon. member for George Etienne Cartier (Mr. Jacobs). There was only a certain amount that we were able to do. We did very well; and, moreover, through most of that time war conditions prevailed. Under those war conditions, it was impossible to recreate industries of that character in this country. I do not know what the hon. member means. Does he mean to chastise us because we kept the tariff averaging as low as we did? He is rather late in the day in commencing that course. I do not know but that on more articles than one we did keep the tariff lower than was for the ultimate benefit of the country. If I were to plead guilty to any indictment, that would be the one that I would plead guilty to, but I do not believe that plea will give much encouragement to hon. gentlemen opposite or to hon. gentlemen to my left.
The hon. member (Mr. Milne) said that there was a greater difference between the 1913 price and the 1922 price on binder twine than on most other things, although there were some exceptions. The reason for that is this. The 1913 price was exceptionally high; it was about 35 per cent higher than it was the year before. Hon. gentlemen will see at a glance what a glorious argument resulted from that on the part of the hon. member for Neepawa (Mr. Milne).


Mr. CAMPBELL:: I fail to draw from an examination of these figures any such conclusion as that to which the leader of the Opposition (Mr. Meighen) has arrived, and it appears, going over these figures from 1899 to the present time, that binder twine has not kept pace with other commodities. Let us take freights, for instance. I think transportation charges have considerably more than
Bounty on Hemp

doubled in the period from 1899 to the present time. Wages have probably tripled. I think about as recently as 1909, we could hire a labourer for about 20 cents an hour; in 1919, we would pay the same man 60 cents an hour. Therefore, binder twine still remained as one of the cheapest articles we have. Let us look at the matter in this way. As regards the purchasing power of money, twine is to-day cheaper or just as cheap as it was at that particular time.
The Minister of Agriculture (Mr. Motherwell) made some references to conditions obtaining in Saskatchewan, but I contend that there is no analogy between that and this kind of a bonus to an industry. I do not know that the Saskatchewan government at any time bonused any private industry. The telephone line that received a grant for organization purposes, was a purely public utility; there was nothing in it in the nature of a private concern at all. It is true that the telephone system in Saskatchewan is a joint stock company, but it is owned purely by the individual owners and users of the line.
The leader of the Opposition	(Mr. Meighen) seems to think it is a very serious state of affairs that only 10 per cent of our twine is manufactured in this country. We m'ght just as well say that it is a serious state of affairs that we do not raise one per cent of the bananas used in this country. Sisal hemp and manila are not indigenous to this country, and I am very doubtful whether hemp will ever be successfully manufactured into binder twine in Canada. I do not, however, think there is in this section of the House any hon. member who would not give his best wishes to this industry, and I do not think anyone in western Canada and probably in eastern Canada who does not hope that the industry will be successful. But coupled with that, there is always this fear, that if it be successful, then we shall have an annual pilgrimage to this House to demand a duty on binder twine, and the protective argument will be put up as a reason why we should have that duty. In the end, probably this will cost the farmers of the West a good deal more than they make on the hemp.
Something was said about our being dependent upon the United States, and about building up monopolies in the United States, or being in the grip of American monopolies. As regards the farmer, there is no particular difference whether he is in the grip of an American monopoly or a Canadian monopoly.
I should like to know whether we are not in [Mr. Campbell.)
the grip of a boot and shoe monopoly, a textile monopoly, a farm implement monopoly, and various other monopolies that have flourished under this protective system.


Mr. McBRIDE:: One hon. member on this side of the House has just made the statement that not one of the hon. members in this section will vote for this proposal. I may say there is one member-he need not be an honourable member-who will vote for it.


William Stevens Fielding: Without cutting into the interesting discussion between the leader of the Opposition (Mr. Meighen) and hon. gentlemen to his left, I should like to call attention to a fallacy which ran through the whole argument of the leader of the Opposition with regard to the figures on binder twine. He appears to have assumed that on the Liberal side it was claimed that the tariff governs the price. Nobody ever proposed such a foolish thing as that. Whatever the price of binder twine was from time to time, it was by reason, not of the tariff, but of the cost of raw materials, transportation, labour. All those elements enter into the price of binder twine. It is absolutely safe to make this remark: Whether the price was low or high in any of those years, whatever it was, it would have been so much higher if the old duty of 12J per cent had remained.


Mr. BIRD:: I feel compelled to vote against both the amendment and the resolution, and in doing so I want to give a word of explanation. I voted before lunch for the bounty on copper, and that action of mine led me into a difficult situation amongst my friends on this side of the House, because they harked back to the action I took on oleomargarine the other day. They seem to have some difficulty in following the tortuous course of my actions. I do not want to enter very deeply into this discussion, except to state once more my underlying political philosophy. I think, having stated it, my course will explain itself. I am not here as a defender of any economic theory, because I realize that the people, at least my constituents, cannot live on theories. They are ordinary men and women of flesh and blood, and they have not yet acquired the habit of living under the air-bell of any economic theory. My actions are all in relationship to that view, and I want to say that if the rural dwellers of Canada do not see this yet, they are destined to see it, namely that the following of any theory, no matter how sacred it is as a theory, will not get them anywhere. It has not got them anywhere in the last

Bounty on Hemp
fifty years and, as I gauge the political situation at the present time, it will not get them anywhere in the next fifty. There must be a change in the attitude of mind of the rural dweller of Canada if his livelihood is to be protected, if his standard of living is to be maintained in some reasonable comparison with that of the city dweller. The rural dweller of Canada for a great many years has followed the star of free trade and at last he has fallen into the pit of political impotence; and he is destined to abide there if he cannot become practical in his political allegiance. I spoke as I did on the oleomargarine question rather out of sympathy with the dairy farmer than for any other reason, and I made the mistake of using the language of irony. But realizing the danger of that practice I warned the House in the course of my speech that I was speaking ironically.
I know, of course, that such language is al* ways double-edged, but notwithstanding my warning I found, after I had concluded my speech that I had wounded my friends more than my enemies. I am sorry for that because my sympathies were altogether with the dairyman, as I conceive him, the man who has the practical work to do on the farm in producing the milk. From that point of view I had a great deal of sympathy with his position, although I am not a dairy farmer myself, nor a representative of dairy farmers.


Some hon. MEMBERS:: Order.


Thomas William Bird: It may not be permissible
for me to explain my action on that occasion, but I think it is usual in this House for hon. members to be allowed that privilege.


Some hon. MEMBERS:: Go on.


Samuel William Jacobs: Does my hon. friend not
think that it is too hot an afternoon to hold any post mortem?


Thomas William Bird: I am trying to avoid that.
I took my stand on that question, not as a dairyman or the representative of dairymen, but as the representative of a wheat growing section of Canada; and by no conceivable stretch of the imagination could it be considered that protection will ever benefit that part of the country. I was consistently carrying out my theory of representation when I took my stand on the question of free trade, as I did in the debate on oleomargarine. Now, with regard to my attitude towards copper. That attitude, let me say, owes something to the peculiar character of my constituency. I think I represent the only constituency in Canada that can produce both copper and
hemp, and produce them equally well. With regard to copper and my vote on that question I frankly own that I made concessions to the isolated community to the north of my constituency, a community that has practically no representation in this House because it is in the minority and has no influence, to speak of, on the representation in parliament. I make that concession frankly to the people on the north side of the Nelson constituency, not with any idea that it will serve my own purposes, because I do not believe for a moment that it will. This matter of bounties contains no element of principle for me. A bounty, as I look at it, should be allowed or disallowed according to its practical bearing on the interests of the country as a 'whole. I am not admitting for a moment that there is any principle herein contained, and I certainly do declare that so far as my conscience is concerned my action is perfectly clear and straightforward.
With regard to hemp, on which I am reversing my vote, let me state the situation. My constituency, on its south side, is well adapted to the growing of hemp, but the farmers there, although their land will grow this product, do not look upon it as a practical proposition, so far at least as they are concerned. - The Minister of Agriculture (Mr. Motherwell) states that the north of Manitoba is not adapted to wheat growing. I want to correct him in. that regard: There is no part of the west of Canada that can grow wheat to compete with that produced in the Swan River valley, comprising the south part of my constituency, and I make no exception whatsoever. It is recognized to be the best wheat growing section in the whole of the West, and there is no such thing as a crop failure in my constituency. For that reason the farmers are not interested i:i hemp. They believe that hemp producing would involve them in additional work in the fall of the year when attention to their crops is all-important. Moreover, they do not believe that the length of the season in the fall is sufficient for the attention which is required in the proper curing of good hemp. This is not my own opinion, for my own opinion is not concerned; I have it on the authority of a very representative body of farmers in my constituency. They do not think that there is any advantage in this bounty on hemp; if there were, I believe they would possibly be in favour of it. I know from experience that the farmer of Canada is not a theorist; he is not wedded to any theory. And why should he be?
43<!0
Bounty on Hemp

Too long has he been misled by theoretical propositions; he has followed that will-of-the-wisp for all these years and has got nothing thereby. He has been led into the never-ending controversy on the	respective
merits of protection and free trade, which question has blinded him to his own interest, so that he has come out the loser. And so far as I can see he will continue to lose. I think I am representing the attitude of the farmer of western Canada when I say that he has no interest in any theory as such; I cannot conceive his being so foolish as to have any such interest. I believe he is becoming sufficiently enlightened	on	theeconomic and political questions	of	thiscountry and is no longer to be fooled by mere theories. The situation of the farmer is rather suggestive of the method used in the capturing of a gamecock. They bring along a gamecock in capitivity and place it near the free bird. Presently the two become so absorbed in their mutual attentions that the owner of the captive comes along and catches them both. That is typical, I think, of the case of the Canadian farmer. The political parties have succeeded	in	ensnaring the farmer in the controversy between protection and free trade, and in the process the rural dweller has been deceived and has got nothing in the result. One would think that having been so badly left behind he would have learned wisdom; but the occurrences of the last few days show that the farmer of Canada has not learned wisdom yet. He has still the desire to pursue the rut which leads towards no profitable goal. In making this explanation, I hope that my hon. friends will not misunderstand me when I indulge in the somewhat dangerous practice of using a two-edged phrase, because I have no other reason for being here than to help our rural men and women receive a better proportion of the good things of life that are being produced in this wonderfully wealthy Dominion.


Mr. DICKIE:: I believe the government
is advocating this bounty largely for the benefit of my hon. friends to the left, and I do not see why we should spend our time this torrid afternoon trying to force the benefit on unwilling recipients. The free trade Old Man of the Sea seems to have fastened himself around the necks of my hon. friends to the left to the exclusion of vision and good judgment.
I believe that the encouragement of the hemp industry will help our friends materially, but if they do not think so, why spend our 
time trying to force a benefit on them that they are unwilling to receive?


William Charles Good: Mr. Chairman,-


Some hon. MEMBERS:: Question.


George Newcombe Gordon: Order.


William Charles Good: At the risk of offending those who wish to get out of this "torrid" chamber I shall venture to make a few remarks. We have had a very interesting exposition of political philosophy from my hon. friend from Nelson (Mr. Bird). I take issue with him mildly in regard to the application of what I consider to be a very sound principle. When he enunciates the welfare of the nation as' the only principle worth considering in deciding between protection and free trade, I think he is on safe ground. I would suggest that if we are convinced that one policy is better than the other, always bearing in mind the common welfare, then he and I are perfectly agreed. I use the very same principle as a test of either protection or free trade, and from a fairly close study of the matter leaving aside for the time being considerations of political economy, the general policy of free trade works out very much more to the advantage of any nation adopting it than does the policy of protection. If we are going to divide ourselves into a number of classes or communities seeking something for ourselves aS such, I do not know what we are coming to. Certainly I very much question the advisability of taking this position.
I regret that the right hon. leader of the Opposition (Mr. Meighen) is not in his seat. I think he is really too shrewd to believe half of what he said this afternoon. For instance, in reference to his quotation of the prices of binder twine, it must be obvious to him, as was partially pointed out by the Minister of Finance (Mr. Fielding), that there are many other considerations entering into the determination of price. I would add to those already enumerated by the minister that the price index, or the general price level, has to be kept in mind in any comparison of figures.
As for the competition between towns, which was referred to by the right hon. leader of the Opposition, I agree with him that it is just as objectionable and just as unjustifiable as the competition between nations.
I think we are prepared to admit that generally speaking such competition between communities is reprehensible. If so, I submit it calls for just as strong condemnation when indulged in between nations'.

Bounty on Hemp
I think the hon. Minister of Agriculture (Mr. Motherwell) ought to remember the danger of taking habit-forming drugs. In the actual working out of this policy of giving bounties, subsidies or tariff protection, we nearly always find that after we take the drug for a few years we acquire the habit, and it is almost impossible to break it off.
I believe the right hon. leader of the Opposition left a wrong impression on the Hous-e with regard to the binder twine industry. I happen to live near the Brantford binder twine factory-one of the few survivors of the 'nineties. It has been alleged that the abolition of the protective tariff on binder twine brought about a number of bankruptcies and general disaster to those engaged in the industry. I regret that I have not the detailed analysis of the situation which was made two years ago by, I think, the Toronto Star, but, speaking from memory, the actual statistics as to production will not bear out the statement made by the leader of the Opposition. If my recollection serves me, the relative production has not decreased in Canada. And the factory at Brantford has gone ahead by leaps and bounds. The management have had difficulty in keeping up with the demand for their products. It has been impossible to get a sufficient amount of capital in the industry to expand fast enough to meet the growing demand, and this in spite of the fact that they were face to face with competition from the larger binder twine industries in the States. A number of our Canadian binder twine concerns which went to pieces at the time referred to were in the promotion stage. If the right hon. leader of the Opposition looks into the statistics carefully, I think he will find that his statement is not correct, and that to speak of the binder twine industry as having been brought to an emaciated, gasping condition by the abolition of the duty in 1898 is very far from the fact.
One more thought I should like to present to him and to the House, particularly to some hon. members opposite -who have perhaps some lingering belief in the gospel-shall I say?-of freer trade. If industry, speaking generally, could be stimulated by this method which we are so prone to adopt at the present time, which seems very plausible and which I notice commends itself to men like the hon. member for North Winnipeg (Mr. McMurray) and a number of his associates, including the Minister of Agriculture (Mr. Motherwell),-if it could be stimulated in this way, then surely we would have had happier results for following this policy. I submit that a careful examination of the
facts will show that if you stimulate one industry it can only be at the expense of some other industry, that where you build up one you tear down another,. and on the average the whole result is negative rather than positive. I submit as a general principle in that connection that a mistaken ptiblio polioy based on an economic fallacy must lead to disaster. As for me I am quite prepared to stand-


Edward James McMurray: Is it not a fact that the Brantford factory of which my hon. friend speaks so approvingly received its start under a system of protection and that when the tariff wall went doivn it flourished? The very :i lustration he gives contradicts his own argument.


William Charles Good: No, far from it. If I remember rightly this factory was built before the abolition of the duty in 1897.


Edward James McMurray: That is what I say.
_ Mr. GOOD: It is quite true it was built before that time, but it had a very precarious existence for some years and it was on the point of bankruptcy when the present manager took over the job. I had it from frequent conversations with him that the success of that industry has been almost wholly, if not entirely due to careful management. He has stated on more occasions than one, I think even publicly, that he and his associates have no desire for any tariff protection. The success of that factory has been marked since the abolition of the duty; prior to that time they were getting along in a very limping way. These are the facts. I simply wanted to impress this upon the committee-and I am sorry the right hon. leader of the Opposition is not here-that we have tried out this policy in Canada and the results have been disastrous. We ought therefore to pause and examine the course we have taken. Having regard to the results that have been secured from this fiscal policy, we ought to be quite certain as to the basic principles involved before we trust our future to it.
Amendment (Mr. McMaster) negatived: Yeas, 44; Nays, 81.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.

Mr. H. B. McGIVERIN (Ottawa):: Mr Speaker, with the consent of the House I

439?
Bounties on Petroleum

desire to present the tenth report of the select standing committee on Miscellaneous Private Bills.


Mr. SPEAKER:: Under Rule 115, the rules can be suspended in cases of urgent and pressing necessity. The hon. gentleman has not made the point that there is a pressing necessity in this case.
charters separate and apart from the ordinary Bank Act. The purpose of this bill is to extend the charter of these two savings banks for a further period of ten years. It is the usual bill following the Bank Act.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.
Harold Buchanan McGiverin: The explanation is that to-night is the last night for private bills, and that if these bills are not placed on the order paper to-day they will have to stand over.


Some hon. MEMBERS:: Carried.


Hewitt Bostock: I think the hon. gentleman has made out a case for the presentation of the report.



BOUNTIES ON PETROLEUM

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance) moved the second reading of Bill No. 214 respecting the payment of bounties on petroleum.
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Gordon in the chair.
On section 1-Bounty on petroleum.
Harold Buchanan McGiverin: I beg to move:
That in accordance with the recommendation contained in the tenth report of the select standing committee on Miscellaneous Private Bills, the following bills be placed on the order paper for consideration in Committee of the Whole this day:
Bill No. 224 (from the Senate) for the relief of John Samuel McDonnell.
Bill	No.	227	(from	the	Senate)	for	the	relief	of
Margaret Marie Pope.
Bill	No.	228	(from	the	Senate)	for	the	relief	of
Loretta May Girard.
Bill	No.	239	(from	the	Senate)	for	the	relief	of
Herbert Hugh Keller.
Bill	No.	240	(from	the	Senate)	for	the	relief	of
Nellie May DeBlaquire.
Bill	No.	229	(from	the	Senate)	for	the	relief	of
Birdena Frances Wallace LeMay.


[Stage Direction]
Motion agreed to.

[Stage Direction]
A message from His Excellency the Governor General, transmitting Supplementary Estimates for the year ending March 31, 1924, was presented by Hon. W. S. Fielding'(Minister of Finance) read by Mr. Speaker to the House, and referred to the Committee of Supply.

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance) moved the second reading of Bill No. 231, to amend the Quebec Savings Banks Act, 1913.
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Gordon in the chair.
On section 1-Certain charters continued.
Henry Lumley Drayton: Before the bill is gone on with in detail-has my hon. friend had an opportunity of further considering this question, and of making up his mind whether it is not possible to save public revenue and at the same time keep the small well producer going by fixing a limited number of barrels beyond which the bounty would not be paid?


William Stevens Fielding: That suggestion was
offered in several quarters at an early stage of the discussion and I am sorry we have not been able to concur in it. We think that the concession now made is giving all concerned an opportunity of adjusting themselves to the changed conditions.


Henry Lumley Drayton: Does my hon.
friend think that the small producer can go on at all under the new conditions? Or is it a matter of indifference to him?


William Stevens Fielding: As my hon. friend asks
my opinion I rather think they will go on, but my opinion is not worth as much as that of other members who are better informed, perhaps.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed. INLAND REVENUE ACT AMENDMENT
Hon. W. S. FIELDING (Minister of Finance) moved the second reading of Bill No. 187 to amend the Inland Revenue Act.
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Gordon in the chair.
William Stevens Fielding: There are two savings On section 1-Excise duty on cigarettes
banks in the province of Quebec having decreased from $7.50 to $6.

Export Act-Pulpwood


Henry Lumley Drayton: I suppose this
bill is just what it appeared to me to be- I have not had an opportunity of studying it-that it merely carries into effect what we have already discussed and what my hon. friend the Minister of Finance has already explained.


William Stevens Fielding: The first part of the bill provides for a reduction in the duty on cigarettes. The latter part of the measure is in regard to the abolition of the excise duty on beet sugar.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed. EXPORT ACT-PULPWOOD
Hon. W. S. FIELDING (Minister of Finance moved the second reading of Bill No. 242, to amend the Export Act.
Motion agreed to, bill read the second time, and the House went into committee thereon, Mr. Gordon in the chair.
On section 1-Governor in Council may by regulation prohibit export of pulpwood.
Andrew Ross McMaster: Before this clause is
carried I wish to direct a few observations to the House. I think it was the celebrated Doctor Johnson who made the following reply when asked by his landlady as to the condition in which certain food came before him: "Madam, this meat was ill-killed, ill-dressed, ill-cooked and ill-served." Apparently it was undesirable from all points of view. And, with all respect for those who are responsible for this legislation, I have the same feeling concerning it. This is not the first time that legislation of this sort has been brought before the House during the last few years. The Protectionist and Unionist government in 1920 brought in a similar though a wider measure before the House. In the session of 1920 Sir Robert Borden moved:
That it is expedient to bring in a measure to amend the Customs Act, and to provide that the Governor in Council may from time to time make regulations for or relating to the exportation of any article, commodity or material which is produced or manufactured in Canada, and which is, in the opinion of the Governor in Council, necessary or desirable for the use or consumption of the Canadian people, or for the encouragement, maintenance or preservation of any trade, industry, business or occupation, and may by such regulations order and direct that any such article, commodity or material shall be exported only under license issued by the Minister of Customs and Inland Revenue, or by an officer appointed upon the minister's recommendation for that purpose.
I will not read the whole resolution, but I would direct the attention of the House to what I consider very sound observations made
at that time by the now Minister of Customs and Excise (Mr. Bureau). After referring to this legislation he spoke as follows:
For my part, I would like to know of some concrete cases in connection with which legislation of this kind becomes necessary in time of peace and under ordinary conditions. We complain that we have a large debt; that our currency is at a discount; that the balance of trade is against us. Now we are going to place in the hands of the government the power to restrict exports of any kind of commodity. Whatever the reason may be, I do not think that there is any emergency to call for action of that kind. Unless the special committee submit a report on the matter which changes my mind, I shall be absolutely and entirely opposed to vesting such power in the Governor in Council.
I addressed the House on the same occasion and spoke as follows:
This proposed legislation is to my mind so vicious that I wish to have an opportunity given on the introduction of the resolution of speaking to it. It would be very well for the country to be fully advised as to what the government purpose doing. I would have thought that the Canadian nation was thoroughly sick of the government endeavouring to control industry, and it is surely bad enough to have a protectionist government in power with the right to control imports into the country, but it would be worse to have them control exports from the country.
It was on that basis that I opposed the resolution at that time. However, the resolution was referred to a special committee. That committee went into the matter. Subsequently Sir Robert Borden begged leave to withdraw the resolution and it was withdrawn on the 30th June, 1920. I commend
5 p.m. the action of Sir Robert Borden in that connection to the present administration.
The Prime Minister (Mr. Mackenzie King), in some remarks directed to this quarter of the chamber some time ago, referred to the member for Brome (Mr. McMaster) having raised a little altar of his own. I admit the fact. But I would remind him that at least the fires of that altar are not fed by splinters from a broken platform. I would draw his attention to the fact that when he made those observations he stated that he was in favour of the principle of free trade, but in order to be on a level with the United States, who had placed high duties against our goods we had to place high duties against them. I will not enter into an argument as to either the soundness of the economics or the soundness of the logic contained in that statement, but I would direct the Prime Minister's attention to the fact that the United States have no duties, as far as I am aware, against exports from that country of pulpwood or any other commodity: that their desire is to further advance their foreign trade and not
Export Act-Pulpwood

to restrict it. The Golden Rule was said by Mr. Roosevelt to be not only good morality but sound politics; I think it is a particularly wise rule to follow when the other party is very much stronger and more powerful than yourself. " Do as you would be done by." This is more especially desirable when the other party is ten times more powerful than yourself. If we are to prohibit the export of pulpwood from this country what are we doing? We are inviting reprisals. I do not know whether they will come or not but we are certainly inviting them. What would the situation be supposing the United States restricted the export of hardwood from that country? What would the furniture manufacturers in western Ontario do to replace their raw , material, the hardwood that is brought in from the United States? They would certainly suffer, and with them the Canadian people. How long could our cotton mills proceed to carry on their business if there was an export duty placed on cotton, or its export into Canada were restricted? They could not carry on very long.


Robert Alexander Hoey: What about coal?


Andrew Ross McMaster: * An hon. member asks "What about coal?" I was just going to speak of coal. The whole of central Canada is warmed in winter, generally speaking, by anthracite coal brought from the United States, and we who live in central Canada would not contemplate with any equanimity our source of supply being interfered with. Indeed, suppose the United States in reprisal adopted an embargo against degrees from American universities? What would happen in that connection, or even if invitations to address Rotarian clubs in that country were prohibited?
What influence has been at work upon the .government to bring them to this frame of mind? The senior member for Halifax (Mr. Maclean) told us that the Liberal party had a frame of mind looking towards free trade. Restriction of exports is not an evidence of a frame of mind reflecting free trade. What has deflected the Liberal party from its frame of mind, according to the senior member for Halifax? Is it those gentlemen in the country whose raw material is pulpwood and who wish to be in a position to buy pulpwood cheaper because there will be fewer buyers in the market? If it is those gentlemen who think their interest will be advanced by such a restriction, they are very short-sighted and they are making a great mistake. For, what are they likely to run into? If hon. gentlemen will turn up the United States statutes, cumu-

lative supplement of 1923, they will see on page 347 a paragraph in the American tariff which reads:
Par. 1301. Printing paper, not specially provided for one-fourth of one cent per pound and 10 per centum ad valorem: Provided, that if any country, dependency, province, or other subdivision of government shall forbid or restrict in any way the exportation of (whether by law, order, regulation, contractual relation, or otherwise, directly or indirectly), or impose any export duty, export license fee, or other export charge of any kind whatsoever (whether in the form of additional charge or License fee or otherwise) upon printing paper, wood pulp, or wood for use in the manufacture of wood pulp, the President may enter into negotiations with such country, dependency, province, or other subdivision of government to secure the removal of such prohibition, restriction, export duty, or other export charge, and if it is not removed he may, by proclamation, declare such failure of negotiations, setting forth the facts. Thereupon, and until such prohibition, restriction, export duty, or other export charge is removed, there shall be imposed upon printing paper provided for in this paragraph, when imported either directly or indirectly from such country, dependency, province, or other subdivision of government, an additional duty of 10 per centum ad valorem and in addition thereto an amount equal to the highest export duty or other export charge imposed by such country, dependency, province, or other subdivision of government, upon either an equal amount of printing paper or an amount of wood pulp or wood for use in the manufacture of wood pulp necessary to manufacture such printing paper.
That is the situation in which this country may find itself if it attempts to restrict. Surely we have had long enough in this country restriction of the right of purchase; but the modern restrictionist wishes to restrict us in the right to sell, and that may land the country in this undesirable position, that our foreign trade in regard to pulpwood may be considerably prejudiced. I think also I might call the attention of the government to this fact, that the passing or bringing into force of such legislation as this, is to ill requite the action of the American people as regards the supply of anthracite coal which we have noticed for the last few years. In this part of Canada we have had for one or two winters back a scarcity of anthracite coal, and we have found that the United States, although they were themselves suffering from a shortage, saw that Canada got its fair proportion. This is a very poor requital for their generosity in that regard.
What is the real theory, what. is the real principle that one should follow in this connection as in other matters of this kind? I take it that after a Canadian citizen has grown a bushel of wheat, or manufactured a cheese, or cut a log, or cut a cord of pulpwood, he should have the right to exchange that for the very best value he can obtain, either inside or outside of this country. I see no other proper theory or principle to follow.

Export Act-Pulp wood
And this legislation, if applied, is directly contrary to that. This constitutes a bad precedent, but before I touch on the question of this precedent, let me state how this will affect people in my riding.
I do not often make appeals based on how a matter will affect people in my riding. I do not consider myself purely a mere delegate to think simply of the interests of my constituents, but I consider myself as a representative of the whole people, although I am elected from a certain constituency. In this ease I believe the interest of my constituency marches on all fours with the interest of the whole country. Under this legislation a farmer in my riding who wishes to sell a certain quantity of pulpwood, let us say to Richford, Vermont, or to an American paper mill, somewhere to the south, will find himself hampered. He will not be able to get the price that he otherwise would obtain for it. That is unjust; it is not right; it is not consistent with the principles which we would have supposed would animate a party calling itself a Liberal party. It is a bad precedent. If it is right to do this, if it is right, in the interest, let us suppose, of the newsprint manufacturers to limit the right of sale of pulpwood to producers, then it is right, in the interest of the millers, to limit the right of export of the grain producers, the wheat producers. There is no limit to the application of this principle, once it is admitted. It is a most unwholesome precedent.
I had the honour to be a member of the last parliament, and I took some part in the consideration of public questions which came before that parliament and in the debates which w'e held. One of the strongest arguments which we used against the continuance in power of the distinguished leader of the Opposition and the group which surrounded him, was that they were too fond of tryina to govern this country by orders in council. We stated that time and time again in the House, and the matter went pretty widely throughout the country. This was one of the reasons, one of the concomitant reasons which led to his defeat. Now what do we find? We find that this unwholesome practice of government by order in council is introduced in connection with this legislation; that some fine morning three months from now, if this legislation passes, the farmers may find that an order in council has been passed in Ottawa restricting their right to sell certain of their wood products to the United States.
When Clovis, one of the first of the Frankish kings was baptized into the church of the day, St. Remi said to him: "Courbe la tete, fier Sicambre, adore ce que tu as brule, brule
ce que tu as adore." "Burn what thou hast adored and adore what thou hast burned." I do not know who is the St. Remi who has given this advice to the present administration but I do know that in this regard the present administration is doing precisely what St. Remi advised Clovis he should do.
I may bring my remarks to a close. I do not wish to detain the committee, but I know that I am on sound Liberal ground in making the protest that I do. I cannot, however, fail to think that a picture which I see before my mind is a somewhat true picture. I see the present administration as a ship, the Prime Minister as its captain, the Minister of Finance as its first mate, and the Minister of Justice as its second mate. In accordance, it seems to me, with orders issued by the second mate, the first mate has thrown overboard the compass. It had become somewhat depolarized before it was confided to the deep. The chart has followed. The starboard watch-for "starboard" means the "steer-board," the side which controls the ship-* watch the chart going down into the ocean, with their faces wreathed in smiles. The port watch do not feel quite so happy. They wonder whether it is worth while launching the life boat in order to recover the chari before it sinks into the ocean. While they are contemplating and waiting, the chart goes down, down, down! No chart, no compass! The ship without a course, without a compass, without a chart, is driven on by this wave of protectionist feeling and wind of protectionist sentiment, until it will, I am sorry to say, inevitably be shipwrecked on the rock of a hostile and, I am afraid, justly exas perated public opinion.


Mr.   POAVER@: I wish to make just two or three remarks at this stage, since I intend to move the six months' hoist on the third reading of the bill. I simply wish to point out to the committee and to hon. members representing certain rural constituencies, that the bill as it is now submitted to the House purports to prohibit the exportation of pulpwood from all lands, the bill to be put into force by order in council at any time after publication of the regulations for four consecutive weeks in the Canada Gazette. What does this mean? It is true it has been intimated to the House by the Minister of Finance, and I think by some other speakers, that the bill will not have for effect the prohibition of the exportation of pulpwood cut from lands belonging to farmers. We have the word of the Minister of Finance to that effect and I am quite willing to take it; I believe he will stand by that promise.
Export Act-Pulpwood


William Stevens Fielding: I did not say that absolutely. What I pointed out was that suggestions of that character had been offered and would be considered; but I gave no decision on the point.


Charles Gavan Power: That only makes my argument stronger.


William Stevens Fielding: Perhaps.


Charles Gavan Power: I am glad that the minister has made that statement. At any rate, the government promises to consider the question as to whether or not the exportation of pulp-wood to the United States from 'lands belonging to farmers will be prohibited. I think that so long as the present government remains in power it is highly improbable that it would go the extreme lengths mentioned in the bill. But what guarantee is there that the party led by my right hon. friend (Mr. Meighen) may not some day come into power-stranger things have happened, strange things happened yesterday-and do just what the bill proposes? If I understand rightly the views of the right hon. gentleman and those of his followers, they are pledged to prohibit absolutely and totally the exportation of pulpwood from all freehold lands in the Dominion. In what position would my hon. friends be placed who come from the border counties, such as Brome, and a number of constituencies in Quebec and Ontario where the pioneer settlers in what I might call the backwoods are obliged, in order to cultivate their lands and to eke out their existence while discharging their homestead obligations, to sell pulpwood? In what position would they find themselves if after four weeks' notice they were told that they might no longer export wood to the United States? They would find that the price of pulpwood had so diminished that it would not pay them to take it off their land. I simply warn my colleagues on both sides of the House of the results that will attend this legislation, and I sincerely hope that while there is yet time the government may decide to postpone further consideration of the bill until the commission which it proposes to appoint shall have made a full report on the matter.


William Charles Good: Last year, along with other members of the House, I got frequent communications from a Mr. Barnjum, who was interested in the preservation of our forest resources. I think we were all very much impressed with the representations made by him in that connection; we were impressed with
 *
the tremendous importance of preserving our forest resources against fire and damage by insects, and so on. Those communications have continued during this year, and I have noticed one rather singular and to me significant fact in connection with the very excellent representations regarding the preservation of our forest resources, namely this, that those representations usually wound up with the recommendation that, as our supply of pulpwood was rapidly being exhausted, we should prohibit its export. I have looked into these representations and I want to say briefly that so far as I can see the parties who were-I would not say, using Mr. Barnjum, although the circumstances would seem to suggest that idea-at all events, those who were interested in the prohibition of the exportation of our pulpwood apparently wanted to prevent competition from the other side. The statement was made, for instance, that we should build up the pulp industry on the north side of the St. Lawrence rather than on the south side. Well, I submit that it does not make any difference to the demands on our pulpwood whether the pulp mill is on one side of the river or the other; you will use the same amount of pulpwood. I am of the opinion, from my careful reading of the representations and the recommendation to which I have referred, that the very necessary precautions that we ought to take to preserve our forest resources have been used as a cloak for an attempt to carry out a policy intended to benefit a few pulp men in Canada by protecting them against competition for the purchase of pulpwood from the other side. That is the way I regard the situation, and I cannot but feel that the whole thing in that respect bears a sinister aspect. Let me say that I am absolutely in sympathy with every possible effort that either this government or the provincial governments may make to protect and increase our forest resources. But I consider that the proposition to prohibit the exportation of pulpwood has no connection whatsoever therewith, and that the bill now before the committee giving this power to the Governor in Council is a very dangerous and objectionable measure.


[Stage Direction]
Section agreed to.
Bill reported.
Mr. Fielding moved the third reading of the bill.
Charles Gavan Power: I move that the word "now" be struck out and that the words "this day six months" be added after the question.

C.N.R.-Construction



CANADIAN NATIONAL RAILWAYS- CONSTRUCTION

[Stage Direction]
Hon. GEORGE P. GRAHAM (Minister of Railways and Canals) moved the third reading of Bill No. 234, respecting the construction of Canadian National Railway Lines.
Arthur Meighen: Mr. Speaker, I desire to move an amendment to this motion and to refer but very briefly indeed to the debate of yesterday on the same subject. It will be remembered that I endeavoured to show the House yesterday that heretofore all the moneys required for railway construction, capital investment, deficits, all purposes connected with our railways, were, under the practice that had prevailed, included in the estimates and consequently the country was informed each year as to just what the commitments of the nation were with respect to our railways. I endeavoured to show that in that way parliament had retained control over the annual expenditure. These were the principles that were embodied in the practice. It will be recalled that exception was taken to my statement at the time by the Minister of Finance, who stated that the estimates merely provided for deficits for such moneys as were needed for administration and operation. A somewhat sharp difference of opinion arose. I adhered to my view. Well, it is scarcely necessary to say that the facts bear me out. But I go further. The law of the land provides that; the law of the land compels it, nor did the late government ever attempt anything else. The Canadian National Railway Act in section 16 reads as follows-I shall not read it all:
Expenses shall be paid out of the receipts and revenues. Deficits sha/11 be payable out of Consolidated Revenue Fund. ,
But here is the precaution:
In the event of a deficit occurring at any time during any fiscal year the amount of such deficit shall from time to time be payable by the Minister of Finance out oS any unappropriated moneys in the Con-
C.N.R.-Construction

solidated Revenue Fund of Canada, the amounts paid by the minister under this section to be included in the Estimates submitted to parliament at its first session following the close of such fiscal year; and in the event of a surplus existing at the close of any fiscal year such surplus shall be paid into the Consolidated Revenue Fund.
Now as to moneys to provide for capital investment, these are covered by section 23, which reads as follows:
With the approval of the Governor in Council-
This is the section that was in question with the now celebrated Hotel Scribe:
With the approval of the Governor in Council. . . sanctioned by the Minister of Railways and Canals, the company may from time to time construct and operate rail was' lines-
Exactly the wording of the present legislation.
-branches and extensions, or railway facilities or properties of any description in respect to the conduction whereof respectively, parliament may hereafter authorise the necessary expenditure, or the guarantee of an issue of the company's securities. A copy of any plan and profile made in respect of any completed railway shall be deposited with the Board of Railway Commissioners for Canada.
And pursuant to those laws of this parliament every dollar for the purposes of the railway, whether to be raised by guarantee or advances in cash, was included in the estimates. The House will scarcely be surprised to learn that when the bill was going through in connection with the loans to the companies, although nothing else was ever intended but that the money should be each year voted by parliament, hon. gentlemen opposite rose and insisted that a clause go in compelling the submission to parliament. That submission was immediately adhered to and a clause put in, and these hon. gentlemen now, and chiefly the Prime Minister, who at page 1539 of the Hansard of 1919 railed in derision at the government for not having a clause in to provide that each year the money should be submitted in the estimates, and who declared that without it parliament would lose all its control, and who as a consequence had the clause put in, now comes to parliament with a bill and apparently is going to get the quiescent approval of this House to provide that the government does not need to put in the estimates any more the moneys advanced to the National Railways for construction purposes. This is of course a change of front, but a change of front is the invariable rule, in fact it is about the >
only consistent thing about the government-a change of front on every piece of legislation and policy. I for my part desire to do what we did, and did willingly, in 1919. I desire to provide for the retention by parliament of its control

year by year of the amount of the people's money that is going out that year, and I therefore move, seconded by the hon. member for Vancouver Centre (Mr. Stevens):
That the said bill be not now read a third time, but that it be referred back to Committee of the Whole with instructions to amend same so as to provide that the money or guarantees of money required for the purposes of the said bill must for each year appear in the estimates and be voted by parliament.


William Stevens Fielding: Mr. Speaker, that every appropriation for the public service and every obligation assumed in the name of the government of Canada shall be subject to a direct vote of the House of Commons is a principle to which we can all subscribe. But I do not agree with my hon. friend in his insistence that all items should appear in the estimates. He said, using a quotation a moment ago, that it was essential that the House should know year by year the outgo for the year. Now there is nothing in the law which my hon. friend has quoted to show that it is essential that all items shall be voted in the estimates. The essence of the law is that the moneys shall be voted by parliament, an<^ parliament is now being asked to vote the moneys for this particular purpose. Again and again in the course of the discussion yesterday the hon. gentleman said that we were asking for a blank cheque. He magnified the situation as to how the Minister of Railways might enlarge or diminish or lengthen the mileage of the railways. In that case the essence is that a railway has to be constructed from A to B. That is the vital question. But if the mileage estimated by the engineers is sixty-two miles, and it turns out to be sixty-one or sixty-three miles, there is no vital error if you take the money that is appropriated and apply it to that purpose. There is no blank cheque so long as you state your sum and state the purpose for which it is to be voted. A railroad from A to B shall be constructed, and the sum is stated and you cannot go beyond that. Again I say, the vital question is not that the item shall appear in the estimates, but that the money shall be appropriated by a vote of parliament.
I called the attention of my hon. friend to the fact that the railway subsidies involving millions of dollars have always been voted in a separate bill. He said no, and later qualified that and said perhaps-he was not sure. I am sure that these railway subsidies, and they are quite akin to what we are doing now, have again and again been submitted to this parliament by a separate vote. Therefore I see no wrong in these railways being treated separately.

C.N.R.-Construction
There is the further point, the reason for that. Let us take as an illustration the resolution on the order paper to loan $10,000,000 to the Montreal Harbour Commission. Here is a case in which we are not going to vote the money year by year in the estimates. We are enacting a law; providing the required amount; we do not limit the harbour board to a particular sum for one year.


Arthur Meighen: Will the Finance Minister permit a question which will bring the matter to a point? Will the minister tell us why it was wrong in 1919 to provide authority to the government to advance money for the construction of railways, for the National lines, and why it is right to do it by legislation in 1923?


William Stevens Fielding: I do not quite recall
what happened in 1919.


Arthur Meighen: I have Hansard and the bill here.


William Stevens Fielding: As far as my impression is concerned I do recollect the question. However, I do not want to dwell unduly on this matter. Is it not a reasonable proposition that instead off asking for money each year provision should be made for carrying on the work continuously? These railways are not to be completed in one year, neither is the harbour of Montreal. In both cases we vote a sum estimated to be sufficient for the purpose, and if it is not expended in one year it is expended in another. In both cases parliament has given the necessary authority. All that my right hon. friend has said regarding the authority of parliament is complied *with in this resolution. We have a distinct vote for a distinct purpose, we have a distinct limitation of amount, and what more can be asked? The Minister of Railways pointed out that if you limit the amount to a sum for the particular year you may stop the operations at the end of the twelve months. As long as you have designated the roads [DOT] to be constructed, as long as the terminal points are indicated, as long as the amount is limited, what earthly good is to be accomplished in the month of December by telling the Minister of Railways that he must stop and not do anything more? It is not reason, it is not law, it is not common sense.


Robert Forke: I listened very carefully to the reading of the section of the Railway Act by the leader of the Opposition which applies, and I am forced to say that I came to the same conclusion that the Minister of Finance has just stated-there is a very specific provision that the money shall be voted by parliament. I can find nothing in the statute which requires that the money shall be voted year by year. I should just like to remark parenthetically that some very wonderful things must have been taking place in parliament in years gone by judging from the remarks we have heard from the leader of the Opposition. However, I for one am not so much interested in what was right or what was wrong in 1919. What I want to know is whether it is right or wrong to carry out what we are interested in at the present time; and I cannot see anything in the act-


Hewitt Bostock: Is it the desire of the House that we should take a vote before taking recess?


Robert Forke: I am through.


Some hon. MEMBERS:: Go on.


Hewitt Bostock: We will proceed by unanimous consent.


Robert Forke: I was just finishing.


Hewitt Bostock: I do not wish to interrupt the hon gentleman.


Robert Forke: I can see the reasonableness of what is proposed. The railway building is to be spread over a period of three years but is to be carried on from year to year. We know how much it is going to cost, and therefore, it does not seem to me to be unreasonable to vote the money for the construction of these lines at the present time. However, I want to remain within the strict reading of the law and if the leader of the Opposition is right in his contention that what is proposed here is against the law, of course, we will bow to the decision.


Hewitt Bostock: Is the House ready for the question?


Henry Lumley Drayton: Just a word in answer to what the Minister of Finance has said. He claims that our position is not sense, is not law; I do not know how much further he went, I simply remember that much. Now, let me read what the present Prime Minister said on this subject. His words are to be found at page 1539 of Hansard for 1919. He said:
If parliament wishes to part with the last vestige of the control that it has over the executive, we should pass this clause, but if parliament wishes to retain any control it may have over expenditures this clause should not be permitted to stand. If money is needed for the carrying on or improvement of the Grand Trunk system, let the minister come to parliament, just as the government does in regard to vother appropriations that may be necessary, state in parliament what money he needs and have that money voted by parliament
C.N.R.-C (instruction

I do not think it is too strong a term to say that this section is thoroughly vicious in that it deprives parliament altogether of its control over the supplies that may be necessary for this purpose. Under this term "the operation or improvement of the Grand Trunk system" the minister can spend public money for any conceivable purpose in connection with these roads, building hotels, branch lines and stations; he can go into any constituency in this Dominion where the railway is going -to run and find that this particular t-own needs this improvement or that particular county needs that improvement-
And so on. That is what the Prime Minister thought in 1919.


Mr. MACKENZIE KING:: There has been a change of government since then.


Henry Lumley Drayton: There has been a change of government, yes.


William Lyon Mackenzie King: A different government altogether.


Henry Lumley Drayton: The ideas my right hon. friend had when he was here are absolutely and entirely different from the ideas he holds now that he is over there. What was absolutely wrong when he was sitting here is absolutely right when he is sitting on the treasury benches. What was practically misappropriation of public funds when he was in opposition becomes a public duty entitling him to make the expenditure when he sits there as leader of the government. Of course it is a different government. That is the whole point. It is not necessary to argue this matter any further. The Prime Minister himself gives the House the answer: He was here before, he is over there now. The facts are the same. Surely they are the same to this extent at any rate: It is a first rate thing for the country as a whole, and for parliament, to know exactly what we are spending on railways, to know each twelve months where we stand.


William Lyon Mackenzie King: Is that not
exactly what the Minister of Railways is doing?


Henry Lumley Drayton: Not at all, that is exactly what the minister is getting away from. We might just as well be clear on that point; there is the whole question. Previously we had to have our twelve months' programme which covered everything including deficits and construction. My hon. friend's bill this year covers construction just as it did before but we will not get the complete annual statement as we formerly did. Under the estimates parliament has got some control, but under this bill we shall have none. This policy will enable the government to do in the constituencies exactly what was foretold

by the Prime Minister when he was in opposition. There are twenty-eight constituencies in which they can do practically what they like. Supposing an election comes on? I do not believe there is any prospect of an immediate election, but supposing there was?


George Perry Graham: You never can tell.


Henry Lumley Drayton: Here is the very vehicle for the government's purpose, here is the bait which can be dangled here and there. Parliament has the right to know what is to be done each year and has the right to vote money for the purposes of this undertaking. But that right has gone. If parliament wants to do this all right, but let parliament clearly understand what it is doing. The customary practice, the right and proper practice is being changed and the minister will be in a position to say "I am not bound by the approximations given to parliament. The
6 p.m. mileage of these lines are mere approximations, the amounts of money to be spent are mere approximations. I can do as I like, under those approximations, with the credit of this country."


Hewitt Bostock: Is the House ready for the question?


George Perry Graham: I just want to inform my hon. friend that what he has read is not consistent with this bill at all, not in the least. If he will look further into the matter, and calmly, he will find that parliament is making the appropriation, that stated amounts are to be expended every year, and that a full report must be made to parliament of the money expended.


Arthur Meighen: After it is spent.


George Perry Graham: Parliament then has the right to say what further shall be done and if we should overrun certain amounts parliament will have to provide for that.


Mr. STEVENS:: If they are overrun.


George Perry Graham: No deviation, no thwarting of the power or will of parliament, directly or indirectly.


Arthur Meighen: What option has parliament if the money is overrun or spent? How does parliament exercise any control after the money is spent and gone? This is the Scribe Hotel case over again.


George Perry Graham: My right hon. friend is raising a very small point. If everybody is dishonest, crooked, then the thing may go wrong; but if people are fairly honest, with the check of parliament, they will not gt>
C.N.R.-Construction
wrong. Let me point this out. My hon. friend said that this is against the law. This bill in getting its third reading, will be the law when it passes through this House.


Thomas Wakem Caldwell: I can see a very good reason from a logical point of view, why this amendment should not carry. Supposing we pass this amendment, each year an appropriation must be voted to carry on construction for the year. We will vote enough this year to make the surveys on these different lines. It is now fairly late in the season, and it is possible that not more than a survey will be made this year. Next year we must vote money for the construction that it is expected we shall be able to carry out during the year.


Arthur Meighen: Vote it this year.


Thomas Wakem Caldwell: This means that this House will be in session until August. That is a possibility. There is also a possibility that no construction will take place next year. I am in favour of voting the three-years' programme. I am certainly in favour of this parliament voting money to carry on public works, and I can see an object in voting the supply for the three-years' programme, for the reasons I have given.


William Charles Good: I should like to ask the Prime Minister for a word of explanation before the vote is called.


William Lyon Mackenzie King: What is the explanation that my hon. friend wants?


William Charles Good: The Prime Minister has made in the past certain representations which are alleged to be inconsistent with his position today, and I should like some explanation.


William Lyon Mackenzie King: They are not inconsistent. If my hon. friend will carefully read all that has been said to-day, he will find that there is no inconsistency.


Mr. MARTELL:: I was paired with the
hon. member for Halton (Mr. Anderson). Had I voted I would have voted against the amendment.


Henry Herbert Stevens: I was paired with the hon. member for Sherbrooke (Mr. MoCrea). Had I voted I would have voted for the amendment.


Mr. DUFF:: I was paired with the hon.
member for Nanaimo (Mr. Dickie). Had I voted I would have voted against the amendment.


Mr. STEWART (Leeds):: I was paired
with the hon. member for Colchester (Mr. Putnam). Had I voted I would have voted for the amendment.
Motion (Mr. Graham) agreed to and bill read the third time and passed.
At six o'clock the House took recess.
After Recess
The House resumed at 8.30 o'clock.



PRIVATE BILLS


[Stage Direction]
Bill 223 (from the Senate), for the relief of Jessie Anne Epstein.-Mr. Duff.
Bill No. 224 (from the Senate), for the relief of John Samuel McDonnell.-Mr. Jacobs.
Bill No. 228 (from the Senate), for the relief of Mary Elizabeth Conkey.-Mr. Church.
Bill No. 227 (from the Senate), for the relief of Margaret Marie Pope.-Mr. White.
Bill No. 228 (from the Senate), for the relief of Loretta May Girard.-Mr. Hocken.
Bill No. 229 (from the Senate), for the relief of Birdena Frances Wallace LeMay.- Mr. Guthrie.
TMr. Mackenzie King.]
Bill No. 239 (from the Senate), for the relief of Herbert Hugh Keller.-Mr. Euler.
Bill No. 240 (from the Senate), for the relief of Nellie May DeBlaquire.-Mr. Rankin.

[Stage Direction]
Hon W. S. FIELDING (Minister of Finance) moved that the House go into committee to consider the following proposed resolution:
Resolved, that it is expedient to amend The Canadian National Railways Act, 1919, and to provide that no securities as defined in section 26 of the said act, including in such definition equipment certificates or obligations in any form intended to be issued to the public, shall be issued, except those approved as to form, terms and amount by the Governor in Council, and that such securities so approved may be guaranteed by His Majesty.
Motion agreed to and the House went into committee on the resolution, Mr. Gordon in the chair.
William Stevens Fielding: The purpose of this resolution is to restrict in some respects the powers of the Canadian National Railway Company. The numerous companies now comprising the Canadian National Railway system have their independent charters, under which certain borrowing powers are conferred. .These charters are still outstanding; some of the borrowing powers remain unused, and if we take no action whatever it would be within the power of the Canadian National Railway Company to exercise those borrowing powers. What we propose in the first place by this resolution is that no such security shall be issued under those old borrowing powers without the consent of the Governor in Council. In the second place, where they have the lawful right to issue securities and where that issue is approved by the Governor in Council, in that case the Governor in Council shall have the power to guarantee them. It is not likely that those old borrowing powers will be very largely used, because the later legislation confers borrowing powers-both the Canadian National Railway Act of 1919 and the act with which we have been dealing today. A bond or security of any kind now issued by the Canadian National Railway Company is to all intents and purposes a bond of the government of Canada; it is desirable, therefore, that we should recognize that fact in the placing of securities. As I say, it is not anticipated that these borrowing powers will be used extensively; perhaps they will be used quite rarely if at all, but if they are used it will be only with the consent of the Governor in Council, and if bonds are to be

C.N.R.-Securities
issued for any lawful purposes there is no reason why they should not then be guaranteed by the Governor in Council.


Mr.   M A CUE AN@York: Have any bonds of this character yet been issued?


William Stevens Fielding: They have not been issued by the Canadian National Railway Company, but the various subsidiary companies have of course issued bonds in many cases.


Arthur Meighen: I must say I sought in vain to understand this resolution before the minister rose, and now in the light of his explanation my difficulty is enhanced. The minister says that the different companies composing the National system have by virtue of the original charters, which they held prior to the passing of the Canadian National Railway Act, certain borrowing powers, and that he wishes to curtail those borrowing powers by placing upon them a restraint, the restraint being that the forms and so forth must first be approved-[DOT]


William Stevens Fielding: And the propriety.


Arthur Meighen: Well, the resolution does not say so. It simply says, "approved as to form, terms and amount." But that is not the point I am making. The restraint he intends to impose upon these constituent companies who want to issue bonds or place mortgages in pursuance of their old charter powers is that such issue or mortgage shall first have the approval of the Governor in Council, and once that approval is given the Governor in Council is to have the power of guaranteeing those bonds. Well, my first point is that the resolution does not do that at all. I hope the minister can correct me-or rather, I shall be very much interested if he can; I have not much hope. What does the resolution say? It reads:
Resolved, that it is expedient to amend The Canadian National Railway Act, 1919, and to provide that no securities as defined in section 26 of the said act, including in such definition equipment certificates or obligations in. any form intended to be issued to the public, shall be issued, except those approved as to form, terms and amount by the Governor in Council, and that such securities so approved may be guaranteed by His Majesty.
I direct the minister's attention to the fact that what he is doing is resolving to amend the Canadian National Railway Act, section 26, so as to provide that any securities issued under that section must be submitted to him. Now, what is section 26? It reads:
The company may, with the approval of the Governor in Council, issue bonds, debentures, debenture stock, perpetual or terminable, or other securities. . . in repect of the mileage of the lines of railway which it, from time to time, constructs, acquires, owns or
controls,-'not including the Canadian Government Railways, nor exceeding, with outstanding securities, in the aggregate $75,000 per mile. Such securities may be issued separately in respect of one or more of the company's lines of railway or properties, or in respect of all of its lines, or properties taken together. The company may issue such securities in one or more separate series maturing at the same date or at separate dates, and bearing the same rate or different rates of interest, not exceeding in any case six per cent, and may limit the security for any series or issue to such of the franchises, property, assets, rents and revenues of the company, present or future, or both, as are described in the mortgage or mortgages made to secure such securities.
I have read it hurriedly, but does the minister catch the point? Here is a section which says the Canadian' National Railway Company may issue securities, and it may issue them on the whole Canadian National Railway property or on only part of the property, but they are an issue of the Canadian National Railway Company. It is the Canadian National Railway Company that issues them and undertakes to pay. The security may be on the whole property or on only part, and the minister says it is expedient to amend that so that these securities may be submitted to the Governor in Council. Does he not see that does not affect in the least any security issued irrespective of the Canadian National Railway Act by virtue of the charter powers of one of the companies making up the composite company? It does not affect that at all. He is only touching the securities here, and the Canadian National Railway Company cannot issue a security save as it has authority to do so by the statute.


William Stevens Fielding: The old constituent companies will not issue these securities now because all their powers are transferred and consolidated with the Canadian National Railway, and therefore any securities issued would be issued by the Canadian National Railway, but we were advised that there was quite a possibility that the power outstanding would authorize the Canadian National Railway, in virtue of the consolidation of the various constituent companies, to issue securities. At all events it was thought well to make it sure that if any securities were to be issued they should be made subject to the Governor in Council. It may be that we are simply making assurance doubly sure, but the legal officers thought that such action was desirable.


Arthur Meighen: I have not struck the section yet, but I am satisfied that there is a section here already which says that all securities issued by the company shall be approved as to form and so forth by the Governor in

C.N.R.-Securities
Council. That is in all these things. Very well, the minister has that now. It does not matter whether he has it under the old powers or not. As a matter of fact, I do not care what anyone says; it is too obvious to admit of discussion. The Canadian National Railway Company cannot issue a security unless it is authorized by the act creating the company. It is given certain powers by that act and it cannot get powers from any other company. It is created by a single act, and these powers it exercises in issuing securities are restrained already by the very terms embodied in this resolution. Consequently it seems to me the minister is not doing what he set out to do. It may be he is restraining the parent company, but he is not restraining the constituent companies at all, and my opinion is that he is not restraining anything. I will tell you what the minister is doing in this resolution. He is doing just what he did this afternoon or what his colleague to his right fMr. Graham) did. He is just preparing another bill by which this government can guarantee the bonds of the Canadian National Railway Company and not come to parliament for a vote for the purpose.


William Stevens Fielding: My hon. friend is dreaming. There is not a shadow of foundation for that view. It may be that this is unnecessary, that we already have the power, but the idea that there is any object here of issuing any securities not authorized by parliament is entirely mistaken. All the rights, powers and privileges of the constituent companies I think have been transferred and consolidated in the Canadian National Railway Company. It has been thought expedient to retain all these rights, powers and privileges, but it has been held and with some force that inasmuch as all these rights, powers and privileges have been transferred and consolidated with the Canadian National Railway Company it might have power to issue securities under the borrowing powers of these constituent companies. The most that can be said is that this bill may be unnecessary. There may be something in that view, but the idea that there is any object of issuing securities not authorized hy parliament is entirely mistaken.


Arthur Meighen: We will just see. The Canadian National Railway Company cannot take powers from these other companies. It has not the power to take them. There is no power save what is here. Secondly, the other companies cannot give the powers to them. A federal railway like the Canadian Northern -all of them are federal railways that are in the act, under the provisions of the British 
North America Act-not one of these can transfer its powers save with the consent of parliament. They cannot do it. The Canadian National Railway Company to-day has not any of the powers of these subsidiairy companies except as given to it by this act. To my mind this is pure surplusage. In fact I must say I think it is merely an attempt to cover up the real purpose of this resolution. The minister says, not without the consent of parliament. That is all right. But what he is going to do is to bring down a bill to enable guarantees to be given on the Canadian Northern securities, and once he gets that bill through he can go right ahead guaranteeing them and giving the credit of this country, and he does not need to include the amount in the estimates. Now we will watch his bill.


William Stevens Fielding: We do not need to include the amount in the estimates, but we would in the proper appropriation. If my hon. friend finds in this some mysterious deep-laid scheme I can only come to the conclusion that he has allowed his intense partisanship to lead him astray. There is not a shadow of foundation for anything of the sort. It may be surplusage. It does not create any power, but if there is an existing power to issue securities of the Canadian National Railway then this says that if they are lawful securities the Governor in Council may guarantee them. It may be that my hon. friend is right and that this is covered by the act of 1919. He may be correct in that view, and if he simply argues that this legislation is unnecessary and that we have covered it already that is worthy of consideration. But when he imagines there is some deep-laid diabolical scheme to guarantee something and give the government new powers I can only hope that he will not always see these mysteries in the common things of life. If he takes the view that it is covered by existing legislation, that view is entitled to respect, but I hope he is not going to base any argument on the foolish assumption that there is some dark, deep-laid scheme behind this legislation.


Arthur Meighen: 
William Stevens Fielding: I will bring in the bill.
Resolution reported, read the second time and concurred in. Mr. Fielding thereupon moved for leave to introduce Bill No. 244, to amend the Canadian National Railways Act, 1919.
Motion agreed to and bill read the first time.



FINANCE ACT, 1904-EXTENSION OF PROVISIONS

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance) moved that the House go into committee to consider the following proposed resolution:
1.	That *the Minister of Finance may make advances to the chartered banks and to the savings banks to which the Quebec Savings Bank Act, 1913, applies by the issue of Dominion notes upon the pledge of certain securities, such advances to be repayable within one year with interest at such rate as may be from time to time fixed by the treasury board.
2.	That the provisions of the proclamation dated 3rd September, 1914, made under the authority of the Finance Act, 1914, so far as they authorize the chartered banks to make payments in their notes instead of in. gold or Dominion notes, and so far as they suspend the redemption in gold of Dominion notes be continued in force for a period not exceeding three years after the date of the coming into force of any enactment founded on this resolution; provided that the Governor in Council by proclamation may declare and proclaim an earlier date for the termination of any enactment which may be founded on this resolution ; and
3.	That the Governor in Council during a period not exceeding three years after the date of the coming into force of any enactment founded on this resolution may by proclamation from time to time and for any period or periods declare and proclaim that the export of gold coin, gold bullion and fine gold bars from the Dominion of Canada shall be prohibited except in such cases as may be deemed desirable by the Minister of Finance and under licenses to be issued by him; provided that the Governor in Council by proclamation may declare and proclaim an earlier date for the termination of any enactment which may be founded on this resolution.
Motion agreed to and House went into committee, Mr. Gordon, in the chair.
William Stevens Fielding: The object of this resolution, Mr. Chairman, is to renew what is called the Finance Act of 1914. That is the act under which the government are authorized to make advances to banks as against certain securities. The act was adopted as a war measure, and no doubt was exceedingly useful in the financial operations during the war. It may be said that the war being over we no longer have any need for the act, but experience has shown that the act is still
required; indeed, I am inclined to think that something of the kind will have to become almost a permanent part of our financial system. Under the act as it stands to-day, the act as passed some years ago, the government are authorized to advance to the various chartered banks, and to the banks mentioned in the act, sums of money as against certain securities not specified but left to the judgment of the treasury board. Any securities of which the treasury board may approve can be accepted for the purpose, and the government can make advances against them. This resolution, and the bill to be founded thereon, simply renews the act but is a little more specific: Instead of leaving the whole matter to the treasury board the resolution and the bill will indicate the classes of securities upon which advances should be made. The securities of the higher class beyond all question are acceptable. Then we come to the class of securities as to which there may be more room for question. We do not need any particular advice or consultation respecting the standing of the higher class of securities-the high class Imperial government securities, the Dominion, provincial and municipal securities; but there is also a class included in the general expression of what I may call commercial securities. Therein comes a little trouble. My impression is that when the act was passed it was hardly contemplated that these commercial securities should be used; I think the act was designed to serve another purpose, But there is no machinery in the Finance department for making inquiries into the character of securities of that class. As I said a moment ago we do not need any machinery to know the value of certain high class securities such as Dominion and provincial securities, or high class municipal securities, we can all easily ascertain the value of these; but when we come to what are called commercial securities, commercial paper and securities like that, machinery for determining their value does not exist. I am inclined to think, although that is a mere matter of opinion, that originally it was not intended that these securities should be used in a large way. However, they are to-day a part of our financial system and there is a growing feeling, perhaps, that there should be some method of rediscounting such as this act provides for. Having in view that class of securities we aim at seeking the advice of somebody who is competent to advise. As I stated before, we have no organized machinery in the Finance department for that purpose, and we
Finance Act, 1904

are proposing in this bill that the gentlemen who are trustees of what is called the Central Gold Reserve institution-which was pretty much discussed in the Banking and Commerce committee-shall be deemed an advisory committee and that we shall have the right to ask their advice. They are not to control the matter, but we may at any time ask their advice as to the character of securities that are offered. Again I say we do not need their advice in the case of the higher class of securities; but if some of the banks were to ask us to make advances against ordinary commercial securities it might be desirable that we should have some means of making inquiry into the character of those securities. As the best available means we propose to ask the gentlemen who represent the government and the banks as trustees for the Central Gold Reserve. We regard them practically as an advisoi-y committee from whom we may seek advice if it be needed.
Another portion of the bill relates to the proclamations by which the export of gold is forbidden. We propose, for the present, to continue the powers to prohibit the export of gold, with the addition that if at any moment it may be deemed necessary, that power can be waived and the export of gold continued. These are the main features of the resolution and of the bill which is to be founded upon it.


Henry Lumley Drayton: I think my
hon. friend is absolutely right in continuing the operation of the War Finance Act. It is something that has proved its value time and time again, and I know that the minister needs it to-day in order to keep commerce going upon a proper basis. In connection with the origin of the act it is, I think, quite true that the securities mainly looked upon as securities likely to be offered were not only our own and provincial securities but other first class securities which became available during the war period, namely, the certificates and notes of the Imperial government against which many loans were made. But besides that there was a very direct object, and that object was the discounting of paper covering the wheat movement. That, of course, is really just as good a security as any of these other securities. We only lend to a proportion of the whole amount covered in these wheat and flour transactions, and we are protected by the usual bills of lading, warehouse receipts, insurance and the like. I hope my hon. friend is not, through any advisory committee, seeking to curtail the TMr. Fielding.]
activities under the act having regard to the movement of the wheat crop. I think I am perfectly within the mark in telling the committee that we never had a loss in connection with the operations under the act. I think my hon. friend will agree with me that we have had some pretty bad times to go through in connection with the war, and the deflation period after the war. But we have had no losses and, speaking frankly, I do not think any very great difficulties. II desire to see the minister doing nothing which removes direct government supervision and control of the extension of these credits. I do not know why the act is necess'ary at all to deal with the question of an advisory committee. If my hon. friend, in the discharge of the office, thinks he has to get advice it is always open to him to get it, but I think the responsibility always lies with the department-


William Stevens Fielding: Surely.


Henry Lumley Drayton: -as to either
the granting or the refusal of credit. I repeat, this is a resolution which I think ought to be adopted, and I hope that the main object will be kept clearly in view-that this is a government function with government responsibility.


William Stevens Fielding: I entirely concur in what my hon. friend has said. The government cannot and do not desire to absolve themselves of responsibility and if my hon. friend will look at the bill-


Henry Lumley Drayton: I have not seen the bill yet.


William Stevens Fielding: -he will find that special reference is made there to the class of securities that are regarded as favourable:
Promissory notes and bills of exchange secured by documentary title to wheat, oats, rye, barley, corn, buckwheat, flax or other commodity;
Then the bill goes on to say:
Promissory notes and bills of exchange issued or drawn for agricultural, industrial, or commercial purposes and which have been used or are to be used for such purposes.
It is not intended for a single moment that the government shall absolve themselves of any responsibility, but they may need information as to that class of securities.
As I stated before, we have in the department no organized machinery to deal with them. All the power we take is this. I will give an illustration. Supposing a bank offered us some security which might be of a very

Finance Act, 1904
good character, but of which we had not the knowledge. Of course anybody in a business way can ascertain the value of securities of the higher class; but if securities of a less substantial character were offered, it might be desirable that we should get some information as to their character. We have thought that these four bankers in Montreal could be for that purpose an advisory committee. That does not mean that they are to have any responsibility or that we evade responsibility. It means that if we need information as to the particular class of security, we do not know of any better authority from whom we can ask information than the gentlemen indicated. They do not have the responsibility. We have the responsibility and must take it. This is merely a precaution in 'the case of a possible offering of a certain class of securities, which may be all right but concerning which we require information. Otherwise, I agree entirely with the hon. member for West York that the object is just as he has described it, and our purpose is not to restrict the business which is being done under this measure.


William Findlay Maclean: Is it not a fact that what the minister proposes to do is already being done in the United States by the creation of the Federal Reserve Bank system, and that all these things are being done there? There is absolute need of a similar institution in this country. For the first time the minister has admitted the need of something of that kind in Canada. I have in my hand a memorandum-


An hon. MEMBER:: Read it.


William Findlay Maclean: I have no intention of reading it, but I will send the Minister of Finance a copy. It gives the details of the splendid machinery that has been created in the United States for this very purpose. This is not exactly in the hands of the banks; but it is in the hands of the government; they take charge of it, and the Secretary of the Treasury and the Treasury department are all parties to it. They discount great quantities of prime paper for the banks for all kinds of organizations; the banks get this money at a very low rate of interest, and they are in a position to increase the amount available that they can offer to the public also at a low rate of interest. If we adopt something like that, we have a first class system to deal with the question, and to reduce the rate of interest to the country on the prime securities of the country. This
is being done in England, and almost every country is gradually coming to this system. All the evidence now is, that the National Reserve Bank system of the United States is an absolute necessity for that country; that it secures discounts for everybody entitled to them at a low rate of interest, and that national notes take largely the place of bank notes, in order to give this credit to the country.


William Stevens Fielding: There is no doubt this
measure serves to some extent the same purpose as the national reserve system of the United States. But as we are not likely at this session to adopt the national reserve system generally, we might have this bill as a piece of it, possibly.


Henry Lumley Drayton: The national
reserve system was a thing that was very carefully considered, and it has not cost a great deal of money. Running it in the way we ran it before-and I think my hon. friend will probably continue to run it in the same way-the cost to the country is practically nothing; there has been just a little more clerical work to be done. On the question of interest, it may be interesting to the committee to know that during the whole of the war period at the time these things were being done, the rate of interest which was charged to Canadian customers, varied from 1 to li and sometimes as much as 2 per cent less than the same charge being exacted by American banks. The whole thing was done cheaply.


John Millar: What is the basis on which the amount of these advances is decided? Would a weak financial condition of a bank, it being therefore much in need, be a factor? If so, how would it operate? Would it tend to increase the advance or to lessen it?


William Stevens Fielding: There is a margin of safety, but at the moment I have forgotten what it is. We make a safe reserve in that :espect. We do not advance the full face value, but I cannot tell my hon. friend offhand what proportion we keep. I think that answers the first question. As regards the second question, if a bank is in a weak position, a hasty judgment might be that we should not have anything to do with it. But if the bank has good securities, an advance might help the bank to get into a good position. Everything depends upon the character of the securities. Therefore, a weak bank, if it had strong securities, would be entitled to <he benefit of the act.

Customs Tariff Act


Mr. LUCAS:: I understand there is no limit to the advances, provided that banks hold the necessary securities.


William Stevens Fielding: That is substantially correct.


William Thomas Lucas: What rate of interest is charged to banks?


William Stevens Fielding: Five per cent. It may interest the committee to know/the extent to which this act was availed of. Beginning with 1914, advances to the banks amounted 1c about 812,500,000. They ran up in November, 1917, to as high as $56,000,000; in November, 1918, to $115,000,000; in November, 1919, to $112,000,000, and in November, 1920, to $123,000,000. Since that date they have fallen, and at this date advances under the act are a little less than $7,000,000. The government have from time to time received interest on these advances, and interest alone down to the present time amounts to over $14,000,000.


Henry Lumley Drayton: And it is practically all profit.
Resolution reported, read the second time and concurred in. Mr. Fielding thereupon moved for leave to introduce Bill No. 245, to supplement the Finance Act, 1914.


[Stage Direction]
Motion agreed to, and bill read the first time.
Mr. Fielding moved the second reading of the bill.
William Charles Good: Are copies of the bill available?


William Stevens Fielding: I will send my hon. friend my copy. If there is any objection, I do not wish to press for the third reading; but this is a purely formal matter, and what has been stated in the House covers it exactly.


[Stage Direction]
Motion agreed to, bill read the second time, and the House went into committee thereon. Mr. Gordon in the chair.
George Newcombe Gordon: As this bill has not been generally distributed, if it is the pleasure of the committee, I will read the clauses.


Some hon. MEMBERS:: Yes.
On section 13-Paragraphs (b) and (d) of proclamation of 3rd September, 1914, continued in force for three years.


Henry Lumley Drayton: Paragraphs (a) and (c) are omitted. What do they refer to?


William Stevens Fielding: My notes are not here and I cannot answer offhand. If my hon. friend thinks it important I can send him a memorandum.


Henry Lumley Drayton: I can probably find out in the meantime.


[Stage Direction]
Section agreed to.
On section 15-Repeal.
Sir HENRY DR  AYTON@: I suppose section 15 deals with a matter covered by the new section 14?


William Stevens Fielding: I think that is likely the case.


Henry Lumley Drayton: I believe it is; in other words, it is made a little more permanent than in the existing statute.
Mr. FIELDING. Yes.


[Stage Direction]
Section agreed to.
Bill reported.
Hewitt Bostock: When shall the bill be read the third time?
Mr. WT. F. MACLEAN (South York): Before the motion for the third reading is carried I desire again to enter my protest, as I did in the Banking committee, against the substitution of bank notes for national notes. There is no reason why the banks, when the accommodation is afforded them, should use their own notes instead of the national notes they take from the government as issued by the Dominion of Canada. Those notes are issued in twos, fours and other denominations, but the moment we give the accommodation to the banks they substitute their own notes for circulation. When an advance is made to the banks national notes are given and they should use those notes in the conduct of their business. But they say for advertising purposes they wish to substitute their own notes for the national notes. This cannot be justified, it is time it came to an end, and I hope that when we get a national reserve banking system all the business will be done with national notes instead of bank notes.
Motion agreed to and bill read the third time and passed.



CUSTOMS TARIFF ACT AMENDMENT

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance) moved the second reading of Bill No. 216 to amend the Customs Tariff Act 1907.
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Marcil (Bonaventure) in the chair.
On section 3-Schedule A amended.
Henry Lumley Drayton: I presume we can take it for granted that the sections carry out in each particular the resolutions already discussed?

War Revenue Act


William Stevens Fielding: I assure my hon. friend that that is correct.
Bill reported, read the third time and passed.



SPECIAL WAR REVENUE ACT AMENDMENT

[Stage Direction]
Hon. W. S. FIELDING (Minister of Finance) moved the second reading of Bill No. 230 to amend the Special War Revenue Act 1915.
Motion agreed to, bill read the second time, and the House went into committee thereon, Mr. Marcil (Bonaventure) in the chair.
On section 1-Stamp tax on cheques, etc.
Henry Lumley Drayton: When this bill was first before us I drew my hon. friend's attention to the way in which the tax on receipts was being evaded by specially drawn cheques and bills. At that time my hon. friend pointed out, as was perfectly true, that there are always evasions of every law, but that this was no reason why the tax should be abolished. Of course, my hon. friend found evasions in the past, but not of an act introduced by him. However, I will not go into that matter. I merely ask if he has made provision in this bill to prevent such evasions.


William Stevens Fielding: Yes, we hope the regulations that may be framed will cover the point suggested by my hon. friend.


Henry Lumley Drayton: I should think that would have to be done by statute, or by giving statutory powers.


William Stevens Fielding: If my hon. friend will read section 3 he will see that what he is referring to is covered. He may be sure that we are anxious to profit by his suggestions to avoid evasions. Might I say regarding the bill generally, that there is one feature as respects which an amendment is found on the order paper to-day. I think most other matters contained in the bill have already been discussed.


Arthur Meighen: This is the bill in which is contained the sales tax in its latest form?


William Stevens Fielding: Yes. The resolution on the order paper to-day really gives the final word on the subject as I hope it will be.


Arthur Meighen: The only reason it is final, I suppose, is because the session is closing.


William Stevens Fielding: There are two or three days yet, you know.


Arthur Meighen: Will the minister be good enough to tell us what this last change really
does? As far as I can make out it simply reverses the second last change. Why does he not reverse it openly instead of by this most circuitous phraseology?


William Stevens Fielding: There is nothing circuitous about it.


Arthur Meighen: I do not know who drafted this, but it does seem too bad that we have to put the legislation in this form. The phrasing is anything but clear.


William Stevens Fielding: I think my hon. friend
is mistaken. The material change is this. In the resolutions as they stood prior to this amendment we contemplated imposing a sales tax upon imports. The advantage of that was that we would certainly get the money and get it at the beginning. It was contemplated that' the tax should be paid, for example, by the importer at the beginning and after he had passed the goods on to the manufacturer he would be entitled to refund, because we would then follow the goods into the manufactory and get the tax at the final stage. That would work out, in a way, successfully from the point of view of the government, but it was urged that it would impose a considerable burden on business men; that where large transactions were being carried on, the necessity for financing to meet the additional duties required would be a serious matter. But perhaps even more serious was the representation that in making arrangements for the refund there would be considerable trouble. After full consideration and hearing the many conflicting views on the subject we came to the conclusion that we would not insist upon the payment of the tax at the time of the importation of the goods; that if the importer sold the goods to a licensed manufacturer there need be no tax paid at that stage; we would follow the goods into the hands of the licensed manufacturer and on his completing the transaction and producing something to be sold the tax would be levied then. I think the change that is made is fairly acceptable-I will not say universally acceptable, because no system of taxation can come under that category. But I am quite sure that although there are differences of opinion on the subject, this form is the most acceptable to the business people.


William Findlay Maclean: Have the business men expressed their view in the matter?


William Stevens Fielding: Yes, I have heard from
all sorts and conditions of business men.


William Findlay Maclean: I have been receiving telegrams from them, and I would like to know whether this amendment in some measure meets their presentation of the case.
411(1
War Revenue Act


William Stevens Fielding: I think it does.


Arthur Meighen: I did complain and do
still about the way this has been done. I doubt if there are three hon. members of this House who know what they are doing right now. I do not, and what is more I doubt whether the minister himself does. The tortuous career of this sales tax and its hopeless involutions would baffle the intellect of anybody. The minister took a sales tax that was simple, that was working all right, and he not only piled conditions on it but he kept changing and shifting and backing and filling, and finally placed the whole incidence of the tax on the importer. Other features were changed, but as to that feature the next change was the provision in some way that the importer should pay the tax first and that there should then be some rebate system when the goods reached the ultimate manufacturer. It is the latter that is being repealed, as I grasp it, by this legislation; that is to say, the final circle the minister traversed is being retraversed backwards. What are we to do? The minister says it is all right; that it is acceptable, but what does it mean? This is the proviso we are adding now; I will read it:
Provided that the consumption or sales tax specified in this section shall not be payable on goods exported; or on goods sold by a licensed manufacturer or producer to another licensed manufacturer or producer if the goods are to be used in, wrought into, or attached to articles to be manufactured or produced for sale and which are articles subject to the consumption or sales tax, or on goods imported by a licensed manufacturer or producer if the goods are to be used in, wrought into, or attached to articles to be manufactured or produced for sale and which are articles subject to the consumption or sales tax; or on goods imported by a licensed wholesaler or jobber whose sales are to be accounted for under the provisions of subsection (7); or on goods sold by a licensed manufacturer or producer to a licensed wholesaler or jobber whose sales are to be accounted for under the provisions of subsection seven of this section.
Well, what is left? Something may be left, but I do not know what it is. Why not simply say that in respect of importations to be used in manufacture there shall not be a tax levied until the manufacture reaches its final state? But if it is impossible to do it that way-I know how simple it is until you get into the details-why not tabulate these exceptions so that they will be clear to the mind? If they were tabulated alphabetically, assuming it is essential that we go into all these matters in order to get back to where we were, the thing might be a little more easily understood. In fact, it is hopelessly involved legislation, and I fancy the working out of it is going to be involved. Indeed, I question whether the minister is going to put this legislation into effect. It is to be

deferred until the first of January of next year. Well, his conduct last year was similar with respect to that beet tax; he finally did not put it into effect at all. And when he puts into effect a six per cent sales tax levied at the source and faces the ultimate result of his conduct, I should not wonder if he would quail before it. But if he intends to put it into effect surely it is possible not only to arrive at what we are finally legislating by a direct and immediate route but to express it in clear language. We have arrived at this stage by all sorts of marches forward, marches back, marches in and marches out and up and down; why, it is almost worthy of the Minister of Agriculture and his oleomargarine record. And if the business man finally knows what his position in the matter is-well, 1 do not think many hon. members of this House do.


William Stevens Fielding: There is one point on which my right hon. friend is certainly wrong. He said we took the simple tax that existed and changed it into this incomprehensible thing. I can assure him that the form of the tax was not simple; it was the subject of a great deal of discussion and a great deal of objection. The tax was payable at several stages, something at one stage and something at another. It was a new question, no doubt the ministers in charge of it made an earnest effort to make it simple, but as a matter of fact it was not simple. As to the proposed change, while it may cause a little friction at the beginning, as all new taxes do, I believe in the end it should work out well. There are good reasons for delay in putting the tax into effect, reasons based on the convenience of business men. I assure my right hon. friend that his judgment is hurried in regard to the drafting. The drafting of measures of this kind is always done under the advice of officials of experience, not only in general drafting but in the administration of customs laws, and I would yield to their judgment rather than to my own so far as the drafting is concerned. This drafting which my right hon. friend thinks is unwise has been well considerod; we are advised by those most competent that it will serve its purpose. The delay is justified by good business reasons, and I have no doubt that if we are both spared to come here in a subsequent session my right hon. friend will find the tax in operation and I hope it will be working smoothly.


Arthur Meighen: The minister was told the same thing when he made the last change

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imposing the tax on the importer. He was advised that it would work smoothly, but it was so obviously impractical and unsound that I do not know what kind of advisers the minister has. Why, it immediately raised a storm all over the Dominion, and the minister at once surrendered. I do not know which change this is as to number. After this I think we ought to pay no attention to the first three or four or five budgets but wait until we get the sixth and then deal with it.


William Findlay Maclean: I have received protests from business men against the tax as it now exists. The net result probably of this is that we are adopting a rather vicious principle, and if we are going to have a deferred sale tax the first thing we know there will be an agitation in the country for deferred customs duties. That would lead us to a condition of affairs that would be very annoying, and instead of securing revenue for the government it would postpone the payment until it gets right down to the consumer.


Henry Lumley Drayton: I would really like to understand something about this. As to the first tax I do not know that there was very much difficulty about that as soon as it got going, and I never heard of any difficulty as to just what the law meant. There was a tax on the manufacturer and a tax on the wholesaler. There was a tax on the retailer and so far as the first law itself was concerned when we had it down in the low brackets there was very little of it passed on to the public, in fact, nothing was passed on at all. But what my hon. friend has done in this case, and if I am wrong he will tell me, is simply to adopt Mr. Tinling's paper. Mr. Tinling really is the author of this tax. Mr. Tinling worked out the percentages. He has a tax of six per cent that he works out himself, then he has another tax of 6i or 7 per cent. The whole thing has been worked out entirely for my hon. friend by Mr. Tinling. As I understood the first suggestion it was briefly something like this, that we have a consumption or sales tax of six per cent on the sales price of all goods produced or manufactured, and that the tax be paid by the producer or manufacturer at the time of the sale by him. That was the broad principle we started with. I was not here the other day when the sales tax discussion was on, but there is a question which is immediately provoked right at the commencement of our consideration which perhaps my hon. friend has covered already. We have been to some extent getting away from the intermediary
distributor. Quite a number of producers now sell directly to retailers. There is always a difference in price between what is sold to the retailer and what is sold to the jobber.
I think it would be fair to say that what would be sold to the jobber at 80, taking that for the sake of illustration, would be sold to the retailer at 100 approximately. What is my hon. friend going to do having regard to this tax being imposed as it is at the source? Is the tax to be paid on the 80, which would be the value of the article as sold to the jobber, and which would make a tax of $4.80, or will there be another tax on the same article when sold to the retailer, based of course upon the higher price? If that is done it is going to throw out the trade lists between the jobbers and the retailers, where you would have a tax on the same article in the first instance of $4.80 and of $6 in the second instance. Before going on I would like my hon. friend to tell me if that point has been considered, and what will be the stand taken by the department.


William Stevens Fielding: I can assure my hon. friend that there are many questions that he can ask as to interpretation which I should hesitate to answer because I quite understand that it is a matter where a difference of opinion may easily arise. Section 19bbb I am advised meets the point my hon. friend raises. It reads:
In addition to any duty or tax that may be payable under this part, or any other statute or law, there shall be imposed, levied and collected a consumption or sales tax of six per cent on the sale place of all goods produced or manufactured in Canada, including the amount of excise duties when the goods are sold in bond, which tax shall be payable by the producer or manufacturer at the time of the sale thereof by him; and in the case of imported goods the like tax upon the duty paid value of the goods imported payable by the importer or transferee who takes the goods out of bond for consumption at the time when the goods are imported or taken out of warehouse for consumption.
For the purpose of calculating the amount of the consumption or sales tax, "sale price" shall mean the price before any amount payable in respect of the consumption or sales tax is added thereto.
I think that covers the point raised by my hon. friend.


Henry Lumley Drayton: Oh no, my hon. friend's adviser has not got the point at all, and it is something which would occur to aDy business man right at the very commencement of his . consideration of this tax. I am right in saying that you have sales of the same article to jobbers on the one hand and to retailers on the other. I know I am also right in saying that you have your regular trade lists, and to keep faith with the jobber
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on the one hand and the retailer on the other certain margins are maintained. Now let me go over it again because the minister evidently did not catch my point at all. We will assume that the sale price to the jobber is 80, and the sale price to the retailer 100. On the face of it, it would appear that the tax on the article when sold to the jobber is to be $4.80, and when sold to the retailer $6. Now that is going to throw out the alignment at once. What my hon. friend so far has not told me and what I want to know is if that same article is going to bear different sales taxes or not.


William Stevens Fielding: If they have different prices I should think the tax could be levied on the actual selling price. The minister has in this case as in the case of the customs law a very general power to deal with any question of valuation, but it is a very intricate matter and I would rather not attempt to interpret the act. If there be any room for doubt in the matter I would have it inquired into, but I would not give my hon. friend a definite answer to his questions because it is quite possible there is room for a difference of opinion as to the interpretation.


Henry Lumley Drayton: I would have thought it would have occurred to anyone before we put new legislation on the books that we should have some .idea of how it is going to work out, and the point I have raised is the very first, thing that occurs to the business man. What is going to happen in connection with his lists? It is not a question of varying prices. The prices are stable, they are the same. You have your jobbers' lists and you have your retailers' lists. Now if my hon. friend is going to say that he is going to charge a different sales tax rate when sold to the retailer as compared with the rate when sold to the jobber it simply means that he is putting still further difficulties in the way of cutting out any intermediaries and cutting down the cost of distribution. If it be that in addition to getting lower trade prices, which the jobber always gets, he is going to pay on the same article a lower sales tax than the retailer, then of course the government is certainly not helping the retailer who desires to buy directly.


William Stevens Fielding: It appears to me that the selling price in each case would determine the tax, but if any peculiar circumstances arise which make the matter one of difficulty there is a clause here giving the minister

power to determine the value for taxation purposes. It reads:
Whenever goods are manufactured or produced in Canada under such circumstances or conditions as render it difficult to determine the value thereof for the consumption or sales tax because,-
(a)	a lease of such goods or the right of using the same but not the right of property therein is sold or given; or,
(b)	such goods having a royalty imposed thereon, the royalty is uncertain, or is not from other causes a reliable means of estimating the value of the goods; or,
(c)	such goods ace manufactured by contract for labour only and not including the value of the goods that enter into the same, or under any other unusual or peculiar manner or conditions; or,
(d)	such goods are for use by the manufacturer or producer and not for sale
the minister may determine the value for the tax under this act.
In other words whenever any of these difficulties arise that my hon. friend has in mind, the minister has the power of fixing the valuation on which the tax shall be levied.


Henry Lumley Drayton: The minister
having read those paragraphs will surely agree that the case I mentioned has not been touched at all. There is not a single provision in the cases read by the minister himself where any case such as I have just given him could be considered. I have not given him complex cases but the easiest ones that could possibly arise in the administration of the act, a matter of every day business, whether we are to have two sales taxes on the same standard article or not. We have not had a single thing even suggested one way or the other as to what is to happen. It is on a par, I suppose, with the general miasma which seems to surround this new proposal. We cannot get the facts in connection with the first case so let us take the next one: Manufacturers or producers of over $10,000 annually are to be licensed. I take it from that, and I want the minister to interrupt me if I am wrong, that the fact of this licensing would enable these manufacturers or producers originally, if licensed, to import without the payment of any fee in advance? They are bonded and the like.


William Stevens Fielding: Yes, that is quite right.


Henry Lumley Drayton: I thought probably that would be the.idea. That being so there was no difficulty created under subsection 1 of section 3 as originally brought down. I take it that the whole difficulty, and my hon. friend will correct me if I am wrong, arose in connection with the subsequent resolution which he submitted. Am 1 right in that?

IFar Revenue Act


William Stevens Fielding: I do not know any
stage of the matter in which there were not difficulties and objections.


Henry Lumley Drayton: Well, I want
to get to an understanding of where we are now. If my leader is not able to understand the matter I cannot blame him. No difficulty has arisen as I see it-if there has I want to be informed-under subsection 1 of section 3 which provides for a manufacturer or producer of goods to the value of over $10,000 annually being licensed.


William Stevens Fielding: That is correct; he is
licensed now


Henry Lumley Drayton: That being so,
what is the difficulty that has arisen in connection with my hon. friend's last suggested amendment?


William Stevens Fielding: I thought I stated the
objections that were raised.


Henry Lumley Drayton: They could
not be raised under this as I read it.


William Stevens Fielding: My hon. friend's statement reminds me of the old story of the man who said "They cannot put me in gaol but I am there."


Henry Lumley Drayton: I think there
must have been another amendment brought down when I was away.


William Stevens Fielding: Possibly.


The CHAIRMAN (Mr. Marcil, Bonaveu-. ture):: We are dealing with section 1 which
refers to the stamp tax on cheques.


William Stevens Fielding: No, we are on the
sales tax.


George Newcombe Gordon: Mr. Fielding suggested an amendment to line twenty of section 1.


William Stevens Fielding: That is to the section
dealing with stamps.


Henry Lumley Drayton: I do not know
how we got into discussion on the sales tax, but we are certainly into it.


William Stevens Fielding: We had better keep
on the sales tax.


Henry Lumley Drayton: I think we had probably better keep on it. Then, in connection with the same idea, there is the regulation as to the amount that will be in the hands of the minister. I suppose that would be the Minister of-?


William Stevens Fielding: Customs.


Henry Lumley Drayton: It would be in the hands of the minister to direct any other manufacturer or producer although doing less than $10,000 worth to take out a license?


William Stevens Fielding: ) (Reading):
If the minister determines that any manufacturer or producer, who does not manufacture or produce goods to the value of ten thousand dollars a year, uses a substantial portion of goods which are exempt from the tax in the manufacture of goods which are liable to the tax, as to which the minister's finding shall be conclusive, such manufacturer or producer shall take out a license as required by subsection six of this section and shall be subject to the same conditions as a licensed manufacturer or producer.


Henry Lumley Drayton: I suppose the effect of that will be to place it entirely in the hands of the Minister of Customs to say just how many people doing a business under $10,000 shall or shall not pay a sales tax. Am I right?


William Stevens Fielding: Well, the power of the minister is certainly very considerable, but he can only apply the act as it reads. I do not think it admits of the minister exercising any power in a manner unjust to any of them.


Henry Lumley Drayton: It seems to me that we have in the first place, a declaration, that people have to be licensed to do a certain amount of business. Then we have a declaration in the next instance that the manufacturers of goods, which when sold are liable to sales tax, will have to take out this license when the minister says so. As it is now left, it is a matter entirely for the Customs department to say whether a man doing a business under $10,000 is to pay or not. The minister may select any one he chooses.


William Stevens Fielding: Under the conditions set forth here.


Henry Lumley Drayton: What conditions? Mr. FIELDING: I have just read them.


Henry Lumley Drayton: It is simply to this extent: using goods exempt from the sales tax. That might be construed in one instance to apply to use of goods to the extent of one per cent and in another instance to the use of goods to the extent of 50 per cent. The minister might say "I do not care to apply it to this particular trade, I am going to apply it to that trade." The whole thing is wide open. It is more than order in council taxation, it is taxation by the minister himself, just as he wants to tax in connection with all these smaller matters.


Mr. GERMAN:: Are we on section 6 of this bill?
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Charles Marcil: We started out on section 1 but we have jumped to section 6.


William Manley German: I have received a large number of telegrams and communications from manufacturers in the Niagara district referring to this sales tax. I am anxious to have the bill discussed section by section, and explanations given by the minister, so that we may explain the matter to the people whom we represent.


Henry Lumley Drayton: We have to get an understanding of the idea first.


William Manley German: The way to understand a bill is to take it section by section. If we are on section 6 let us take it first, and see to what extent it goes and whether there is anything in that particular section which is against the public interest. I do not see anything myself in that section but we shall never get anywhere if all sections are discussed together in a hotch potch sort of way. We have to read the whole bill from beginning to end in order to understand it.


Henry Lumley Drayton: I do not want to make any suggestion to my hon. friend as to the course to be pursued. I found the general discussion proceeding on the sales tax and I continued it. We certainly will have a general discussion of this tax on some section of the bill. It was suggested by the Minister of Finance we might just as well go on with it now. It is a matter of indifference to me.


William Stevens Fielding: We have drifted into a discussion of the sales tax, and having entered upon it I see no reason why we should not dispose of it.


Henry Lumley Drayton: That seems to me to be proper, too. There is another thing' that we should like to get a little more light on in order to enable us to understand the clause. There is a provision that:
A wholesaler or jobber who sells not less than SO per cent of his total sales of goods to a licensed manufacturer or producer. . . . may be granted an annual license.
It is a matter of importance to the wholesaler or jobber to be able to get his license. The minister will see that he has to carry the interest on the payment he has to make. In the first instance, he has a right to his accounts and the like. How are we going to ascertain whether a man is really doing a business of not less than 50 per cent of his total sales to licensed manufacturers or producers? If we do that, and he sells 50 per cent of his sales this month to his licensees 
and he sells none next month to his licensees, is his license to stop? Is anything going to be done to see that there is continuity in this? What is the idea of the clause? Why should we have it at all?


William Stevens Fielding: In all these matters, regulations will be made by the minister. I quite admit that the bill is a very complicated one, and it requires very careful study. There is something in the statement made by hon. gentlemen opposite that even after we have carefully studied the matter, it is full of trouble. All I can say is that the regulations of the department will cover most of these things, and they will be made intelligently and reasonably with a view of meeting the public desire.


Henry Lumley Drayton: What is the idea of the change from the old basis to this?


William Stevens Fielding: The old basis was a varied rate of sales tax, and this is a straight 6 per cent tax. That is the main point of difference. The other point of difference was as regards the proposals, and I think it is concerning that that hon. gentlemen have received telegrams recently. The proposal was to put a tax on imports. It was held that while that might possibly be a convenience to the government in getting the money from that source, it was imposing burdens on the business man who would have to finance in order to provide the tax. It was represented, and I think truly, that in many large organizations, materials have to be ordered far in advance of their use. They have to be held, and it was contended that if these business men, having large stocks on hand awaiting the moment to be used, had to finance for paying interest and to carry all the stock at the same time, that in itself was going to be a serious burden. I thought there was force in the contention. There was further a provision that when an importer 'paid the tax and the goods afterwards went into a manufacturing concern, there would be a refund, and it was held that keeping of accounts for this would be a troublesome thing. For these reasons we have abandoned putting the tax on the importer at first, and we have provided that the importer shall not pay the tax if he sells to a licensed manufacturer. The goods will be brought into the licensed factory, and ultimately we shall get the tax when the licensed manufacturer produces something to sell. That is the main point of difference that perhaps the hon. member for Welland (Mr. German) had in mind.


Mr. HOCKEN:: There is one feature of
this sales tax to which J should like to direct

War Revenue Act
the attention of the minister, something a little more concrete than what we have been getting for the last hour. The committee will remember that a resolution was passed unanimously that some consideration should be given to publishers of magazines and periodical literature. I should like to draw the attention of the minister to the fact that ,instead of giving any relief to that particular industry, he has increased the sales tax from 2| to 6 per cent. That is just about the last straw that breaks the camel's back. Would it not be possible for the minister to do what he promised us when he brought down the budget originally, that is to say, to remove the sales tax from the newsprint and paper that go into magazines and such publications? That particular industry is in a very desperate state, and it is undoubtedly the case that a magazine could be taken from Toronto or Montreal and published at Buffalo at a lower cost than it could be published at in Canada. I am informed on very good authority that the managers of the largest magazine that we have in Canada are contemplating that particular move. It would not be a very admirable spectacle for the people of Canada to see magazine publishers forced into the United States because of the difficulties and embarrassments that are placed upon them by the laws of this country. Is it too late for the Minister of Finance to revert to his original proposal and to remove the sales tax from the paper and, indeed, from all the materials of magazines? That is a fair proposition. They are paying taxes now; they are paying duty on their art work, on their inks, on everything that goes into the manufacture of magazines and periodical literature. The minister would be well advised if he took that step, and it would be popular throughout the country if he would give that much consideration to the publishing interests. The enormous increase in the cost of production of daily newspapers has caused a great deal of embarrassment, so much that hundreds of daily newspapers have been compelled to suspend publication. Add that feature of the matter to magazines and periodical literature, and I think the case calls for some consideration by the Minister of Finance.


William Stevens Fielding: The matter to which the hon. gentlemen refers, arose - at an earlier stage of the session on a motion which he himself made and which produced an interesting debate. I think it had reference at the time entirely to the customs duty on American periodicals. While there was much to be said in favour of the hon. gentleman's suggestion, there is another side of the question, and we have reason to believe that public opinion on the whole would not favour it. I admit the position of publishers of magazines and periodicals is rather a hard one, but the question of the sales tax is quite a different matter. Magazines and newspapers are now exempt from the sales tax.


Horatio Clarence Hocken: Are they exempted on
their raw materials?


William Stevens Fielding: On the thing they produce. They do not produce raw materials; they produce newspapers and magazines, and they are exempted from the sales tax, while other industries have not that benefit. The raw materials, the newsprint and paper will be produced by the owners of the mills, the paper companies, and they will pay the tax. It is laid down as a principle that with very rare exceptions, all taxes will get down to the ultimate consumer, although you may evade this for a while. In this case, however, the tax is paid by the manufacturer of paper, and not by the publisher, who becomes a seller of magazines, or a seller of newspapers, and who is exempted from the sales tax on those. Of course, it may be said that the paper company passes the sales tax on to the publisher, and I have no doubt that is the case. It would be very pleasant for the Minister of Finance if he could exempt many more things; but I do not think any strong case has been made for the exemption of print and paper; at all events, that was the view which I was obliged to take.


Horatio Clarence Hocken: I should like to point out to the minister that the ultimate consumer does not pay this tax, and that it has to be absorbed, not by the papermaker, nor by the ultimate consumer, but by the publisher. When the publisher buys the paper and the sales tax is paid, that sales tax is added to the price of his paper. There can be no doubt about that. It is impossible for the publisher to increase the price of his magazine, and at the same time to get any sale for it. Consequently he has to absorb that extra three and three-quarters per cent in addition to contending against conditions that are already so onerous that it is almost impossible for him to stay in business. This is not like any other industry. If a man is making 'boots, or anything dse, he can pass the tax on to the ultimate consumer; but a man producing a publication of the kind I am describing cannot pass it on. This sales tax is putting an extra burden of three and three-quarters per cent upon the publishing industry instead of giving the relief pleaded for, not only by myself, but by a large number of hon.
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members, including the Acting Chairman himself (Mr. Marcil). I thought, from the case made out by that hon. gentleman, that we should get that relief, but instead of that there is an added burden. That is the ground of my objection. We have been compelled to accept what the minister says: There cannot be any duty on magazines or on the advertising in magazines. But having accepted that, it is pretty hard now to have the sales tax increased 3J per cent on the raw materials that go into the product, which increase must be absorbed, representing in many cases the difference between solvency and insolvency, or perhaps between the publication of the Canadian magazine in Canada, and in the United States. I still think that the minister should look at this matter sympathetically. I believe he realises that there should be some relief in this direction; in fact I think he has said so. Surely then it is not too late to exempt these publications from the tax on their raw materials. At least do not increase the tax; keep it where it was. Do not add any burden to the industry if you cannot give it the relief for which it asks.


Henry Lumley Drayton: The minister does not say anything.


William Stevens Fielding: What do you expect me to say?


Henry Lumley Drayton: I thought that at least the minister would give us an expression of sympathy if nothing else. I wonder whether he does not yet realize the fact that it is impossible for him to expect this country to carry on in competition with the outside competitor when we have here special heavy burdens thrown upon the producer by a system of taxation to which the outsider is not subject. There was absolutely no answer made by anyone to the figures quoted by the member for West Toronto (Mr. Hocken) when the matter was brought up. There was no dispute about the question; we had the exact facts and figures showing that the business was labouring under a disability. Surely my hon. friend sees perfectly well that when he says that the Canadian magazine must pay a 6 per cent tax on its raw materials, which the American competitor does not pay, he is adding very materially to the burdens of the Canadian publishing business. As I have said before, when discussing this sales tax, I do not believe in a large number of exemptions. My hon. friend must get the money and he has to get it from as broad a field as he can find.
I have never urged exemptions upon him, for I think that possibly our list of exemptions 
to-day is too broad and perhaps the minister has erred in enlarging it. But a very real wrong is done when we get away from the underlying principle of the sales tax. I was responsible for the institution of that tax here and certainly, as I understand it, the underlying principle was that it should be of such a character that its incidence would be so small as, on the one hand, to place no great hardship on business, and on the other render it probable that the tax would not be passed along to the general consuming public. My hon. friend must unquestionably realise that when he gets the tax up to 6 per cent he is losing sight of all that and imposing a burden which is affecting every one of our producers. Let us take my hon. friend's authority in this matter, Mr. Tinling. Mr. Tinling shows that the result of this tax is that the original charge of $6 on a hundred becomes a charge of $11.25. This matter is of sufficient importance to justify some discussion and I will point out to my hon. friend again that in the first instance, under the sales tax of the former government before it received the 50 per cent boost which the hon. gentleman gave it, much of the tax was never passed on. It did not directly add to the cost of living. I gave one or two quotations from the representations of the people that have been importuning my hon. friend to have this change made, namely, the people in business who were anxious to pass on to the consumer 100 per cent of the tax, plus their profits, and I will give one or two other questions. The thing really is so clear that there is no room for argument about it at all. I will take the case of the Wholesale Grocers' Association, whose secretary, Mr. Pyke, was interviewed in connection with the budget.


Thomas Vien: Where is the hon. member
about to quote from?


Henry Lumley Drayton: 
William Stevens Fielding: Somebody had to pay it.


Henry Lumley Drayton: Of course, somebody had to, but the manufacturers were absorbing it.


Samuel William Jacobs: Oh, oh.


Henry Lumley Drayton: My hon. friend
laughs. I will give authorities for my statement.


Samuel William Jacobs: What did the manufacturers do with it, absorb it into their system or pas's it on?


Henry Lumley Drayton: My hon. friend
may have some confidential advice in regard to the matter, I do not know. This is what the authority-and it is an authority that has been accepted by this government, because
the plan is exactly the plan of Mr. Tinling

says:
That because of the wording and the operating of the act, some manufacturers and the majority of the wholesale and retail trade have been forced to absorb the greater part and in many instances the whole of the sales tax, which has entailed losses aggregating, it is estimated, to about $80,000,000 for these three branches of the trade.
Then he gives details of how it is brought about, and he shows how beautifully it works out when the whole of this tax can be passed on. He shows that the jobbers' profit is 25 per cent-I think he is wrong in his figures, I do not believe it is quite as bad ns shown here because the retail profits are not as high-but he shows the jobber's profit is 25 per cent, the retailer's 50 per cent. Starting with the six dollar tax on a hundred dollars, the jobber's profit at 25 per cent is $1.50, making $7.50; the retailer's profit of 50 per cent on that is $3.75, making a resultant cost to the public, as shown by the author of this plan, of $11.25 to collect a six dollar tax. Obviously, my hon. friend has not had an opportunity of getting at the bottom of this thing, for "he could not answer an elementary question dealing with it only half an hour ago. He will find difficulties without end in connection with it. Just take this one feature. My hon. friend realizing that this is a tremendous tax on industry provides for refunds of all previous taxes. My hon. friend will find when he goes into a warehouse for the purpose of getting at what these refunds are that the tax has gone into the stock, it is not kept in a little box for each special purchase at such-and-such a price. I do not know how my hon. friend is going to find out what those refunds are to commence with. I am sure ample opportunity is being offered there for the bleeding of my hon. friend's department in refunds. There will be practically no check at all. There might be some check if we had constant prices, but we have varying prices right through the year. I think my hon. friend is going to find it something interminable to get at, something very expensive to the country and something impossible to enforce equitably. I hope he will take power to himself to hold up the whole proposition.


William Manley German: Did I understand the minister to say that the tax upon the duty-oaid value of goods is amended so that the duty is not paid when the goods are immediately taken out of bond?


William Stevens Fielding: My hon. friend will find
the amendment on page 4 of the order paper.
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Mr. BAXTER:: I desire to call the attention of the minister to some matters in regard to which I have received communications. One of them I think he has had under consideration, and perhaps there is to be some change in respect to it. I refer to lumber. Messrs. Haley Bros. Limited, of St. John, write me as follows:
Dear Sir,
Our attention has been drawn to the following provisions in the new sales tax plans as amended May 23,
1923,	as follows:
"(7) A refund of the amount of the said consumption or sales tax may be granted in the following cases,-
(b) To a licensed manufacturer in respect of goods on hand on the 1st of January, 1924, and which are to be used in the production of articles for sale, no refund to be allowed in respect of goods on hand after the 31st of March, 1924."
This provision regarding refund is going to be a hardship to a great many concerns such as ourselves, who have to carry a considerable quantity of material through the winter months, a great deal of which will not be sold until the following fall.
All the lumber which we would normally have on hand January 1st, and on which we have paid a 3 per cent sales tax, it 'would be possible to sell but a small proportion before March 31st, and we would therefore ask you to have this provision removed if possible, or at least the date of same moved forward for six months instead of three as stated in the clause.
Looking at the marginal note it says:
No deduction after 31st May 1924.
But the text reads the 30th day of June,
1924.	I understood that the minister had in mind making some concession in this respect, and I should like to know what may be done. I would further call his attention to the increase from 4J to 6 per cent on lumber. If it were in reference to lumber exported,
I do not know that we would have very much to say.


William Stevens Fielding: There is no tax on exports.	[DOT]


John Babington Macaulay Baxter: I would not have very
much to say if it were a tax on exports, but when we consider that this is a tax upon lumber which enters very largely into the construction of our houses, it becomes very much more serious. This parliament granted for several years considerable assistance, through the vehicle of the provincial governments, for the building of houses. I do not know whether the scheme produced all the results that were expected or not, but undoubtedly there was a good deal of expenditure in most, if not all, of the province. But to-day a man is face to face with the question of erecting his own dwelling, Lumber enters very largely into that and the tax must fall upon the man who intends to

create a home for himself. It is worth while, perhaps, to consider the possibility of letting this tax stand at the old figure. I know the minister is faced with the question of raising revenue; on the other hand the housing problem is very acute especially in our cities. In order that I shall not take up further time later I will direct the attention of the minister to a telegram which I received-I assume he has received similar representations from an important brush manufacturing industry near the city of St. John. These are people who are not unwilling to pay taxes, who want to pay their just share, and I am sure that any objections that they make are put forward not with any idea of embarrassing the administration, but entirely to point out the practical difficulties that would be raised in their business. They say:
As applied to the brush industry it is unworkable due to the impossibility of tracing the identity of proposed sales tax on raw material through to the manufactured goods. The clerical effort alone necessary to implement this proposal would add to the cost, and the uncertainty of the refunds obtainable would make an addition to our selling price imperative in self protection. The proposal will inevitably increase the cost of goods to the consumer and any gain to the government will be more than offset by the cost of the army of clerks necessary to handle refund claims.
I have other telegrams and letters from people in the lumber business, but the minister no doubt has received these representations and many others besides. The gentleman who sends me that telegram with reference to the brush industry presents his case in a very few lines and I would ask the minister's most careful and favourable consideration for the facts put forward by these respective parties.


Mr. MEWBURN:: Before the minister replies I would like to corroborate what the hon. member for St. John City (Mr. Baxter) has said. I think we have all received numerous telegrams; I have something like twenty telegrams here from various manufacturing industries throughout Ontario, one of which is a brush industry in Hamilton, similar to the one the hon. member for St. John has just referred to. I have representations also from the Westinghouse Company, and I would like to mention in this connection the case of Dominion Canners. They are large importers of tin plate which they use in the manufacture of cans at their can plant. Their requirements in a year would probably approximate anywhere between a million and a million and a half dollars. To tie up six per cent of this is to deal with no inconsiderable sum, especially

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when the cans require to remain in their warehouses for a year or two years, or even longer, according to the size of the pack and the conditions of trade. I need not go into the details; I understand that the minister has on the order paper a resolution which is in the shape of an amendment to section 6 of the sales tax bill which will probably meet many of these cases. If so, I do not suppose there is any necessity of my taking up the time of the committee in arguing the twenty or thirty cases I have before me, which are all of the same character.


William Stevens Fielding: All taxes produce criticism. The chief complaint reaching me, however, has been the proposal to tax imports and the argument advanced, as set forth in the communication referred to by the hon. member for Hamilton (Mr. Mewburn), is that large stocks of goods have to be carried on hand and that the financing involved is a very serious matter. Then the further question is raised in connection with the difficulty involved in the matter of refund. These difficulties are covered by the amendment which I propose to move. With regard to the points mentioned by the hon. member for St. John City (Mr. Baxter), only in part can we give relief there. The former tax on lumber was 3 per cent. These various taxes pyramided; you had some imposed at one stage and some at another, and it can be shown by actual transactions that in some of these cases where there was nominally a small tax, the actual tax after it had passed from one stage to another was much higher than 6 per cent. In the case of lumber they paid a special tax of 3 per cent, and I frankly admit they will have to pay now a tax of 6 per cent. I cannot help that; somebody has to get hurt in the matter and I cannot see why lumber should be exempted. No business is very prosperous in Canada to-day, but certainly lumber is not less prosperous than the others; the price of lumber is high and the lumber industry is perhaps well able to bear the burden. The suggestion of the hon. member for St. John City with regard to the date at which some of these things should come into force has, I think, been met, but as to the main question-if it is the main question-namely, that the tax on lumber has been increased from 3 to 6 per cent, I do not see how we can promise any relief on that score. It would be most agreeable to the Minister of Finance if he could make a list of exemptions. Somebody has to get hurt in the readjustment of these taxes. In the end I do not think we shall get much
more money; in fact, I am not aiming at that; the object is to simplify the tax, and if in the end we get any more money, it will not be very much. I think it will be found in a good many cases that the people will pay a smaller tax than they paid before. In regard to housing, there is some force in the suggestions made. If the lumber is imported it can be passed to the manufacturer without the immediate imposition of a tax, but when the lumber is produced at home a tax will have to be paid. That is to say, the saw mill men, those who produce the lumber, will pay the tax; I have no doubt that they will pass it on-although some hon. gentlemen have sought to show that these taxes are not passed on-[DOT] to the contractor, and the contractor will pass it on to the house builder. But I am afraid we cannot help that. Several hon. gentlemen have spoken to me about the telegrams they have been receiving during the last few days, and I think the main difficulty complained of there on this question of the taxing of imports is fully met by the proposed amendment.


George Newcombe Gordon: The discussion has been proceeding on section 6, but section 1 has not yet been passed.


William Stevens Fielding: I have taken the committee into a discussion of section 6, and I suggest that it be allowed to proceed.


George Newcombe Gordon: With the consent of the committee.


Arthur Meighen: On this matter of the tax on the lumbermen, which the minister has glossed over so gently and respecting which his heart is much moved because the lumberman has to pay, I just wish to say a word or two. The minister has not increased the tax on lumber from 3 to 6 per cent; he has increased it from 2 to 6 per cent. That is what the minister has done in his seventeen months of power. When he came into power there was a lumber sales tax of 2 per cent, because what we use everywhere in Canada for building purposes is our own lumber; and there was no pyramiding allowed-none whatever. The act was as clear as day. It said:
Provided that in respect of lumber an excise tax of 2 per cent shall be imposed, levied and collected on sales and deliveries by the Canadian manufacturer and of 3 per cent on importations, and that no further excise tax shall be payable on re-sale.
That was the law when the minister came into office, and when that law was put on the statute book, hon. gentlemen who are now members of this government headed by the present Prime Minister-in this respect the
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present Minister of Trade and Commerce was the chief spokesman-denounced the administration for putting a 2 per cent tax on lumber -bewailed the fate of the pioneer, bewailed the fate of the farmer, bewailed the fate of the house builder, to the acclamations of hon. gentlemen of the Progressive party at the time, and called upon us to take the tax off as impossible for the pioneer to bear. And this committee sits quiescent while the present Minister of Finance imposes a tax of 6 per cent on lumber and allows profits on the 6 per cent-profits to the lumber dealer as against the contractor and to the contractor as against the consumer. This the minister has done because, he says, we have to get the money. Well, the House is faced to-night, two or three or four days before prorogation, with a set of estimates almost as big as the estimates that were produced in the middle of the session-estimates, page after page of them, that we ought to have had before us for weeks, even for months, before prorogation. I would like the minister to tell wherein the history of Canada estimates of that magnitude were ever brought down in the last week of the session. Occasionally there would be a single page and that would be all, and there would be a row over that. The members of the present government would then be screaming about the idea of bringing even that much before the House in the dying days of the session. It is unspeakable that this House should be presented with the estimates we are presented with now, running into I do not know how many pages; I have not counted them but it looks like nineteen or twenty pages of estimates entering into new votes and all kinds of votes, increasing salaries here, there and everywhere. Here is presented a second estimate almost equal to the first when we are only three or four days before prorogation, and the minister says we have to tax the settler six per cent on lumber to pay for this. He calls it a tax on the lumberman when it is not a tax on the lumberman at all. He cannot help bur pass on a tax of six per cent. If it is a small tax much of it cannot be passed on, but when it is a large tax of' six per cent all of it is passed. The minister has increased the tax on lumber three hundred per cent, and that is what he has done in respect of many other things. In many other lines he has doubled the tax to the consumer, but in respect of lumber, which is a staple article and has many claims to be within the exemptions, he trebles the tax and then he pleads he has to have the money for purposes of estimates like this presented to the House just three or four

days before we prorogue. Has the minister wholly lost control of his colleagues? His colleagues are completely running away ,/ith the treasury when estimates like these are brought down. I cannot believe the minister is exercising the functions of the Minister of Finance when he allows his colleagues to present to parliament estimates of this character right on the eve of adjournment. Here is $14,711,000 in addition to supplementaries of $5,800,000. We have supplementaries already amounting to over $20,000,000-


William Stevens Fielding: Not for this year.


Arthur Meighen: We had supplementary
estimates for last year, then we have this year five and a half milion dollars for the bonus and now $14,711,000. Here is over $20,000,000 of supplementary estimates presented just as we are preparing to prorogue. Is that really taking care of the finances of this country? Is that exercising any check whatever? What consideration can be given to these estimates now?


William Stevens Fielding: I think we will discuss the estimates when they come before the House.


Arthur Meighen: We cannot discuss them.


William Stevens Fielding: When my hon. friend
says the estimates are unprecedented and io forth, as usual he is making rash statements.


Arthur Meighen: Not at all.


William Stevens Fielding: He will find that there are many precedents as to the time at which they are presented. I rather sympathize with the hon. gentleman in that respect. I think perhaps they should have been down earlier and that part of his criticism I will not resent, but when he says they are prodigiously large I would reply that they are not unusually large. Last year our supplementary estimates were about $15,000,000, and I do not know that my hon. friend thought we were extravagant then. But we will come to the estimates at a later moment.
On the question of lumber, again I say there is a readjustment of taxation. I am reminded of a saying of Sir John A. Macdonald in days gone by that there would be "readjustment and no increase." This is a readjustment of taxation. Somebody has to pay more and others will pay less, because the aim is not to get a large increase in revenue.
I am sorry we cannot relieve them, but I cannot see any good reason why we should exempt lumber from taxation altogether or impose a lower rate than we have imposed

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on other lines of goods. It would be agreeable to me if I could concur in? that view, but notwithstanding my hon. friend's observations we need the money. The estimates we can discuss at another time.


Mr. EULER:: I have no desire to delay the committee but I would like to be perfectly clear as to the effect of the resolution as it appears on page 4 of the order paper. I think the intention when the budget speech was delivered was that there should be no tax on raw materials coming into this country.
That I think was varied by the
11 p.m. resolution introduced on the 25th of this month, where six per cent was to be collected on the raw materials and was to be refunded to the manufacturer when the goods were manufactured and actually sold. There were a great many protests with regard to that. I had a great many telegrams and letters myself protesting against it, and the minister has reconsidered the objections, which I need not repeat. I would like to ask: Does the resolution as it appears on the order paper actually in effect remove the objection that has been made with regard to the tax on raw materials?


William Stevens Fielding: In the case of imports, yes.


William Daum Euler: That is what I referred to. The manufacturers who protested to me were ;n the main satisfied with the original budget proposals. I would like to ask whether the resolution as it appears here restores in effect the original proposal as made by the minister.


William Stevens Fielding: Substantially yes, but if the importer sells his goods to a licensed manufacturer no tax is paid under the amendment I now propose, but the goods are followed into the hands of the licensed manufacturer and he ultimately pays. The importer whom it was proposed to tax is not taxed by this resolution.


Samuel William Jacobs: I would like to ask what the minister means by licensed manufacturer? Do I understand that under this new system manufacturers will have to take out a new license?


William Stevens Fielding: Most of the manufacturers of the country are now licensed under the sales tax system.


Horatio Clarence Hocken: The minister has not in-rtmated whether he is going to afford any relief from the sales tax to magazine publishers. Is there any hope of us getting any relief for that particular industry?


William Stevens Fielding: I do not like to give my hon. friend an assurance that I might not
be able to carry out. Under the act the Governor in Council has power to add to the list of exemptions, but I do not want to give the assurance that that will be done. The representations my hon. friend and others have made in the matter will receive the best consideration. There are, of course, two sides to the question, but sometimes we can only see one side. My hon. friend presented one side of the magazine question, but there is another side, and we believe there was a strong manifestation of public opinion against the course proposed. I do not want to give my hon. friend any guarantee. I would like to be able to give them something because my sympathies are with them, but I must not give an assurance lest I cannot fulfil it.


Horatio Clarence Hocken: Just as to the strength of that sympathy the minister has for my proposal I would ask him to consider the position of those engaged in that particular industry. An appeal was made in this House, and it received sympathy from all sides. A resolution was passed unanimously that some encouragement should be given to that particular industry.


William Daum Euler: Is my hon. friend making a plea on behalf of the newspaper publishers as well as the magazine publishers?


Horatio Clarence Hocken: No, for the publishers oi magazines and periodical literature. The men engaged in that industry had a right to expect from the resolution that carried unanimously in this House that they would get some relief. The minister could not see his way clear to putting a tax either on the advertising or on magazines but later he brought down his budget, and I just want to fix this in the mind of the minister so that his sympathies will be strengthened. He brought down his budget and the magazine publishers saw some relief. They were going to be exempt from the sales tax of 2i per cent. Well, that was something but before they got to the end of it that exemption was withdrawn, and instead of a sales tax of 2J per cent there is now a sales tax of 6 per cent, so that as compared with the original budget announcement this particular industry is now suffering under an increase of six per cent, and that is what I want to fasten in the mind of the minister if he will allow me. Under the original budget proposals they were exempt from the sales tax, but now they have a sales tax of six per cent. That is too heavy, Mr. Chairman, and I think the minister, feeling as he does, ought to endeavour to bring his colleagues and the Governor in Council around to the view that this exemption shoull be added to those already in force.
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John Millar: I should not like this
bill to pass without a protest on my part. I suppose it is hopeless to look for any change, but certainly what is proposed under this measure seems to be a very heavy tax that will fall upon the consumer. The increase is very great, and I notice that a great deal of discussion centres around, and seems to depend on whether it can be passed on or not. Not enough consideration has been given to those who are to pay the tax after it is passed' on. I listened with care to the words of the leader of the Opposition and I took a note of their purport. I feel that I concur, and must do so, in what he has said in regard to expenditure. In fact after looking over the supplementary estimates that have just been brought down-I am sorry to say this but I feel bound to do so-it does look to me as if the ministers seem to be tumbling over each other to see how they can spend the money. When I look at the long list of items representing the expenditures that has been made in building or repairing harbour improvements or wharves, and when I refer to the further lengthy list of proposed expenditures which has come down, and then think of the vast expenditure in regard to other matters, to say nothing of the increase in the salaries of the deputies, I think that during the two sessions I have spent here I never felt as hopeless as I do to-night. Something has been heard already in this House in regard to the secession of the western part of Canada from the rest of the Dominion. I have always discouraged that idea, and I hope I shall always be able to do so, but if this expenditure goes on, I shall not be able to discourage it with the same fervour and feeling which have influenced me in the past. When you think of the industries that are languishing, and that are being starved to death; when you think of the suffering on the prairies-I know that hon. members do not like to hear this but I feel that I am discharging my duty when I bring this again to the attention of the government-when you think of the manner in which many families have been living-it is no exaggeration to say that in some cases the children have been clothed in sacks; that I believe is an absolute fact-when you think that many started farming years ago and have worked hard for the last three years but are poorer now than they were, without any bad luck; when you think of all these things and then look over the estimates that have been brought down, personally I cannot help but feel discouraged 
and I must protest against this lavish expenditure and the heaping up of burdens on those who are least able to bear them.
Mr. FIELDING; I think I will have to suggest to my hon. friend that he discuss the estimates on their merits. Each of these items will have to be considered and if there is no good reason in their favour they will have to be dropped. If there are good reasons for them my hon. friend no doubt will admit their propriety. However, we both agree this is not a good moment for discussing estimates.


Arthur Meighen: Would the minister tell us how in the world we can discuss these estimates? The notice is out for prorogation this week. The discussion of these estimates is a mere farce which may have been intended by the government who brought them down at this stage.


William Stevens Fielding: I hope my hon. friend
is not taking part in a farce. I should like him to feel that he was discussing matters of a serious character; but if he feels that he is doing anything farcical I regret it very much.


Arthur Meighen: The minister knows it
is a farce.


Mr. CHISHOLM:: It was always thus. '


Mr. ELLIOTT (Waterloo):: It seems to me that what is proposed is going to impose a hardship on a great many of our industries. I have received quite a number of communica' tions from large manufacturing concerns in my riding with regard to this taxation and their chief objection is that it will tie up great sums of money that they need in their business. As I understand it this tax is to be applied on goods imported. After the goods have been manufactured and resold this sum of money is to be given back to the firms in the shape of a rebate. Now, I have in my constituency a firm doing the business of wood-working, a firm known as the Victoria Wheel Works. This firm import nearly all their material. That is to say all the hickory and white oak which they use in the manufacture of their wheels, spokes, and so on is imported; they cannot get this material in Canada. Now, they claim that if this tax is imposed they will be subjected to very great hardship and inconvenience because they have a large amount of money tied up in the sales tax and consequently are out of money to that extent. Another objection which I find is quite common is this. It will involve a great amount

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of extra book-keeping and no small amount of extra work in order to preserve the identity of these taxes. There will be considerable expense involved, and the objection, to my mind, on that score seems to be well sustained. I should like to ask the minister if the amendment which he has proposed will cover these points?


William Stevens Fielding: Yes, I can assure my hon. friend that the case he has just mentioned is entirely covered by the amendment before the House. He is all right.


Mr. SPEAKMAN:: There is just one comment I should like to make on this proposition. I have always been a believer in direct taxation because I thought it was the fairest and most economical form of taxation; in studying out the details of this bill and considering the objections which have been advanced during the discussion I am certainly very much strengthened in my opinion. I do not like this tax. I am not going to discuss it at any length because I know it is futile, but I should like to say this: I do not like it for two or three reasons. One is the inevitable pyramiding which this form of taxation involves. It is absolutely correct, as stated, that the tax will approximate 10 or 11 per cent by the time it is paid by the consumer. That means that the men who pay the taxes actually pay about double the amount the treasury receives, and to my mind it is a rotten form of taxation, if you will excuse the expression. I am not worrying about the manufacturers; I have always found they are very well able to look after themselves. The man I am worrying about is the poor fellow at the other end who finally has to pay the bill. To the manufacturer it is simply a matter of some inconvenience, of, perhaps, extra bookkeeping, and of the tying up of a sum of money for a little time. Eventually the tax is passed on, and the ultimate consumer pays it. He is the man I am worrying about. I should not like this opportunity to pass without repeating the protest I have made before [DOT]against this form of taxation. I do make the appeal to the Finance Minister to consider the matter and see whether he cannot do away, to as great an extent as possible, with this indirect taxation upon commodities which is bound to bear with peculiar hardship upon the consumer by its pyramiding, by the fact that it is not based upon a man's ability to pay but upon the amount of goods he requires to purchase, and must increase in direct ratio to the number of dependents he has in his family. It is not a fair basis of taxation at *all, and I hope the time will come when the 282
Minister of Finance, the government, and parliament will see their way clear to adopting some direct system of taxation as a result of which a greater proportion of the money obtained will find its way to the treasury, a taxation which will be based upon a man's ability to pay and will meet the necessities of the case.
Section as amended agreed to.
On Section 3-Exemption for stamp tax on receipts.


Henry Lumley Drayton: Where has the minister got all this from? I have not noticed it before. I suppose this is practically the manner in which the act is to be enforced.


William Stevens Fielding: This is taken from the
English act, I am advised.


Henry Lumley Drayton: Is it all taken
from the English act?


William Stevens Fielding: Practically, I am advised.


Henry Lumley Drayton: Is there any
machinery thought out as to how this is going to be enforced?


William Stevens Fielding: The machinery is provided largely in the act itself. If anything more is necessary, it would have to be covered by regulations.


Henry Lumley Drayton: Which clause
covers the machinery?


William Stevens Fielding: Several clauses might be called the machinery of the act. What particular part does my hon. friend refer to?


Henry Lumley Drayton: In connection
with the stamp tax, I did not waste time going over the difficulties. I handed over the mass of rulings given in connection with the stamp tax. The whole thing is in an awful mess, and no attempt was made to solve the problem. The minister, however, had the help of the Bankers' Association in administering the act as regards stamps on cheques. Who is going to enforce this? Who, for example, is going to be charged with the duty of looking after it? Let us take the last clause (8):
Save as aforesaid, a receipt liable to taxation under this section, shall not, except in criminal proceedings, be given in evidence, or be available for any purpose whatsoever, unless it be duly stamped in accordance with the law in force at the time when it was given.
How on earth can that be shown or proved? Is my hon. friend not going back to the old difficulty we had in the early days, in the fifties and sixties, when we had a law that said that a bill was no good unless it was stamped, and when a bill might be stamped just before it came into court?

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William Stevens Fielding: Any court can enforce
that.


Henry Lumley Drayton: What is the
court going to know about the matter?


William Stevens Fielding: I am afraid, if there
would have to be any prior knowledge in these matters, you would have to trust the department to exercise its authority in putting the matter before the court.


Henry Lumley Drayton: How would the department know about it?


Lewis Herbert Martell: By the evidence brought before the court.


Henry Lumley Drayton: Take the first
two sections:
Section 14 of the said act as enacted by chapter 47 of the statutes of 1922 is amended by striking out paragraph (b) of subsection 4 and substituting the following:	.
"(b) a receipt or document in the nature of a receipt which is taxable under section 12 of this act.
(2) The following are inserted as subsections 5, 6, 7 and 8 of section 14 of the said act."
What is the effect of that?


William Stevens Fielding: Subsection (4) in the
act reads:
The stamp duties imposed by this section shall not apply to the following cases:
Several are mentioned:
(,b) A receipt or document in the nature of a receipt which is taxable under any other section of this act.
That is omitted.


Henry Lumley Drayton: Is any suggestion made at all by the minister as to how this section is going to be enforced?
The following are inserted as subsections 5, 6, 7 and 8 of section 14 of the said act:
"(5) A receipt given without being stamped may be stamped within one month after it has been given, upon the terms following, that is to say."
How is the department going to be seized of the knowledge of receipts that are not stamped? What is the machinery?


William Stevens Fielding: If there* is not ample
machinery in the act, the minister will have to do this by regulations. I have no doubt this act will call for a vigorous administration, and that the Minister of Customs will see that the machinery is provided.


Henry Lumley Drayton: It is not provided in the legislation.


William Stevens Fielding: If you impose penalties in the act, you can rely on the department to enforce them.


Henry Lumley Drayton: I do not know when this bill was distributed, but I have
[Sil Henry Drayton.]
not had an opportunity of reading it carefully. It may provide for penalties; it may provide for imprisonment. I am asking how it is going to be enforced, and the minister cannot tell me anything about it.


William Stevens Fielding: The hon. member might ask how any part of our law can be enforced. He might ask how the customs law is enforced. It is going to be enforced by the vigilance of the customs officials.


Henry Lumley Drayton: The customs
officials have their duties laid down. Is a whole host of new officials going to be appointed who will have the special duty of inspecting receipts, or are the people to make returns of their receipts to the department?


William Stevens Fielding: So far as I know, there
is no intention of appointing an army of officials. As to the balance of the question, we shall have to leave the matter to the administration of the minister and his officials.


Henry Lumley Drayton: Is it to be the law that if a man puts a stamp on a receipt after the receipt has been signed, and not at the time it was signed, he must pay $10?


William Stevens Fielding: I do not wish to give
any legal interpretation of the law. On most of these things the law is plain. If there is a doubt in the matter, I am going to leave the minister to interpret it.


Henry Lumley Drayton: Does the minister desire the committee to pass a provision that if a man does not put a stamp on a receipt at the time it is signed, he must pay $10? The bill has not been long distributed, and the sections have not been read. Surely we have a right to know what we are supposed to be passing.


William Stevens Fielding: I think my hon. friend
will find in all these things that the law is plain and distinct and can be read intelligently. If there is a debatable matter, I certainly will not want to be led into giving a definition of it at this hour. I would leave the matter to be interpreted by the proper officials of the Customs department.


Henry Lumley Drayton: The minister
does not know what the law is going to be. I am going to read it:
5. A receipt given without being stamped may be stamped within one month after it has been given, upon the terms following that is to say:
(i) The stamp shall be affixed to the receipt in the presence of any collector of customs and excise by the person who gave the receipt, and shall be cancelled in the same manner as provided by subsection 2 of this, section.

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(ii) Before such person may affix the stamp he shall pay to the said collector of customs a penalty of $10 for the public uses of Canada.
Where does the principle of the $10 fine come from? Does it come from England or is it fixed by the minister? What is the idea?


William Stevens Fielding: The penalty is $50, but the man may avoid it by paying $10 in the way described.


Samuel William Jacobs: Subsection 6 provides with reference to the penalty of $20 that payment may be made "to the judge, arbitrator, referee or trustee". I think it would improve the subsection to amend it so as to read:
-and the receipt may, on payment of a penalty of $20 for the public uses of Canada, be received in evidence, etc.
Judges do not usually receive these penalties.


William Stevens Fielding: The amendment suggested by my hon. friend seems reasonable, but I should not like to accept it without first consulting the Department of Justice.


Samuel William Jacobs: Judges as a rule never receive such sums of money; the clerk or some other authorized person receives it on behalf of the treasury of the Dominion. It is most unusual to provide that the penalty shall be paid to a judge.


Henry Lumley Drayton: It is new.


William Stevens Fielding: If my hon. friend wants to press the amendment I shall delay the third reading of the bill in order to consult the Department of Justice. The amendment seems reasonable, but I hate to disturb a clause of this kind without consulting those who have drafted it.


[Stage Direction]
Section agreed to.
On section 4-Definition.
Henry Lumley Drayton: What is the proposed change in "19aa"?


William Stevens Fielding: It is to determine the question of "duty paid value." It differs slightly from the old clause but the purpose is the same.


Henry Lumley Drayton: Is there any change in substance, or is it merely a question of form?


William Stevens Fielding: The words are nearly the same as in the old section. There is a slight departure, but the substance is the same.


[Stage Direction]
Section agreed to.
On section 5-Excise tax on wines.
Henry Lumley Drayton: I suppose the effect in this is to do what was mentioned in the budget resolutions?
282i


William Stevens Fielding: Yes.


Henry Lumley Drayton: It goes a little further, I think. It makes an exception of sparkling wines, "containing not more than 40 per cent of proof spirit."


William Stevens Fielding: There is no change in that respect.


Henry Lumley Drayton: I take the minister's word at once, but my recollection was that it was 26 per cent.


William Stevens Fielding: I think that 26 per cent is used in the French treaty somewhere, but there is no change here from the resolutions.


[Stage Direction]
Section agreed to.
On section 6-Tax on sales.
George Newcombe Gordon: Section 6 is amended, as will be found in the order paper of to-day, as follows:
That in section six of said bill, the third paragraph of subsection one of section nineteen BBB be struck out and the following substituted therefor:
"Provided that the consumption or sales tax specified in this section shall not be payable on goods exported: or on goods sold by a licensed manufacturer or producer to another licensed manufacturer or producer if the goods are to be used in, wrought into, or attached to articles to be manufactured or produced for sale and which are articles subject to the consumption or sales tax, or on goods imported by a licensed manufacturer or producer if the goods are to be used in, wrought into, or attached to articles to be manufactured or produced for sale and which are articles subject to the consumption or sales tax; or on goods imported by a licensed wholesaler or jobber whose sales are to be accounted for under the provisions of subsection (7); or on goods sold by a licensed manufacturer or producer to a licensed wholesaler or jobber whose sales are to be accounted for under the provisions of subsection seven of this section."


Henry Lumley Drayton: I have been following the resolutions as brought down on
May 11, and I assumed that the bill would be in keeping with them. Suppose a spinning manufacturer buys needles from another manufacturer for the purposes of turning out knitted goods, is any sales tax payable on the needles? As I read this, no tax is to be levied, but I have seen some discussion which rather indicates that if a licensed manufacturer buys from another licensed manufacturer goods which are not classed as materials, the tax must be paid.


William Stevens Fielding: You would have to pay the tax.


Henry Lumley Drayton: Then my hon. friend is not doing what he said would be done in this resolution of the 11th May. I thought the bill would stick to the resolution, except where directly changed by an amendment. The resolution reads:
On sales by a licensed manufacturer or producer to another licensed manufacturer or producer of goods To be used in the production of articles for sale.
War Revenue Act

Now, if one manufacturer sells thread to another, that thread is no more used than is the machine. It is another instance of where the department may apparently say that one thing is to be taxed and another is not. Surely my hon. friend's adviser is wrong there, or else we are using language in these resolutions, not to express our thoughts but to conceal them.


William Stevens Fielding: The bill, as is usual, is a little more full than the resolutions. I think my hon. friend will find that the bill deals with the matter.


Henry Lumley Drayton: What section?


William Stevens Fielding: I think the amendment under consideration covers the point.


Henry Lumley Drayton: No, I think we are there dealing with the question of exports and imports. Here is something that is really of importance, and surely parliament knows what it is doing.


William Stevens Fielding: Sometimes.


Henry Lumley Drayton: Surely we are supposed to know, or is the minister serious in proposing that we put through legislation that neither we nor he know anything about? If I am right in assuming that we are dealing intelligently with these matters, we ought to know what we are doing. I point out to my hon. friend that here what is sold by one licensed manufacturer to another licensed manufacturer for the purpose of manufacturing should pay no tax.


William Stevens Fielding: What is my hon. friend quoting from?


Henry Lumley Drayton: From the resolutions.


William Stevens Fielding: The resolutions are not before the House; the bill is. If my hon. friend will quote from the bill he will be making a better choice.


Henry Lumley Drayton: We have only read the marginal notes of the bill. I thought my hon. friend would know what his bill is intended to provide for.


William Stevens Fielding: I refer my hon. friend to the beginning of the proviso at page 5.


Henry Lumley Drayton: That, as I understand it, has only to do with imported articles.


William Stevens Fielding: The amendment? Yes.


Henry Lumley Drayton: If there is any dispute about it, let us get it settled. I am

not speaking of imported articles at all. We will take the bill. I put the same question to my hon. friend.


William Stevens Fielding: Read the proviso.


Henry Lumley Drayton: Provided that the consumption or sales tax specified in this section shall not be payable on goods exported; or on goods sold by a licensed manufacturer or producer to another licensed manufacturer or producer if the goods are to be used in, wrought into, or attached to articles to be manufactured or produced for sale.
My question is perfectly plain. Does that exempt, for example, needles which are bought for the purpose of manufacturing?


William Stevens Fielding: I will have to answer my hon. friend that I am so advised.


Henry Lumley Drayton: That the sales tax would have to be paid?


William Stevens Fielding: In that case, yes.


Henry Lumley Drayton: I thought the principle here was that no sales tax whatever was to be paid by the manufacturer except the 6 per cent on the goods he sold.


William Stevens Fielding: That is correct.


Henry Lumley Drayton: If that is
correct, the answer given by my hon. friend two minutes ago is absolutely incorrect. If the manufacturer has to pay a tax on the stuff he is using for the purpose of manufacturing, he is paying more than 6 per cent on his manufactured article, he is paying 6 per cent on a whole lot of his raw material.


William Stevens Fielding: I do not quite grasp my hon, friend's contention. A needle is a part of the machinery, it is not one of the articles to be wrought or made into the finished article. My offhand opinion is that it would have to pay duty.


Henry Lumley Drayton: It is all very well to say it is a machine, but it is something which wears out.


An hon. MEMBER:: All machinery wears out.


William Stevens Fielding: It is not going to be wrought into anything else.


Henry Lumley Drayton: This section before did not use the words "wrought into" at all. It covered merely "sales by a licensed manufacturer or producer to another licensed manufactured or producer of goods to be used in the production of articles for sale." It is absolutely clear that what I pointed out to

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my hon. friend was right in the first instance.
I had an idea that the act was following the resolution. It does not follow the resolution, it contains the words "wrought into."


William Stevens Fielding: Surely.


Henry Lumley Drayton: Then the minister's intention is to tax Canadian manufacturers 6 per cent on everything they buy for use in the production of their goods, that is, on the actual raw materials that go into the finished article; am I right?


Mr. BUREAU:: Used in the goods, not m the production-"are to be used in, wrought into or attached to articles to be manufactured."


Henry Lumley Drayton: Let me put my question to the Minister of Customs (Mr. Bureau). Is it the intention that the sales tax, instead of being confined merely to the finished article, is to be paid on everything except the raw materials that actually go into the goods to be manufactured?


Jacques Bureau: As against what,-the machinery?


Henry Lumley Drayton: Yes, moving
parts and everything else.


Jacques Bureau: Machinery ought to pay a duty. It is not wrought into the goods, it is used to manufacture them.


Henry Lumley Drayton: It has not been so considered. Those who have gone into business have done so on the faith of the resolution, and I have told them myself in reply to objections taken to the sales tax, that it was quite clear that the principle was just what the minister said himself originally, that the only tax, as against the manufacturer, should be on his finished product, and that needles and the like used-just following the words of the resolution-would be exempt. However, now we get the fact.


George Newcombe Gordon: Shall section 6 as
amended carry?


Henry Lumley Drayton: That is subsection 1 of section 6.


George Newcombe Gordon: Yes, pages 4, 5, 6, 7 and 8 are all interlocked with section 6. The whole section is under debate because one relates to the other. I am not declaring the section earned, so it is debatable.


Mr. MacLAREN:: On page 7 between lines 25 and 30 the date is given which is to
apply to those who Have considerable stocks on hand. I understand that there is no sales tax on stocks if they are held up to the 31st March, 1924. Am I correct in that?


William Stevens Fielding: I direct the hon. gentleman's attention to the words "not accounted for before the 31st day of March." The holders of these stocks must account for them so that it may be a matter of record. They are not obliged to dispose of them before that date.


Murray MacLaren: I am told that if the
period could be extended to three months it would go a long way toward meeting the conditions affecting those who hold heavy stocks bought under the old provisions of the sales tax.


William Stevens Fielding: They may sell the stocks at any time after that date, provided they have rendered an account of them.


Murray MacLaren: My point is that until
they have disposed of s'tock which they bought under the old provisions of the sales tax they will suffer some hardship if the collection of the 6 per cent at the source is now enforced. If the period be extended to three months, they will by that time have disposed of a sufficient amount of the stock bought under the old conditions to relieve them of a certain amount of disability.


William Stevens Fielding: If the requirement were that the stock should be disposed of before that date, my hon. friend's criticism would be well founded, but all that is required is that they shall be accounted for; they can be sold later.


Murray MacLaren: It is not a question
of selling them. They will not have used up, during that period, the stock bought under the former conditions.


William Manley German: I wish to call the minister's attention to a telegram I have received regarding subsection 8 of section 6. It is from the Rogers Manufacturing Company, and it says:
Subsection 8 of the proposed sales tax bill 230 of June twentieth regard proposed charging manufacturers sales tax on imported materials and refunding same when such materials are finally manufactured and sold seems impossible of administration because of manufacturing of large importations of raw metals into many thousands of individual items sold in thousands of lots throughout country which would require millions of refund claims. This particular change from the Finance Minister's proposal May twelfth would require manufacturers to carry investment of 6 per cent on cost-
Well, that is provided for, but this question arises: These people are manufacturers of flat
4m
War Revenue Act

ware,-knives, forks and spoons-which are made out of raw material that is imported. These are sent all over the country in small lots. Would it be possible to keep an account in order to get a refund of the amount of the sales tax paid?


William Stevens Fielding: I think the amendment to which I have already directed my hon. friend's attention is such that sales tax will not be paid on the raw material used in the manufacture; it will be paid on the finished article!


William Manley German: That is what I thought, but I wanted to have the point made clear.


George Newcombe Gordon: Shall the subjection carry?


Henry Lumley Drayton: That is subsection 1?


George Newcombe Gordon: We are on the whole of section 6.


Henry Lumley Drayton: I thought we
would get along better if we dealt with the subsections separately. However, let me call attention to subsection (3) of 19bbb. It reads:
If the minister determines that any manufacturer or producer, who does not manufacture or produce goods to the value of ten thousand dollars a year, uses a substantial portion of goods which are exempt from the tax in the manufacture of goods which are liable to the tax, as to which the minister's finding shall be conclusive, such manufacturer or producer shall take out a license as required by subsection six of this section.
Does the government desire absolutely a blank cheque here, or is it the intention to put some reasonable restriction upon the exercise of ministerial fancy?


Jacques Bureau: Do not call it "fancy"; that is hardly right. Make it "discretion."


Henry Lumley Drayton: No, I think
"fancy" is a pretty good word to use. They are leaving it wide open to the minister to say that certain people in this country shall be taxed or shall not be taxed simply because the minister for some reason thinks they ought to be or ought not.


William Stevens Fielding: I do not know any system of taxation you can carry on without leaving a large measure of discretion to the officers in charge. If they abuse their privileges or exercise them in any oppressive way, the only remedy is discussion in this parliament. I could not offer any system of taxation to which my hon. friend's criticism might not apply.


Sir HENRA DRAA  TON@: Can my hon.
friend mention any system of taxation front

which he got that provision? I think it is one of Mr. Tiniling's ideas. Is that taken from any act anywhere? Is there any precedent for it? If so, I have not been foi

tunate enough to run across it.


William Stevens Fielding: I am told it is designed to meet the case of the smaller confectioners who ordinarily will not take out a license but will use considerable amounts of material. There are cases of the kind which in the experience of the Customs department render this clause desirable.


Henry Lumley Drayton: Then this is entirely new? There is no precedent for it?


William Stevens Fielding: Well, yes.


Henry Lumley Drayton: That is right, is it not?


William Stevens Fielding: I think so, yes.


Henry Lumley Drayton: We are not following the precedent of other acts or anything else?


William Stevens Fielding: Oh yes, we had a precedent from England a moment ago.


Henry Lumley Drayton: Now, if there is any doubt about it, let us get it right. A moment ago the minister said there had to be wide discretion in the collection of these taxes. I asked if there was any precedent for this very extraordinary exercise of that quality of discretion-because it goes to the root of this question of taxation. Now my hon. friend tells me there is no precedent for it at all.


William Stevens Fielding: There is no need of any.


Henry Lumley Drayton: A moment ago we had it that there was no precedent; that it was something new. If I am wrong in that, I should be glad if the minister would tell me. That being so, this being something new, I am going to ask my friend what percentage is meant by the use of the words "a substantial portion of goods." What percentage will my hon. friend be content with? There should be some amendment there to make this something like a law, and not something which is going to allow this minister to do something this day and somebody else the next. There is no definition here whatever as to what will be regarded as a " substantial " portion, and the section itself says, that it shall be left absolutely to the minister.


William Stevens Fielding: Why not?


Henry Lumley Drayton: Well, generally parliament has been thought to be the proper

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source of taxation, and not a minister. What parliament here is asked to do is to say that the minister can impose special taxes on special people as he chooses to designate.


Samuel William Jacobs: That is already in the law.


Henry Lumley Drayton: What law?


Samuel William Jacobs: That the minister's finding shall be conclusive. It is left to the minister's discretion.


Henry Lumley Drayton: That is not the point at all. What you have in the law there are matters in connection with quantum and the like, rulings on statutes. This is not a question of ruling on a statute. It is a question of the minister making his own law and saying that Jones shall pay and Smith shall not pay. He can do just as he likes.


Jacques Bureau: If I read the section correctly what my hon. friend objects to are the words "a substantial portion of goods." The clause reads:
If the minister determines that any manufacturer or producer, who does not manufacture or produce goods to the value of ten thousand dollars a year, uses a substantial portion of goods which are exempt from the tax-
Now what would my hon. friend call a substantial portion?


Henry Lumley Drayton: That is what I am asking. I want to know what the government proposes to do.


Jacques Bureau: It is left to the minister's discretion. My hon. friend is proceeding on th$ assumption that the minister will determine that a substantial portion in one case is five per cent, in another case fifteen per cent, in another case twenty per cent, and so on. Otherwise his argument could not stand. The only objection he could take to this clause is that it leaves discretion to the minister as to what shall constitute a substantial portion of the goods. Well, he must give credit to any minister that is at the head of the Customs department not to play witti that discretion and determine on five per cent in one case and eighty per cent in another. We have officers in the department, and recommendations can be made to the Governor in Council. I for one do not propose to have two rulings on two different measures. If fifty or sixty or seventy-five per cent is determined to be a substantial portion it will be the same for every one. My hon. friend's argument that we can play with this power is based on the assumption that the man who is going to be at the head of the Customs department is either a fool or a knave.


Henry Lumley Drayton: There are a
hundred and one different businesses that will be subjected to this, and a hundred and one different ways in which it could be worked.


Samuel William Jacobs: To whom would the hon. gentleman give discretion if not to the minister?


Henry Lumley Drayton: I think we should have it fixed in the House whether a man is taxable or whether he is not. I do not think the parliament has the right to delegate its authority to tax, that is all.


Jacques Bureau: Parliament does not delegate any authority at all. It simply gives power to interperet the words.


Henry Herbert Stevens: I am not desirous of
delaying the committee. I understand we are on subclause 3 of 19bbb.


George Newcombe Gordon: We are on section 6 generally.


Henry Herbert Stevens: I wish to draw the attention of the minister to what perhaps has been overlooked. I do not think there is any objection to this. The suggestion I have to make would properly come on page 5 after the section referring to " sale price " defined. It has reference to concerns which manufacture and retail direct to the people, perhaps dealing more particularly with confectionery, cakes and such like. That is, cases where a bona fide retailer is also a manufacturer. It is claimed by these people that at present the officials of the department presided over by the hon. Minister of Customs and.Inland Revenue determine arbitrarily and without statutory power that the valuation for taxation shall be sixty per cent of the retail price. No objection is taken to that, but it is not provided for in the statute, and the suggestion is made that provision should oe made in the statute for the minister to make regulations in that regard. I have to suggest to the minister an amendment to come in after the word "thereto" in line 8 on page 5 of the bill following the clause that reads:
For the purpose of calculating the amount of the consumption or sales tax, "sale price" shall mean the price before any amount payable in respect of the consumption or sales tax is added thereto.
I propose an amendment to add after the word "thereto" the following:
Provided, however, that the minister may in the case of goods manufactured for sale to the consumer by a person carrying on business exclusively by retail determine by regulation upon what portion of the actual sale price the tax shall be calculated.
War Revenue Act

In other words, that in the case of businesses where a retail manufacturer sells direct to the consumer the minister by regulation shall have the power to fix the price upon which the sales tax shall be applied. If it is provided for already in the bill I would be very glad to have it pointed
12 m. out, but it is pointed out by those more directly interested that the bill does not provide for it at the present time. I know very well that it certainly intended to cover it but I do not think it is covered in the bill. If this amendment is acceptable I would offer it to the minister.


William Stevens Fielding: If my hon. friend will
turn to section 13 on page 8 he will find that that is covered. Section 13 reads:
Whenever goods are manufactured or produced in Canada under such circumstances or conditions as render it difficult to determine the value thereof-
That would be the goods described by my hon. friend.
-the minister may determine the value of the tax under this act.
I think that covers the point raised by my hon. friend.


Henry Herbert Stevens: I may say, so that the
minister may understand the spirit in which I bring this forward, that I am quite prepared to accept his assurance that it covers the case if he will so assert, but the information I have is that it does not. At present in the case of a prosecution, for instance, while the interpretation given by many of the officials is that sixty per cent of the retail sale price is the amount upon which the tax
should be levied, there is nothing in the act which authorizes the officials to make that price, and what I am after is that the act shall make it perfectly clear that the officials shall have the authority to fix such a price.


William Stevens Fielding: Under this clause I think they would have the power to fix the price, but not necessarily sixty per cent. I think my hon. friend ought to be willing to leave it to the judgment of the Minister of Customs. I think the words are broad enough, and unless it be found by experience that it does not interpret fairly I do not think the change my hon. friend asks is necessary. I have enough faith in Ministers of Customs, no matter to what government or party they belong, to believe that they are endeavouring to administer the customs and the sales tax laws in a spirit of fairness to all concerned.
I hope my hon. friend will not press his amendment, I think he will find the point is covered.


Henry Herbert Stevens: I might say, so that the minister will correctly interpret my remarks, that I am quite willing to accept his interpretation. That would be the purport of my amendment. If the minister is satisfied that under this clause any regulation made by him or his officials-that would be the Minister of Customs and Excise I understand fixing the value at forty, sixty, seventy or any other percentage is legal, that is what I want to get at. If the minister is satisfied of that my amendment is unnecessary.


William Stevens Fielding: I think if the Minister of Customs made a regulation along these lines it would be absolutely certain that he could do so. As to whether it would be wise for him to do so, I would rather leave to his judgment than tie his hands.


Henry Herbert Stevens: In view of that I am quite vailing to accept the minister's interpretation of the act in that regard.


William Stevens Fielding: Thank you.


Henry Lumley Drayton: We had some discussion in connection with the question of 50 per cent. I did not get any answer to my question. Perhaps it is foolish to expect any answer in connection with this bill at all from anybody; but I did ask as to how subsection 7 was going to be worked out; how it was going to be ascertained as to the 50 per cent of the total sales so that this special privilege could be availed of; for how long that 50 per cent would have to continue; and what would happen when the 50 per cent was not maintained.	*


William Stevens Fielding: That I think you will have to leave to the minister.


Henry Lumley Drayton: I am asking, though, a little information from the minister who is here. I suppose the government have some idea of what they are doing by this bill, but I am beginning to think they have not.


William Stevens Fielding: There were cases in the existing law when it was administered by my hon. friend where the Minister of Customs received large power, and my hon. friend did not see any danger in it at all. The Minister of Customs had power to define this, that and the other thing. My hon. friend did not then imagine any difficulty. I do not see why he should imagine difficulties now.


Henry Lumley Drayton: This is something very different. This bill goes further than any act we ever had.
Mr. FIELDING We had this before.

War Revenue Act
This may seem at first sight a somewhat small thing; but if you take an area like Aylmer, Ontario, or the Okanagan valley, or many other sections where thousands of acres belonging to hundreds of individuals are devoted to the growing of tomatoes, this is an important matter. I would ask the Minister of Customs if it would be possible to do one of two things, either to interpret the act as it, at present stands to include tomato plants, or to make the necessary amendment to include tomato plants in the exemptions.


William Stevens Fielding: I think the Minister of Customs was dealing with that. I can quite understand, upon all these questions, there may be possibly different rulings by the customs authorities. I really do not know what more the hon. member can do than to leave the matter to the judgment of the minister, and I hope he will give attention to what the hon. member has said. This does not require a change in the bill. If the ruling is wrong, I suppose he will make a ruling to correct it, but I presume he will not admit that it is wrong.


Henry Herbert Stevens: If the very genial and efficient Minister of Customs would intimate that such a ruling would be given, that would be entirely satisfactory.


Jacques Bureau: A ruling was made by the Commissioner of Customs, and the question was discussed to-day again. My hon. friend says that tomatoes come in free. Supposing apples come in free, would that necessarily make the tree free?


Henry Herbert Stevens: The act makes the tree free and also the fruit of the tree.


Jacques Bureau: One might go further. If milk came in free would you allow the cow m free?


Henry Herbert Stevens: The cow being a milk factory, I do not think the case is a parallel one.
, Mr. BUREAU: The matter is under consideration, under an appeal from the hon. member for Victoria City (Mr. Tolmie).


Henry Herbert Stevens: Can the minister give some assurance?


Jacques Bureau: I cannot give an assurance.


William Stevens Fielding: Hope, not assurance.


Henry Herbert Stevens: This "hope" business is l ather discouraging at times. I see* in the countenance of the Minister of Customs, some ray of, might I say, new hope reflected.


Samuel William Jacobs: That means nothing. I have had experience.


Henry Lumley Drayton: I was unable to get any information as to the clause relating to jobbers. If I cannot get any information from the ministers, I want to give them a little information which, I think, can fairly be considered in connection with this matter. I point out that a distinction is made between classes of jobbers, and that it is unfair to make a distinction between classes. I point out that business of the same character should be dealt with on a similar basis. I point out that the licensed jobber will be relieved of any burden as to refunds and such troubles and that he does not have to finance the tax on his purchases. The unlicensed jobber has to finance his tax, and in order to sell to the licensed manufacturer he must be in a position to know from whom he purchased the goods shipped; and he must keep his stocks separate. This is a very difficult matter in connection with bulk goods. The unlicensed jobber must also know when the goods were purchased and the prices paid. The government will have to keep a check on all this if we are to have anything like equitable treatment between the two classes. I have been met by the government with the statement that they cannot give any information, but I hope they will endeavour to inform themselves on the subject before they attempt to enforce this measure. I trust that something will be done to preserve a semblance of fairness in the matter. Is it possible to make these refunds? The minister cannot tell me anything about his machinery, but perhaps when we come to some of the other sections he may be able to ascertain from his deputy how the department will arrive at the amount of refunds that have to be made between now and the first of the year.


William Stevens Fielding: I understand that there are not likely to be any refunds in the way my hon. friend describes, but there will be deductions.


Henry Lumley Drayton: The matter can only be adjusted by means of stocktaking. Who is to take the stock?


William Stevens Fielding: The man owning the goods will have to be prepared to show a stock record. All these things are matters to be determined by conference between the parties concerned and the department, and I do not anticipate the difficulty which my hon. friend seems to apprehend.


Henry Lumley Drayton: There is only one way of checking up these deductions or refunds, whatever you choose to call them.
War Revenue Act

Any business man will tell my hon. friend that the only way of keeping a check on the matter is to take stock of the goods.


William Stevens Fielding: In a hundred cases the departments have to check up statements, and I presume the same thing will be done in this case. The officials of the department will have to check up the statements of the party wherever necessary.


Henry Lumley Drayton: In other words, the man takes stock and the department checks his statement.


William Stevens Fielding: Yes.


Henry Lumley Drayton: Has the minister any idea as to what that will cost?


William Stevens Fielding: No.


Henry Lumley Drayton: It is quite right that these deductions should be made in respect of unmanufactured goods, but why should not similar deductions be made in the case of manufactured goods unsold?


William Stevens Fielding: I understand that the
same rule will apply in that case; there is no difference.


Henry Lumley Drayton: The section is
exceedingly long and I do not see how anybody can read it in one breath and get the sense of it. If the minister says that it covers the completed article I am satisfied; but so far as I can see, it refers only to articles that must be further manufactured. If I am wrong the minister will correct me.


William Manley German: If the importer does not pay any duty where does the refund come in? How can there be a refund if no duty has been paid?


William Stevens Fielding: If a duty has been paid the manufacturer is clearly entitled to a refund, but obviously there would be no deduction if no duty had been paid.


William Manley German: This therefore would apply to goods already imported. It could not apply to goods to be imported in the future.


Henry Lumley Drayton: I should be glad if the minister would clear up the point I have already raised. Does this refund apply to the finished article which is still on hand?


William Stevens Fielding: If the manufacturer has paid the tax he is entitled to the refund.


Henry Lumley Drayton: Then we have it definite; the refund or deduction or repayment will apply to the finished article just as much as to the raw material.


William Stevens Fielding: If they have paid the 5 per cent.


Henry Lumley Drayton: Yes; but everything now has to pay the 6 per cent.


[Stage Direction]
Section agreed to.
On section 8-Failure or refusal to keep books.
Samuel William Jacobs: There is an anomaly in this section. Subsection 19b reads:
19e. If a manufacturer or producer fails or refuses to keep adequate books or accounts, in English or French, for the purposes of this act, the minister may, by notice in writing, require the manufacturer or producer to keep such records and accounts as the minister may prescribe.
I would suggest that we strike out the words, "in English or French" because otherwise it would mean that a manufacturer or producer might keep books in any other language- Choctaw or Iroquois, for instance-and could not be proceeded against.


Henry Lumley Drayton: I do not think my hon. friend is correctly reading the section. It means that the use of the Choctaw language would be an offence.


Samuel William Jacobs: Why not strike it out altogether?


Henry Lumley Drayton: Then Choctaw would be good. My hon. friend does not understand Choctaw.	Ik


Samuel William Jacobs: Nor do I understand this section very clearly. If a man does not know either English or French, and keeps his accounts in Spanish or Italian, it ought to be a very simple matter for the department to find out whether his books are properly kept or not. He ought not to be penalized if he cannot keep his books in English or French.


Henry Lumley Drayton: That is another argument.


William Stevens Fielding: If you are going to make an active requirement that the accounts should be kept, I think it is right to specify English or French. I do not agree with my hon. friend that Choctaw could be used.


John Babington Macaulay Baxter: I think some consideration should be given to the suggestion of my hon. friend from George Etienne Cartier (Mr. Jacobs). Our English and French ancestors acquired this country by achieving mastery over the people for whom my hon. friend pleads. The minister might perhaps consent to an amendment to permit the use of English, French or Choctaw-and then my hon. friend's objection would be met.

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Samuel William Jacobs: As my hon. friend has
helped me out of the hole, I would suggest that he include Micmac, which I understand is current in New Brunswick.


[Stage Direction]
Subsection agreed to.
On section 8, subsection 19g-Refund on goods sold to province if province exempt from tax.
Henry Lumley Drayton: Why should this refund be made? 1 always understood my hon. friend required the money.


William Stevens Fielding: The object of this, I am advised, is that a local government, for example, could import an article free of duty, but in the case of a manufacturer or producer producing the same article he would be subject to tax. In that case when he sells to the local government he could get a refund so he would be put on even terms with the importer.


Henry Lumley Drayton: This shows the infinity of trouble my hon. friend is making for himself. I thought it was bad enough when we had a lot of refunds at the commencement, but now apparently claims can be put in anywhere.


William Stevens Fielding: They are all there for a good purpose.


John Babington Macaulay Baxter: I do not see why the principle that underlies the exemption of provincial governments should not be extended to municipal governments as well or else be denied to all.


William Stevens Fielding: Under the British North America Act I am afraid we cannot tax the Crown, that is, a provincial government, but we can tax a municipality. That is the ground of the difference.


Henry Lumley Drayton: I think in cases under the Income Tax Act as to questions of priorities and the like we had the general right of taxing fairly well settled. As to the liquor case in British Columbia my recollection is that the Privy Council decided that we had the right.


William Stevens Fielding: For resale.


Henry Lumley Drayton: We put it on resale in that case. Does my hon. friend suggest that the provinces have not to pay customs tariff?


William Stevens Fielding: That is one of the interesting constitutional questions that arise in Canada. We are advised that in all probability we have not the right to impose the tax on provincial governments unless they have the goods for resale.


Henry Lumley Drayton: I think to-day we are taxing for customs.


William Stevens Fielding: It is a nice legal question to put it mildly and I do not think we ought to put a tax on the provinces which would involve us in difficulties.


[Stage Direction]
Subsection agreed to.
Section agreed to.
On section 10-Government or provincial sales; use of postage stamps.
Henry Lumley Drayton: What does that refer to?


William Stevens Fielding: Subsection 3 of section
19 is the clause which permits the use of postage stamps, which after a given date are no longer to be used.


[Stage Direction]
Section agreed to.
On section 11-Schedule 1 amended.
Henry Lumley Drayton: What is the
effect of that?


William Stevens Fielding: The passages struck out relate to confectionery and beverages, which were the subject of discussion before.


[Stage Direction]
Section agreed to.
On the title.
Mr. MORIN:: Before you report the bill,
Mr. Chairman, I would like to direct your attention to a defect in the French translation of the bill. In the English version, in the 25th line of subsection 8 of section 6, the words appear, "no deduction to be allowed in respect of such goods not accounted for prior to the thirty-first day of March, 1924." These words are translated as follows: "aucune remise ne devant etre accordee con-cernant des marchandises possedees." The word "possedees" means on hand; it should be replaced by the proper French translation of the English words, "not accounted for."


William Stevens Fielding: My hon. friend having
called attention to the defect in the translation, I have no doubt that it will be remedied.


[Stage Direction]
Title agreed to.
Bill reported, read the third! time and passed.
On motion of Mr. Mackenzie King the House adjourned at 12.50 a.m. (Wednesday).
Fuel Supply
[Stage Direction]
Wednesday, June 27, 1923