1924-06-10

RAILWAYS AND SHIPPING


Right Hon. W. L. MACKENZIE KING (Prime Minister) moved:: That the select standing committee on Railways and Shipping owned, operated and controlled by the government, appointed on the 4th day of June instant, be composed of the following members, viz: Messieurs Drummond, Euler, Gauvreau, Graham, Harris, Jelliff, Jones, Kyte, Ladner, Mackinnon, Milne, Rinfret, Robi-chaud, Stewart (Humboldt) and Stork.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. CHARLES A. STEWART (Argen-teuil) (Minister of the Interior) moved for leave to introduce Bill No. 172, to amend the Indian Act.
He said: We propose to include the control of the Eskimos under the Indian Act. That is the only innovation in the legislation. The Eskimos now require some supervision, and it was thought wise that they should come under the control of the Indian Act and under the supervision of the Superintendent General of Indian Affairs.
We are amending the act in connection with the care of property of insane Indians and making some amendments with respect to the disposition of deceased Indians' property.
Another rather important amendment to the act is one dealing with the cancellation of land sales. The House will remember that two years ago we passed a validating clause in connection with the cancellation of leases as affecting their timber, mining, and so forth. We find that the same difficulty has been encountered in connection with the leasing of lands belonging to the Indians; and where sales have taken place of Indian lands and as

Consular Privileges
frequently happens, there has been failure to complete the sale, there has been some doubt whether or not the department has taken all precautions necessary to validate the cancellation of the sale or lease. We are taking power to do so up to date.
With respect to enfranchisement, we have had some difficulty in connection with the amendment of 1920, and we propose to cure the difficulty that exists in connection with the enfranchisement provisions of the 1920 amendment to the Indian Act.
Mr. MEIGHEN:: What is the disease, and what is the cure?


Mr. STEWART (Argenteuil):: The department has been enfranchising Indians under the provisions of section 122A as enacted by section 6, chapter 26, of the statutes of 1918, from the time it was enacted to the present time, on the assumption that this section was still in force. We are now advised that this section was rescinded by section 3, chapter 50 of the statutes of 1920. It is desired that the said section 122A shall be maintained and that anything done purporting to be under the provisions thereof shall be validated. There seems to be some doubt as to the amendment of 1920 as it affected the amendment of 1918 with respect to enfranchisement, and we propose curing that in the amendment contained in this bill. Those are the principal features of the bill.


Mr.   MACEEAN@York: Does this propose to establish a claim of the provinces on certain Indian lands under certain conditions?


Charles A. Stewart: I think my
hon. friend has reference to a bill that I introduced the other day ratifying the agreement between the Ontario government and the federal government.


Mr. MACLEAN (York):: Was that not
withdrawn?


Charles A. Stewart: I reintroduced the bill and it will come up in due course.


William Findlay Maclean: Is that in this
bill?


Charles A. Stewart: No.
Motion agreed to and bill read the first time.



PRIVATE BILLS FIRST READINGS

[Stage Direction]
Bill No. 170 (from the Senate), for the relief of Philip R. Marshall Palmer.-Mr. Duff.
Bill No. 171 (from the Senate), for the relief of George Felix Simpson.-Mr. Ladner.

[Stage Direction]
On the Orders of the Day:
Mr. PIERRE F. GASGRAIN (Charlevoix-Montmorency):	Is it the intention of the
government to table the correspondence which has passed between the Audit Board, the Civil Service Commission and the government, with reference to the readjustment of salaries of postal employees?
William Lyon Mackenzie King: (Prime Minister):	If any hon. member desires to have the correspondence tabled there is no objection to its being brought down.
I assume it is my hon. friend's wish to see the correspondence and I undertake to see that it is tabled.



CONSULAR PRIVILEGES

[Stage Direction]
On the Orders of the Day:
William Lyon Mackenzie King: I have received from the
Norwegian Consul General a communication which he has requested me to read to the House. It is as follows:
Montreal, June 10, 1924. Right Hon. W. L. Mackenzie King,
Prime Minister,
Secretary of State for External Affairs,
Ottawa, Ont.
This morning's Gazette published a Canadian press telegram from Ottawa to the effect that a member of parliament asked you for a statement regarding the arrest of the Spanish consul in Montreal. In this interpellation reference was made to an alleged protest by me against my colleague's arrest and to my alleged use of the term " colony " in referring to the Dominion of Canada. Inasmuch as, from press reports, you seem to have accepted the statements of the member in his inquiry as true, I am compelled to correct mis-statements made in this connection. The Gazette on the 7th in a local article stated that I had " protested " and the paper used the word " colony."	This article	was published	without	myknowledge.	No reporter	of the Gazette	nor	of	anyother paper saw or interviewed me on this subject. I did not make a protest against the Spanish consul's arrest nor have I in this instance or on any other occasion referred to Canada as a " colony." I am too well informed to make that error. Although it is well established in international law that the archives and files of a foreign consulate are inviolable, I made no	protest against the search of	the	Spanishconsulate.	I feel that	it should be	left	to	the
Spanish government itself to take such steps in the matter as it deemed proper. My intervention in the case consisted of a visit to the Spanish consul at his request, as I am doyen of the consular corps in Montreal, and to an inquiry of the judge as to whether he was aware that Consul Maluquer is a Consul de Carriere. I also presented to the judge the Spanish consul's complaint against his treatment at the hands of the police. I am confident you will communicate the contents of this telegram to parliament and to the press.
L. Aubert,
Norwegian Consul General.
Prince Rupert Elevator



NORTHWEST TERRITORIES-REPRESENTATION IN PARLIAMENT

[Stage Direction]
On the Orders of the Day:
Mr. D. F. KELLNER (East Edmonton):: I desire to remind the Prime Minister of a petition which I presented about a year ago signed by a number of residents of the Northwest Territories praying for representation in this House. The right hon. gentleman told me at that time that the petition had been transmitted to the Redistribution committee to be dealt with. I should like to know what progress if any has been made in connection with it.


William Lyon Mackenzie King: I shall have to refresh
my memory by a reference to the records, but I shall give my hon. friend an answer.
PRINCE RUPERT ELEVATOR On the Orders of the Day:


Mr. A. E. ROSS (Kingston):: I wish to
call the attention of the government to the : following paragraph which appears in the j Vancouver Province of the 4th instant:
Special to the Province
Prince Rupert, June 4-Word is received this morning that Premier Mackenzie King authorizes the announcement that a terminal grain elevator will be built at S Prince Rupert by the Dominion government. Provision for this will be made in this year's estimates.
In view of this statement, may I ask the government whether such an erection is contemplated, or whether such promise has been made?


William Lyon Mackenzie King: 

SUPPLEMENTARY ESTIMATES

[Stage Direction]
On the Orders of the Day:
Arthur Meighen: It is very important
that the supplementary estimates should be brought down at the earliest date. These estimates, I may say, are being used in the province of British Columbia in a by-election as the chief weapon of appeal, and the government in that way is put in a position which I know it does not like; the estimates are being used as a sort of political catspaw of the local administration. This would be obviated if the supplementary estimates were brought down.



GRAIN COMMISSION

[Stage Direction]
On the Orders of the Day:
Mr. O. R. GOULD (Assiniboia):: I will repeat the question I asked yesterday of the Minister of Trade and Commerce (Mr. Low). The minister is now in his seat and he may be able to give me an answer. The question I asked was, whether the government would lay on the Table the interim report of the Royal Grain Commission.


Hon. T. A. LOW (Minister of Trade and Commerce):: We hope to bring it down very shortly.



CUSTOMS TARIFF, 1907, AMENDMENT

[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved the third reading of Bill No. 127, to amend the Customs Tariff, 1907.
Sir HENRY DRAYTON (West York):: I desire to refer again to the position of a large number of the people of Lambton and Kent in relation to the question of the oil bounties which were removed as a result of the budget legislation of last year. Representations regarding this matter were made to my hon. friend which I was not aware of until last night, and I shall have to crave the indulgence of the House for a few minutes in order to consider the position of the crude oil producers of these counties. Speaking from memory, I think we have upwards of 3,500 wells from which crude oil is drawn. At the last session of parliament the Minister of Finance (Mr. Fielding) introduced as part of his budget proposals certain legislation which is to be found in chapter 63 of the statutes of that year, the effect, of which is, in short, to provide in the first instance for a sharp reduction of the bounty and to extinguish it altogether on and after July 1, 1925.

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The total annual production of oil is something like 160,000 barrels of which total Lambton and Kent, the two counties chiefly affected, produce 145,238 barrels. It is an old industry to which the countryside has adapted itself entirely, and thriving towns have been built up. For instance, there is Petrolia, just as nice a little country town as could well be imagined, with a debenture debt of about $450,000, incurred largely in connection with the extension of municipal activities which result from the carrying on of the oil industry in the neighborhood. The great majority of the oil producers are farmers. The production is small and the costs are fairly heavy. As matters stand to-day the House must face the wiping out of the industry entirely, which simply means that Petrolia and Oil Springs will find it difficult indeed to carry on municipally. In addition to this, the farmers of Ontario, with the American market now absolutely closed to them, and with their own market very largely open to their American competitors, are none too well-off to stand further losses.
As I said, Mr. Speaker, representations have been made to my hon. friend that the oil bounty is a matter of vital concern to these little communities. It may be said that we have little to do with local conditions there, but I do not take this view, because if production ceases in that district we will have to buy American crude to the extent probably of $450,000 or $500,000 annually, which will simply add that much more to the adverse drain that we are now subjected to by reason of our currency being at a discount in the United States. But this is not a political matter; it is a matter of life or death to the people interested. The representations which were being made were not made through Conservative channels, they were made through Mr. Greenizen who, if I am correctly instructed, is the president of the local reform party; that is, he is the representative in those counties of my hon. friend's government from a party standpoint. His representations have just been put into my hands, and I am going to give them to the House, so that if this proposed legislation is enacted we will understand, and the country will understand that the government do not think that the farmers cf Lambton and Kent have any right to be in the oil industry. These representations are also old representations as will be apparent in a moment or two. Mr. Greenizen's letter to my hon. friend is dated April 4, 1924, and is as follows:
Dear Sir,-Referring to the recent interview Dr. Fair-bank and myself had with you regarding the legislation of last session whereby the bounty on crude petroleum produced in Canada is removed, we submit for your consideration the following facts:
1.	Crude petroleum was first produced in America at Oil Springs in Lambton county, in 1858. This was followed some few years later by the discovery of oil at Petrolia.
2.	The discovery of oil in Canada was followed by its discovery in Pennsylvania. These early Pennsylvania wells produced such enormous quantities of oil that the home market could not absorb it, and they began shipping to Canada as this market was then free to them. This resulted in a glut of oil on the market. The flush production of our Canadian wells had greatly diminished and with the competition of free United States crude oil it was seen our Canadian oil industry was threatened with extinction. This condition of affairs was brought to the attention of the government of the Honourable Alexander Mackenzie then in power.
I pause for a moment at that point of this appeal addressed by a Liberal to the Liberal government. If there is one thing more than another that my hon. friends talk about it is the protection-no, I will not use that word, for while they mean protection they say protection is an evil-it is the adoption of such a fiscal policy as will help in the production of our raw materials. And oil is a raw material. It is a raw material of great benefit to that class of the community which my hon. friends pretend to be so much in favour of, namely, the farming class.


Mr. SPEAKER:: Order. I would call the
attention of hon. members on both sides to the fact that there is too much conversation going on. The Speaker can hardly hear what the hon. member is saying although he raises his voice. It is not fair to the hon. gentleman addressing the House that a general conversation should be engaged in on both sides.


Mr. GAUVREAU:: There are too many
reading.


Henry Lumley Drayton: Thank you, Mr. Speaker. That is one of the things that we have to put up with. It is something at which my hon. friends across the way are adepts As I say, this is the production of a Canadian raw materal which, according to my hon. friend's own doctrine, ought to be encouraged. And my hon. friend's predecessors in office- not their immediate predecessors, but their more distant ones, those of the Liberal faith as understood perhaps at a time when the Liberal doctrine meant something and was at least the outcome of thinking along straight lines, a doctrine that led somewhere-my hon. friend's own party gave effect to it.
This condition of affairs was brought to the attention of the government of the Honourable Alexander Mackenzie then in power. The necessity of protection for our Canadian oil industry was recognized and that government placed an import duty on crude petroleum and its products. This import duty had a stabilizing
29%
Customs Tariff

effect and our producers were able to carry on.
3.	This import duty with some changes continued through the different governments down to the year 1904.
4.	Consumption of the different manufactured products from petroleum was increasing enormously while the Canadian production was steadily declining. The tax upon the people through the tariff on oil was heavy and was the subject of constant attacks upon the hustings and in parliament.
I do not think my hon. friends will disagree with anything that this Liberal politician says, at least down to that point.
5.	Introducing his budget at the session of 1904 the Hon. Mr. Fielding after investigation and consultation with our oil producers suggested the discontinuance of the duty on the large amounts of crude petroleum entering the country and substituting for it the present bounty of one and a half cents.
It will be observed that the condition of affairs in that section of country whose people had adapted their activities to oil production was brought about by a policy inaugurated by the Right Hon. Mr. Fielding himself in 1904. Mr. Fielding's reasons for the change are found in the House of Commons Debates, session of 1904, volume 3, pages 4359-00. I now quote Mr. Greenizen, who quotes from Mr. Fielding as follows-page 4359:
" The oil industry has a fair claim on our consideration." And further on he says: - "What we desire to do is to bring about a reduction in the duties on oil in such a way that the consumers shall have cheaper oil and that no injustice shall be done to the oil industry, but that it shall have as fair a chance as others."
Do my hon. friends take any exception to those statements of Mr. Fielding made in 1904? I do not think they can.
Again at .page 4360 he says his desire was " to deal fairly and generously with the people who have invested their money in the industry of producing crude oil."
6.	The necessity of protecting the crude oil producing industry was recognized and the bounty was in substitution for the previous duty.
7.	Since the introduction of the bounty in 1904 the oil producing industry has been free from attack. No individual or party in parliament has attacked it, nor is there any evidence that the public generally was demanding its repeal. The substitution of the bounty for a duty was a good business move, and resulted in the building up of a large oil refining industry employing several thousand men. The discontinuance of the bounty announced by Mr. Fielding when introducing his last budget came as a surprise to the oil producers. No investigation was made upon the ground here as to the effect this change would have upon the oil producers.
Let me again remind the House that I am but giving voice to the protests of the head of the local Liberal organization; it is he who says that this action was taken without the slightest investigation and without the slightest thought as to its effect upon the industry.
Investigation will show that our oil producers cannot carry on without a bounty or a protective tariff, 
and large amounts of invested capital will be wiped out if the change goes into effect.
Again I pause to interpolate:	As I understand it-and my hon. friend will correct me at once if I am wrong-an investigation into this question was asked for and was made by the Geological branch of the Mines department. A report was made, I think by Dr. Hume-if I have the names wrong my hon. friend will inform me. No one has yet seen the report; I have never seen it, but I am further told that it substantiates Mr. Greenizen's claim. That report would be in my hon. friend's hands now.
8.	We operate about 3,500 wells with some 216 separate power plants. I have no means of accurately arriving at the capital investment, but it undoubtedly runs into several millions.
9.	Delivering his budget speech, May 11th, 1923, in
dealing with this matter of the bounty on crude petroleum, Mr. Fielding said:	"The total amount
paid in the form of bounty in 1922 was $93,636. The amount is not large, and if we had to consider only the condition which existed when the bounty was applied it might not be worth our while to make any change. But oil has been found in our western country. There is a widespread conviction that we are on the eve of great oil discoveries in the far west and north." And further on he said: "If there should be, as may very likely occur, great strikes of oil in the western country, the bounties we are called upon to pay would be a very serious charge upon the treasury." It is to be noted that the moving cause for the removal of the bounty was the fear of large production being found in the West, and I think it fair to conclude from Mr. Fielding's statement that he would not have discontinued the bounty if he had not such fear in his mind.
Hon. gentlemen will recall that Right Hon. Mr. Fielding found no fault whatever with a bounty policy. Why, he put on more bounties last year. He gave bounties last year, for example, in connection with some form of copper production in the West, at any rate, in relation to a large smelting company there. No objection was offered to the principle; no argument was made that a bounty was not required in order to keep the industry going. But there was the fear that large oil resources would be found in the West or in the north and that the country's treasury would be subjected to very heavy demands. Well, there Being nothing wrong with the principle, there being no room for debate as to the necessity-provided, of coursfe, that these farmers were to be looked after and the busines kept going-the suggestion came from the hon. member for West Lambton (Mr. LeSueur), if I remember rightly, that the bounty should be limited to five barrels a day per well. The whole idea of that was to apply the bounty only to the small production; it would be of no use to large commercial ooncems. Just

Customs Tariff
imagine five barrels a day with a bonus of 52J cents a barrel, a total amount of $2.60 a day that each well could earn. The whole idea was to make it clear that the class of people we wanted to help were the small producers who could not otherwise carry on -that and that alone. Moreover, if a great gusher was found in the West or in the north, it would be entitled only to $2.60 a day, so that all fear was removed of any injury to the treasury had that proposal been adopted. Well, it was not, and my right hon. friend, although pressed for it, could not and did not give any reason why it should not be adopted.	Now I come
back to Mr. Greenizen. He proceeds:
It is now nearly a year since Mr. Fielding delivered this speech. Hundreds of thousands of dollars have been spent in the search for oil in the West but without a favourable result. Investigation of the position of the crude oil produced would have shown a much diminished production as compared with 1904, and that owing to the increased cost of labour and supplies it was costing nearly three times as much to get this production as it cost in 1904, and such investigation would further have shown the impossibility of carrying on at a profit without the bounty. We believe that if Mr. Fielding had seen his way clear to protect the treasury against the possibility of large production, and at the same time protect our industry here, he would have continued the bounty. We suggest that the act passed last session be repealed and the bounty restored, with the proviso that such bounty shall only apply to wells and groups of wells producing an average per well of one barrel or less per day.
That is a most modest request, a far more modest request than the real legitimate claim of the district entitles them to. That cuts it down to a bounty of 52| cents per day. It seems too small altogether, but even that small consideration has been denied. It goes on:
This will enable producers here to carry on. The government cannot be charged with sectionalism in the legislation.
10.	Our oil production for the year 1923 was 158,511 barrels. If the removal of the bounty results in closing down our wells this oil will have to be replaced by purchase from United States producers, at a cost of about {400,000 per year.
11.	I am unable to state definitely the number of workmen employed in the industry, but I believe several hundred men derive their livelihood directly and indirectly from the business.
12.	Our oil fields have been a training school for
oil well drillers. Many of these find employment in the oil fields in different foreign countries. Their drilling contracts are usually for a term of three years, and their families remain here and considerable sums of money are returned to this country from this source.	_
13.	Property owners in the town of Petrolia and in other producing districts in Ontario will suffer a serious loss if our wells are forced to close, as most of our workmen employed about the wells would be forced to leave, and no doubt most of them would secure employment in different fields in the United States.
Again, Mr. Speaker, I point out that this is not the opinion of a Conservative politician, but of a Liberal politician, who says, and says deliberately, that the direct effect of this legislation is to deny employment and to further assist in the process of expatriating the Canadian. I further point out, so clear from all doubt is the real situation here, that during the whole of his submissions to this government he has done only one thing, and that is to absolutely endorse the position taken by us in this section of the House when this legislation was proposed. The file I have does not show why or on what ground relief has not been extended to these people.
There were other documents also put before my hon. friend. We have a document here which further reinforces Mr. Greenizen's appeal. Before reading that I am going to read from a statement which shows the average price received per barrel of crude petroleum each year, but omitting the bounty, the cost of production, the net profit or loss per barrel. The statement goes back as far as the year 1905, and its effect is to show just where these small producers would be without the bounty:
Price ex -	Cost per	Loss per	Profit perYear	Bounty	barrel	barrel	barrel1905.. ..	.. 1.29	1.347	.057	1906.. ..	.. 1.328	1.448	.12	1907.. ..	.. 1.337	1.62	.283	1908.. ..	.. 1.421	1.43	.009	1909.. ..	.. 1.288	1.54	.252	1910.. ..	.. 1.214	1.66	.446	1911.. ..	.. 1.225	1.467	.242	1912.. ..	.. 1.457	1.55	.093	1913.. ..	.. 1.793	1.59	.2031914.. ..	.. 1.505	1.612	.107	1915.. .	.. 1.42	1.742	.322	1916.. .	.. 1.99	1.691	.2991917.. .	.. 2.335	2.20	.1351918.. .	.. 2.675	2.60	.0751919.. .	.. 2.81	2.322	.4881920.. .	.. 4.097	3.51	.5871921.. .	.. 2.662	2.736	.074	1922.. .	.. 2.663	2.541	.122
Average for period 1.815.
Apart from the bounty, 11 years of the 18 produced crude at a loss and 7 years at a small profit.
The aggregate profits for the whole period, exclusive of bounty, amounted to 12 per cent on the capital invested, an average of 2-3 of one per cent per year. No charge has been made for depreciation or depletion of the properties and no large salaries paid.
During this period the bounty in the aggregate was 84 per cent of the whole profits and 29 per cent of the full price received by us from the purchasers.
Now that statement, which was filed with my hon. friend, was made by the Canada Crude Oil producers, Limited, signed by W. McIntosh, Secretary-Treasurer. It shows at least that there are no undue profits being made, and on its face it bears out what I
Customs Tariff

have been saying, that without some continuance of this bounty system-let it be cut down as I suggest-the small producers must of necessity stop. My hon. friend had that information and it was reinforced by-


Mr. McMASTER:: As a matter of economics, and considering what would be the benefit of the whole nation, does the exMinister of Finance (Sir Henry Drayton) wish to suggest that an industry which can only earn two-thirds of one per cent a year over a period of eighteen years should be kept alive by bounties?


Henry Lumley Drayton: My hon. friend must not get an industry of this character confused with industries of the nature that he is so fond of describing, for example, endeavouring to raise oranges in the province of Quebec and bananas in the Yukon. This is an industry the product of which is obtained from the soil in Canada. It is an industry which may be made strong and substantial if properly assisted. At present millions of dollars are sent out of Canada every year to pay for imports of this material. Are we to abandon all possibility of putting Canada on the map as an oil producing country through the agency of this industry?


Andrew Ross McMaster: How long would the
hon. member suggest that the bounty system should be maintained?


Henry Lumley Drayton: Well, I would
say this, that now when the Ontario farmer is finding it hard to make ends meet is the worst possible time to remove this bounty. I have never been so much in favour of bounties ms'self; I support another kind of fiscal policy rather than the granting of bounties, as my hon. friend knows. But here is a system which was inaugurated by the present Minister of Finance (Right Hon. Mr. Fielding) and it is now proposed to strangle that gentleman's economic offspring.


Andrew Ross McMaster: Does my hon. friend
wish to resuscitate it?


Henry Lumley Drayton: No, the infant is not dead yet. Still infanticide is going on. It is a horrible thing to have a case of infanticide in one's family. As I was saying, it is all wrong.


Andrew Ross McMaster: My hon. friend is right, it is all wrong.


Henry Lumley Drayton: It is all wrong that communities like Oil Springs, and Pet-rolia, which are living on this industry should be threatened in this manner.


Andrew Ross McMaster: Living at the expense
of others who are paying the bounty.


Henry Lumley Drayton: I know what
my hon. friend's views are, but I think that very often we get along better by helping each other a little rather than by continually helping the foreigner. We are more likely by such a policy to make Canada the great, prosperous and self-contained country which it ought to be. After all, the
4. p.m. amount in question here is very small. It is so small that the Right Hon. Mr. Fielding himself stated that we need not bother about it; last year the whole amount of the bounty was only $84,000. So the cessation of the bounty was never proposed on the ground of the cost of the present commitments to the country; the present finance minister was never rash enough to make such an argument as that. The whole tenor of his argument rather was that there would be such a tremendous commercial development from the oil industry that it would rain the treasury to pay the bounty. At that time the minister had the statement in question from Mr. Greenizen; he also had a statement from the Canada Oil Producers Limited in connection with this question. I now read from that statement:
The production of crude petroleum in Canada dates from the year 1858, when oil was first struck in what is now the village of Oil Springs. The discovery of oil in Oil Springs was followed a short time later by the striking of oil in Petrolia. In the early days of these fields the wells produced very prolifically and for a considerable period there was an excess of production over consumption. As time went on production diminished and consumption increased. Extensive oil fields were developed in the United States and crude oil, owing to the extremely large production there, reached a price where our Canadian producers could not compete with these large producing wells in the United States.
I have already given the history of this industry from a statement by Mr. Greenizen who was a lawyer. I am now giving it from the point of view of the efforts for the preservation of the industry.
Tor the preservation of the business here a duty was placed on the importation of crude petroleum into this country. This duty saved the situation. Producers here were able to carry on and the field continued to expand and grow in extent for a great many years. A number of refineries were established nearly altogether in the town of Petrolia for the refining of our locally produced crude oil. This import duty on crude oil continued until the year 1904 when it was removed by the present Minister of Finance and a bounty of one and one-half cents per gallon was allowed Canadian producers. At the time of this abandonment of the duty and the introduction of the bounty the minister was in conference with our representatives from Petrolia who were able to convince him at that time that producers here could not carry on without this bounty. As

Customs Tariff
matters turned out the wiping out of the duty and the substitution of the bounty resulted very beneficially for the country. At the time of the change the Imperial Oil Company were operating one refinery at Sarnia of small capacity as compared to what it has at present. There may have been one or two other small refining plants in the country at that time but as to this I am not able to speak with certainty. At the present time the Imperial Oil Company has seven large refineries scattered throughout the country and there are possibly half a dozen other refining plants, so that at present the refineries in the country are taking care of practically all our domestic consumption. Large quantities of the raw material are imported from the United States free of duty and manufactured in our Canadian plants by Canadian workmen.
The present move on the part of the Minister of Finance in announcing the discontinuance of the crude oil bounty came as a shock and surprise to Canadian producers. We had heard of no clamour on the part of the public for the removal of this bounty, in fact, ever since the establishment of the bounty the oil business has been practically free from public criticism while in the old days of the duty the producers were being continually called upon to meet a tax upon their business.
The total number of wells in opersftion in western Canada is 3,574. These figures are furnished by the official inspector of oil and gas wells. There are in operation 216 power plants for the operation of these wells and outside the value of the lands these wells and power plants represent an invested capital of upwards of $2,000,000. The following is a statement of a comparative production of the western Ontario oil fields for the different years from 1915 to 1922 both inclusive:
These details are of importance for the purpose of showing the total absence of any iarge drain on the treasury. This is a very small thing as regards the Dominion; it is a very vital thing to the people of Lambton and Kent:
Total production
Year	in barrels
1915		 214,440
1916		 196,900
1917		 203,000
1918		 288,760
1919		 220,110
1920		 181,749
1921		 172,858
1922		 164,731
I again interpolate. 1 want hon. gentlemen to note that small production in comparison with the number of wells. The great number of wells gives some indication of the number of farmers that are interested. This is no large crushing corporation; this is something entirely removed from excess business profits taxes and all that sort of thing. This is very largely a side adjunct, a side activity of the Canadian farmer. We have 3,574 wells, producing chiefly at a loss if it were not for this bounty, and altogether producing in the yeaz 1922 only 164,731 barrels. The statement continues :
The above figures are furnished by the official supervisor of bounties on crude petroleum. There is a further small production in New Brunswick and a
trifling amount of oil is produced in Alberta. The total production for the whole of the Dominion of Canada at the present time is now about 180,000 barrels. The oil producers affected by this removal claim that it will result in the complete closing down of their wells and the cessation of production of oil in Ontario and in substantiation of their claim that this will be the result they submit signed statements from some twenty representative producers showing the cost of producing a barrel of oil from their properties. It is fair to assume that men are not going to continue to operate their wells at a loss and in some instances a serious loss so the result will be undoubtedly as stated above the wiping out of the business of oil production in Canada and the wiping out of millions of dollars invested in the business, leaving to the men with this amount of money invested nothing but a trifle they may be able to realize from the junk-dealer.
I would ask my hon. friend when he speaks, to advise the committee whether the industry is to continue or not; what his honest view is; if his honest view is that these gentlemen who are in the business are all wrong, where they are wrong; how he expects their business to be carried on; whether he is indifferent to their business closing or not, as it will; whether he sees any reason why the small well should not be allowed to continue when it can continue without the slightest risk to the country; why the farmer should not be able to have the right to take one or two or three barrels a day from his well, resulting in a total which will be very much less than the total now paid, cutting it down in that way, and as regards which total the present Minister of Finance (Mr. Fielding) himself said that we need not bother about the amount and to let things stand as they were. The historical statement continues:
The Minister of Finance in announcing the removal of the bounty stated: The amount paid annually is about $92,000-
It is less than that now. If the information I have is correct, it is more like $85,660, but there is not very much difference anyway, only about $6,000.
-representing a per capita tax of one cent per year or thereabouts as the burden the people of this country are bearing for the maintenance of this industry. If the bounty is removed what will happen is this; With the removal of one-half the bounty in July of 1924 which is the proposal of the Minister of Finance a certain number of wells will close, possibly as much as 50 per cent, With the removal of the balance of the bounty in the following year 75 per cent or more of the balance will close down. The small balance remaining will attempt to carry on, possibly a few producers whose all is invested in the business and who do their own work may be able to make fair wages for a period. A couple of properties at Bothwell and perhaps one at Oil Springs can carry on until they reach the point where they will have to replace worn out equipment with new, and they also will be forced to close.
Bothwell, I may interpolate, is a point in Kent, and both Kent and Lambton are vitally affected.
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It is only a matter of three or four years until every property will be closed down. Another feature of the business, which might compel even properties which can operate at a profit for a time with the bounty removed, to close almost immediately on the removal of the bounty is this: the only market our Ontario producers have for their oil is the Imperial Oil Company at Sarnia. This company has receiving stations quartered throughout the territory where the oil is received. It is then collected in tanks in Petrolia and shipped by pipe line to Sarnia. With such a limited production as will immediately follow the wiping out of the bounty the Imperial Oil Company cannot maintain the staff of employees and equipment necessary for handling this oil and this will mean that any producers with oil for sale would have to make delivery themselves at Sarnia. The cost of handling oil in this way would so cut the producers profit that even the few large producers remaining would be forced out of business.
This is something that will .be apparent to every hon. member. The economies that are effected in oil production consist in the pipe lines, the getting rid of transportation, and so on. The business can only be carried on if there is a certain volume, and unless this is assured the wells will not be operated. The statement proceeds:
The 180,000 barrels per year produced by these Canadian wells is refined in our Canadian refining plants and to that extent, small though it may be as compared to total consumption, goes to satisfy the demand in this country. If this 180,000 barrels per year is cut off the source from which the shortage will be made up is the United States and it means that we will have to send out of the country somewhere about one half a million dollars a year for oil to replace what is now produced here. On the one hand, the country is contributing to the maintenance of this oil business one cent per year per head of our population and is saving to the country an industry which is adding to the wealth of the country as a natural resource half a million dollars per year. Wipe out the bounty and we pay the Americans this half million dollars in addition to the millions we are already paying them for oil. There is a little more to this question than simply closing down of the oil wells and the scrapping of the equipment of these oil operators and the wiping out of the two million dollars or more that these men have invested in the business. Take the town of Petrolia. This town has always been the centre of the oil producing busines. This is now a town of some three thousand inhabitants and dates back some sixty years. During all this time the town has continued to progress and to-day it is one of the most liveable small towns in the country. It has good business blocks, numerous comfortable homes, paved streets, a good sewerage system, water system taking water from lake Huron some eleven miles away and in every way a town and community that should be preserved rather than killed.
I wonder what my hon. friend will say to that. Petrolia is a town that should be "preserved rather than killedand if this industry is killed, what will take its place? Or does my hon. friend expect that the expatriation will continue in the case of this town as it has done in so many others?
The oil busines puts in circulation in Petrolia somewhere about $200,000 per year and every person in this 
community no matter whether he is an oil producer himself or engaged in any line of business is largely dependent upon this business and if the business is wiped out it will undoubtedly have a serious effect upon a great many people who are not directly connected with the business. We cannot carry on as a place with our present population if the oil business is wiped out. People gradually drift away, those connected with the oil business will likely go to the United States and others will likely follow adding our few hundreds to the tide of emigration to that country which is even now serious.
According to the figures given above, the closing down of our oil business here will result in an immediate loss to the country of upwards of $400,000 a year or the difference between the bounty paid and the amount we will have to send out of the country to replace the oil now produced here.
Another considerable loss will result. The oil regions of Western Ontario for years have been a training school for oil well drillers and these oil well drillers find employment in other oil fields in the British Empire and in a great many foreign fields. We have hundreds of Canadian drillers in the fields in Asia, Africa and South America. These men usually enter into a three-year contract and they invariably arrange to have their earnings over and above their trifling expenses in the field transmitted to our Canadian banks. Two banks in Petrolia report average deposits of upwards of $100,000 a year by these drillers and considerable sums are deposited in the home towns of other drillers. It is estimated that at least one-half million dollars a year comes into the country from our Canadian drillers in foreign fields. These men return to this country when finished with their foreign drilling and the money they have returned is spent here. Of the proceeds received from the sale of oil produced in this country practically every dollar is expended for wages, oil well equipment and otherwise in the country.
My hon. friend has said in his budget that he is in favour of primary production, and when assistance is taken away from an industry and that industry is left without the protection which enabled it to exist, it must certainly be looked after by some method such as the remission of the sales tax or the remission of certain customs duties.
I do not know whether my hon. friend has ever had time to read these representations. I am inclined to think that he has never done so; I do not think that Mr. Greenizen sufficiently impressed him with the great importance of this matter to western Ontario, because if he had, the minister would have extended to the people who are engaged in the oil producing business at least as good treatment as he gave the manufacturers of agricultural implements and other things. These people are directly engaged in a primitive industry, and the minister should certainly give them at least as good a chance as he would those who are employed in any other primitive production. But they are overlooked; I do not think he has considered their position at all, because there is no duty whatever in this case. As I have just received the information I have not been able to

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check the accuracy of what I will now give my non. friend, but he will have the facts, for he knows what he did. My recollection however is that this is correct, that the exemptions from duty, the reductions of duty, and the rebate:', in his general bill are all in connection with raw materials to be used in the production of articles classified under certain customs items. In other words, it does not
make, let us say, brass or steel free, or give a rebate on brass or steel, unless these materials are used in the manufacture of agricultural implements or something of that kind; it is not general. This is what these people say and the list is in my hon. friend's hands. It is a list of articles used in operating and drilling for crude petroleum. These are the articles and the rates of duties:
Commodity
1.	Brass tubing
Item	Rate of Duty
348c	10 per cent when in lengths of over six feet
(plus 5 per cent sales tax).
2.	Well-drilling machinery and apparatus and
parts thereof, of a class not made in Canada, drawn or seamless iron or steel tubing over 4 inches in diameter, for drilling for water, natural gas and oil, and for prospecting for minerals, not to include motive power	
3.	Wire rope lines to be used as cables	
4.	Lapwelded tubing of iron or steel, not less than
4 inches in diameter, threaded and coupled or not	
469 Free of duty (this would not apply to 4f casing as it is only 4 inches in diameter).
408	25 per cent plus 5 per cent sales tax.
30 per cent but subject to a drawback of 50 per cent of duty in casing oil and natural gas wells also exempt from sales tax (not over 4 inches in diameter).


Mr. McBRIDE:: Mr. Speaker, in this corner Sir HENRY DRAYTON:	I am giving
of the House we cannot hear what the hon. the customs items, and unless my hon. friend gentleman is reading.	has the schedules before him he would not
be a bit interested. Then:
Commodity	Item	Rate of Duty
	412 399 454 588	75 cents per 100 pounds, and 25 per cent plus 5 per cent sales tax. 30 per cent plus 5 per cent sales tax. 30 per cent plus 5 per cent sales tax. 53c cents per ton. 27| per cent plus 5 per cent.
6. Wrought or seamless tubing, iron or steel, plain or galvanized, threaded and coupled or not.		
		
		
		
	.	
My hon. friend knows a good deal of coal has to be used in this business; he has not looked after that feature at all. I point out to my hon. friend, Mr. Speaker, that the withdrawal of the bounty is a very real injury to that part of the country. The objection to its withdrawal is not political; everybody in the district knows what the discontinuance of the bounty means to the farmers and the community, and they are united in their protest irrespective of politics.
Now, what have those people done that their interests should be wiped out? They made their investments on their faith in the policy of my hon. friends opposite, their policy of 1904, but those people have been
able to carry on only with the most beggarly profits. I wonder if my hon. friend thinks that the farmers generally are making very big profits at the present time.


Mr. ROBB:: No, I do not think so.


Henry Lumley Drayton: Very good. It means something to the farmers of Lambton and Kent to be able to carry on even with such small returns. The continuance of the industry is absolutely vital to the little community centres which I have been describing. The bounty was not removed last year because the principle was wrong, and my right hon. friend Mr. Fielding wanted to swallow himself, for he has never said that the bounty
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principle is wrong. On the contrary, in the very same speech in which he announced the withdrawal of this oil bounty he reaffirmed the principle of bounties by adopting this method to stimulate Reproduction of copper in the West. The people of Lambton and Kent were not getting something which the right hon. gentleman thought they should not get, that was not the trouble at all; he said in effect, "I am afraid for my balances, I am afraid that big discoveries of oil in the North and in the West will create an undue strain on the treasury if the bounty on oil is continued." But the threatened danger has never materialized. Still, these people know they are to be injured because of the prospect of big oil discoveries in other parts of the Dominion. They also know that if we merely adopt the simple provision of limiting the bounty to a small number of barrels per day per well-the suggestion last year was five barrels-the total charge on the treasury per well would only be $2.60. We often hear it said that the farmers never get any benefit from our fiscal policy. Here is a case where they do get a benefit. I do not know what the idea of the government is. Last year there was to be a differential duty put upon sugar beets so that our farmers producing them would not be in as good a position to compete with the producers of raw cane sugar. My right hon. friend realized the mistake he had made and stayed his hand. He has made just exactly the same mistake here. I think if he were to stay his hand here also it would be equally to the purpose. Honestly, what else could he do? His whole reason for proposing the withdrawal of the bounty was these large anticipated oil finds which, as I have shown, have not yet materialized. I am confident that the right hon. gentleman would have stayed his hand in this case were he now at his desk. What did he do in connection with sugar beets? His idea was that having regard to the duties on raw and refined Cuban sugar the sugar beet producers were getting too great protection, and he cut the duty of 48 cents in half. We prevailed upon him to let it stand for a year. He did so because the refining company at Walkerville showed that they had made their contracts with the farmers and would be out the 24 cents if the duty was so reduced. After the right hon. gentleman allowed it to stand, it was pointed out that having done so for the reason stated, it was quite Obvious to everybody that he was taking the money from the farmer and not from the refiner. Thereupon he very properly allowed the duty to stand. I am quite con-
vinced that the same sense of fair play so characteristic of my right hon. friend would influence him to take the same action in this case if he were here to-day.


Mr. MURRAY MacLAREN ((St. John and Counties of St. John and Albert):: Mr. Speaker, I would take this opportunity of bringing to the attention of the House the condition of the oil fields in the county of Albert. This matter was referred to a year or two ago. In the county of Albert the oil fields are in the early or development stage; there has as yet been no large development. Up to the present I understand that between a million and a million and a half dollars of British capital have been invested in this work. The amount of production, I say, is not large; the work is in its initial stages. The bounty that has been paid is something about $5,000 a year. If the bounty is to be abolished, as is now threatened, then this industry in Albert will lose that sum-a small sum, it is true, but it is something that would help. The profits are very small, or nil; therefore a bounty, even if a small one, is of first importance.
Two years ago the Minister of Finance of that day was very cautious about continuing the bounty, because he said there might be an outpouring of oil in the northern and western parts of this country. It was pointed out to him that that was a remote possibility; that it might happen within a year or perhaps not for fifty years; that he was legislating on something that might occur, to the great loss and disadvantage of industries that were being earned on to-day. It is important that this industry should not be subject to loss, because surely we will all agree that we should encourage the investment of money from without the country. The development of the oil area in Albert is a case in point, because it is largely British capital that has been invested in this work. The abolition of the bounty would unquestionably be a severe blow at the investment of British money in this part of the country. The work has not been put on a profitable basis, therefore those who have invested their funds in the work and are not yet receiving a fair reward cannot help considering that they are not being treated fairly. Surely there can be a means of providing that any such wonderful development of oil as has been predicted will not plunge the country into an enormous expenditure; surely the bounty can be limited to a certain point of production. I place this matter again before the minister in the hope that it may make some little impression on him. I sincerely believe that to abolish the bounty will not

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benefit the country. You are proposing to make a small immediate direct saving, but the ultimate loss will be very great in injury to or the closing of these industries and in shaking the confidence of outside investors in this country.


Hon. EDMUND BRISTOL (Centre Toronto):: Mr. Speaker, it is obvious that we are anxious to keep in Canada all the people we have here, if for no other reason than that they may help in the payment of our national taxes. It is equally obvious that we would like to bring back from the United States the hundreds of thousands of those who have been going there for a long time past, and particularly during the last two years. It is of much more importance that we should solve these two problems than that we should bring in immigrants from different parts of Europe who apparently spend one year in Canada and then go over to the States as fast as they can. In anything I have to say to-day I have no desire to find fault with this government or with any government; I shall simply try in a fair fashion to examine the difficulties which beset us and to see whether there is not something that we as a nation should do to help the situation.
Unquestionably we have a difficult situation to face. We have a national debt as a result of the war, which is costing us $200,000,000 a year. We have the National Railways, which, unfortunately, largely on account of the ambition of our friends opposite, are now costing us about $75,000,000 a year, and we have to pay our debts as we go along. We are subject to taxation which is greater than that of any other country. We cannot meet our yearly obligations unless we get people into Canada and keep them here, and unless we get money into Canada. I do not think that even my farmer friends, who may differ from us on many other points, wall deny that it is a national necessity that we should keep our people here. We must first of all make our farmers prosperous; we must get more people into the country, and we must get- I hope-our own people back from the United States. In order to do all these things we must have additional capital, and if we are to get additional capital we must make the conditions just as favourable here as they are in the United States, which naturally is our greatest competitor, and which has more capital than we have.
Looking over the Ottawa Journal to-day I noticed an article on the subject of the Canadian and United' States income tax, and a few of the figures given in that article are
illuminating. For instance, on an income of $3,000 the Canadian tax is $40 where the United States tax is $7.50. Is it any wonder that our young men think of going to the United States to earn an income of about that amount when they are taxed only $7.50 upon it? Then, on an income of $4,000 the tax in Canada is $80 where in the United States it is $22.50. Is it any wonder that our men are going to the States? On an income of $5,000 the tax in Canada is $126 and in the United States $37.50. Then, when you come to the higher incomes, which many people think should be dumped over to the government: On an income of $1,000,000 the tax in Canada upon a man who has worked hard enough to get that amount is $696,000 while in the United States it is $429,000. Take even an income of $10,000, which is an average income in this country for a great many people:	the tax in Canada
is $619 while in the United States it is $207.50. Then take the wages that are earned in their respective countries:	Young
ladies who work in the stores, for example, get $13 in Ottawa and $30 in Detroit.
I do not think that the tariff changes which my hon. friend has suggested will have the effect at all of assisting the country in overcoming the difficulties we are discussing. On the contrary, we scared the life out of the manufacturing interests of this country that we were going to have eventual free trade, and that did more harm to this country than any tariff changes he made, because the tariff changes he has made have not been for the benefit of the farmer, but for the benefit of the manufacturer of agricultural implements. A short analysis will show my hon. friends that the manufacturer of implements is making more and the farmer making less. Iron, steel and other materials going into the manufacture of these implements come in free from the United States, and the manufacturer of agricultural implements is making just as much to-day as anybody in the United States. The farmers may think they are being materially aided by the tariff changes; I hope they are, but I am satisfied they will find on closer examination that the manufacturer of implements is the one man who is better off, and every other manufacturer connected with that industry, and the great mass of people in this country who are interested in manufacturing, have been injured by certain statements made by a couple of the ministers that the Liberal party is now headed on its journey towards complete free trade.
I say to my farmer friends, to start with, that I do not know any stage in the history
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of our country when the Conservative party had not full appreciation of the fact that the prosperity of the farmers was absolutely Jssential to have progress in this country. Canada cannot get ahead unless the farmers are prosperous. They are certainly not prosperous in Ontario to-day. As far as western Canada is concerned, I think perhaps they are more prosperous than the farmers of North and South Dakota and of one or two other states bordering on this country, from the fact that our farmers in the West grow the best wheat in the world. They are good farmers, they work hard, and do the best they possibly can, but they have a heavy railway rate against them. It is less than in the United States, because in this country the farmers have been given the benefit of a railway rate to the head of the lakes which is 9 cents a bushel less than the American farmer gets; and I am glad of that because it gives the Canadian farmer a chance. But, coming as I do from one of the largest manufacturing cities in Canada, Toronto, I want my farmer friends to understand first and last that we believe we can have no real or great prosperity in any country unless the farmers of that country are prosperous. I do not think that what the government has done for the farmers this session is going to help very much in making them prosperous. I do not see how the five or ten dollars apiece will bring them prosperity. However, the western farmers are well able to look after themselves. They send a spiendid lot of representatives to this parliament, men of great ability and intelligence, well able to look after themselves, so I am not proposing to give them any advice as to how they should conduct their own affairs. But I want this made plain:	As far
as the manufacturing interests of this country and the Conservative party are concerned, no sane man believes that this country can become great and prosperous until our farmers are made prosperous, and kept prosperous, and are treated fairly and squarely. It is clear they are men of great intelligence, and how they can go back seventy or eighty years and advocate free trade I do not understand. It is all very well in theory, and if we had free trade all over the world, and every country was free to import the natural products of the rest, we would have a lovely time; but when the other countries of the world have adopted a different policy and each has said, in effect, "We will keep all our business for our own country," there is not going to be any great prosperity in those other countries where free trade is adopted as compared with

those countries that are looking after their own interests, and where manufacturers, farmers and the working people are in unanimous agreement for the good of the whole country.


Mr. EVANS:: What is the matter with
the farmers of Dakota? Have they not got protection?


Edmund James Bristol: If my hon. friend will
excuse me-I am speaking with very considerable difficulty-I ean mention an article on the subject which appeared in a recent issue of the Saturday Evening Post, April 14, 1924, in which he will find the whole subject dealt	with,-what	the government of the United' States is doing for the western farmer of that country who has not been intelligent enough to keep Mr. Pig and Mrs. Cow and these other accessories which our farmers go in for and which help to tide them over bad periods, bad crops and bad weather. That article deals with the subject much better than I could. I am trying to deal with the problem on a broad basis, and I say that in no country can you have prosperity unless the farmers are prosperous, and the idea of many farmers that the manufacturers are a body of gentlemen with their mouths wide open, wanting to eat up everybody else, is a great mistake. I know many distinguished manufacturers of Ontario whose fathers are farmers in the province of Ontario. Why? Because the farmer on the farm in Ontario produces the best breed of men and women anywhere in the world. They grow up in the fresh air amid healthy surroundings, and come to our great universities. They are splendid men, and they take possession of our cities and manufacturing just as my hon. friends to my left are taking possession of this government to-day.
I want to come back for a moment to what I think might help the situation in this country. I am quite satisfied that the five or ten dollars apiece that the farmers will get out of these tariff changes will not help them very much. There is another question. How are we going to get back into this country almost the one million French Canadians who are in the United States to-day? We want them back in Canada, because there are no better people in the world than these French Canadians, men and women, and there is no more prosperous province than Quebec, and no province that is belter run. We would like to see these people back in this country. What has my hon. friend done in his tariff changes to get them back? He has had three or four members from the province of Quebec get up and tell him what a rotten tariff it is, -and they have not done full justice to it,

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because they were very diffident, not wishing to hurt his feelings. The whole point, so far as the great provinces of Ontario and Quebec are concerned, is that the farmers are not prospering any more than is the western farmer, but they do not come here in a body and ask us all to get up and work for them, they are trying to do what they can with their farms to make themselves as prosperous as they can. If the western farmer got his free trade policy, it might help him get cheaper products in his home, perhaps, but the farmers of Ontario are perfectly well aware that if the manufacturing industries of this great province are injured, and if our population, and particularly our working men, leave this country for the United States, instead of staying in Canada, there is going to be no prosperity for them. Take the situation in the province of Quebec. You have not heard any of the members from Quebec agitate for free trade. Far from it; they would not dare to go back to their constituencies if they did so.
The policy of the present government seems rather to be one of trying to make friends of the farmers of .the West and retaining power for the time being, rather than of considering the inauguration of a policy that would be of real value to the people of this country. Why, sir, will anybody tell me that the farmers in the provinces of Ontario and Quebec do not need protection on everything they produce? Take eggs for instance. The duty on eggs entering the United States is eight cents a dozen, whereas the Canadian duty on eggs coming in from the United States is three cents a dozen. The disparity there is quite marked, but protection for the farmers of the United States is a marked feature of their tariff. Now, it is vitally important, to my mind, that .the farmers of Ontario and Quebec, in fact the agriculturists of the country generally, should have the same protection, if not more, in the case of products entering Canada from the United States as in the case of products going into the United States from .this country. If that policy were adopted our producers of fruit and vegetables, for example, would be able to sell their products when prices were firm and the demand good; they would not, as at present, have to content themselves with the tail end of the market when most of the demand had been satisfied by the Americans.
The agitation for a lower tariff practically has arisen almost entirely in the West where great delight is felt because there has been a reduction in the duty on agricultural implements. This in itself is unimportant even when taken in the aggregate. Apparently 190
however the western farmer is highly pleased because he has been able to force the government to take a step in the direction of free trade.
What we want in this country is a policy which will not only increase our industrial development but will augment our population. What we should strive to do is to retain our present population and bring back all those Canadians who have gone to the United States. A proper tariff policy would have these results. With all respect, I say that our tariff should be raised and not lowered, so that instead of importing nine million dollars' worth of agricultural implements from the United States, and seventeen million dollars' worth of woollen goods, we shall not import any. My advice to Canadians is: Do not import any of these goods; raise your tariff just as the United States has done. I do not mean to say that we should imitate the tariff policy of the United States in its entirety, but adopt such a policy as will cause to be made in Canada everything that can be produced or manufactured here. By doing this you will be giving real protection to our people.
A great many of our western friends, and other people also, are of the opinion that the manufacturers and the working men will be the only classes to benefit if that is done. Well, I am not in favour of allowing the manufacturers to milk, so to speak, the farmers or any other class of the community. But what I do say is, that any work required to be done in Canada should be done by Canadian workmen, who, in turn, will buy the products of the farmers. So far as the manufacturers are concerned, I am quite satisfied that my hon. friend the Acting Minister of Finance (Mr. Robb) will see to it that they pay their proper share of taxation; he can be depended upon to see that the manufacturers do not get unduly rich. If all the work needed by Canada is done by Canadians it will mean that the home market will grow and expand. There will be more people for the agriculturists to sell to, and the farmer of the West will get his share in common with the rest. I believe there are about two and a half million Canadians in the United States at the present time, and one of our objects should be to get them to return to their own country. We can get our own people back by increasing the demand for manufactured products, and the best way to do that is by making a judicious use of the tariff, just as the United States has done, and giving the first preference in our markets to Canadian manufacturers.



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When Sir Wilfrid Laurier came into power in 1896, what happened? A tariff policy was framed which it was thought would work favourably for Canada. In the great constituency which I have the honour to represent a Liberal protectionist was elected at that time, and he was a very 5 p.m. good man. He came down to Ottawa, in company with the Hon. Lyman Jones, at that time head of the Massey-Harris Company, and what did they do? They did not suggest that the tariff on agricultural implements should be lowered -not at all. In the new tariff regard was had to imported materials when used in the manufacture of agricultural implements exported abroad. That provided work for our own people and helped our manufacturers to successfully compete in European and other markets, with the manufacturers of the United States. That was a good thing for Canada, and our people prospered. Any one who examines the Laurier-Fielding tariff of 1897 will have difficulty in finding it to be other than a protectionist tariff under which the country prospered.


Mr. HUGHES:: It. was roundly condemned by hon. gentlemen opposite at the time.


Edmund James Bristol: It is possible that mistakes were made. The present government is making mistakes, and I am showing hon. gentlemen opposite how to correct them. The best thing they can do is to go back to the tariff of 1897. True that tariff underwent changes, but in the main it was a reasonably protective tariff and made provision for the necessities of the country. Not only did industries flourish under that tariff but there was a large influx of population. On the other hand, between 1874 and 1878 the Liberal policy was very much as it is to-day. It was upheld by gentlemen who professed to believe in free trade rather than protection-in a word they were gentlemen who professed what they thought would get them into office. The acting finance minister of to-day is a very able and very fair man, and I have great respect for him personally. It is for that reason I am pointing out these facts to him. When Sir Wilfrid Laurier and the great Liberals of that day succeeded to office they gave the country a somewhat better protective policy than the Conservatives had done. Today we on this side are endeavouring to secure for the country a real protective policy such as the United States has framed for its people. A policy of that kind is absolutely essential at the present time if we are going to pay the interest on our national debt, keep our [Mr. Bristol.!
railways in successful operation, repatriate our people who have left the Dominion, and get more population from other sources.
The province of Nova Scotia has never had fair treatment in the matter of coal. It has an abundant supply. So also has western Canada. There is no reason in the world why we should send out of Canada to the United States every year the enormous sum of from eighty to one hundred millions of dollars for the purchase of coal. Ontario is producing its own electric power. That is what has kept that province alive, as well as the province of Quebec. But Canadian coal, rather than American coal, should be used in this country; there is no reason for spending the large sum I have mentioned in buying American coal when western Canada and the province of Nova Scotia can meet our demands in this respect.
There is one other matter to which I should like to refer. In Canada we have wonderful timber resources, and according to engineers we have also the greatest mineral resources in the world. That is a matter of absolute importance to this country. Fortunately we cannot take our mines and give them away to the United States. For that reason the mining is going on in this country, Canadians are being employed in the development work, and the money is spent in Canada instead of being spent in the country to the south. I advise the Acting Minister of Finance to give this country a real protection, a policy such as will protect the farmers of Canada, give our workmen a chance to earn good wages instead of going to the United States, and retain our population in all parts of Canada at home. If my hon. friend will inaugurate a policy of that kind he will do something which will be of real benefit to the people. I submit that the present tariff is not helping Canadian industries in any way whatever. It seems to be designed chiefly for the purpose of keeping the government in power, which to them is of great importance, of course. Furthermore the government's tariff policy has frightened the industries of Canada to such an extent that they are apprehensive of disaster and do not know what is going to happen from one minute to another. Finally it has put a damper on the country's prosperity.


Mr. B. W. FANSHER (East Lambton):: If any person should be interested in the oil industry it is the representative for East Lambton which yields at least three-quarters of the oil produced in the Dominion. The plea advanced by the hon. member for West
i

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York (Sir Henry Drayton) was made entirely on behalf of the farmers who are interested in the oil industry. I am somewhat at a loss to know why any plea should be made entirely from the farmers' standpoint. With that in mind, I wish to make a few observations. The oil industry, as most hon. members no doubt are aware, is not entirely in the hands of farmers. In fact, only a small portion of it is in the hands of farmers or those who own the land. Oil companies lease the land from the farmers with the object of drilling for oil, and the right of a company to put down a well and to enter into the oil producing business is always procured from the owners of the land by a lease which gives every eighth barrel or the equivalent thereof to the farmer. So, when the hon. member for West York (Sir Henry Drayton) speaks of the bounty being of such interest to the farmer, he is not entirely correct. The amount of bounty paid to the oil industry last year throughout the entire Dominion was less than $80,000. Only one-eighth, or less than $10,000 of that bounty went to the farmers of the Dominion of Canada during last year, while on the other hand about $70,000 went to companies operating the wells and producing the oil. Why then all this plea on behalf of the farmers when the meagre sum of $10,000 is distributed amongst the farmers of this Dominion who have oil wells on their properties?
We are indebted to the hon. member for West York for the somewhat lengthy history of the industrsq and in this connection I have a few observations to make. It is true that m the early days of the oil industry there was a duty on crude oil coming into this country. At that time there was nearly enough oil produced within this Dominion to supply the needs. When, however, oil became more in demand and it was found necessary to procure crude oil from outside of this country to keep the refineries going, the Canadian refiners came to the government then in power and through their efforts secured the removal of the duty on crude oil entering Canada-another case simply of the manufacturer who was a free trader on what he had to buy but a protectionist on what he had to sell. The refiners succeeded in getting crude oil put on the free list and at the same time in retaining a protection on the refined article of from half a cent to two cents a gallon. Of course, the producers of crude oil at that time felt that they, having enjoyed the protection on crude oil, should not be left to shift for themselves.
190i
To satisfy the producers of crude oil, the Minister of Finance in 1904 gave them a bounty. He gave the refiners what they wished by giving them free crude oil and he gave the producers within this country a bounty. That has continued for about twenty years. Last year we were given notice that the bounty would be discontinued this year; that one-half would be cut off and that in the succeeding year the other half would be taken off; while the refining branch of the industry was left alone, it can obtain its raw product free and yet it has a protection of one-half to two cents per gallon on the refined product. What should have been done was to give assistance to neither. If the government removed the duty from crude oil, they should also have reduced the duty on the refined article and given this country the benefit. They have, however, made fish of one and flesh of another; they have put the producers of crude oil in open competition with producers of crude oil in other countries, but they have left the refiner in a position where he can charge from one-half to two cents a gallon, according to the grade of the oil, more than he could if not protected.
I was very much interested in hearing the remarks of the hon. member for St. John (Mr. MacLaren), and I observe from a return brought down in the House that some few hundred dollars less than $4,000 was paid in bounties to oil producers in his province, New Brunswick. In Ontario over $76,000 was paid in bounties and the major part of this came to the riding of East Lambton; in fact, I think I would be safe in saying that over three-quarters of the oil produced in Canada is produced in East Lambton and, therefore, three-quarters of the bounty paid would be paid in that riding. But that bounty went to no exceeding great number of producers. One hundred and fifty would count them all told. There are about fifteen oil companies operating in Canada and they get the majoi portion of the oil bounties. The farmers who have leased their lands to these oil companies get one-eighth or the small percentage.


Mr. MANION:: Surely the hon. member
does not think the farmer who just owns the land should receive the same bounty as the man who is developing the well?


Burt Wendell Fansher: one-eighth, 'that is not placing the matter in a true light.


Robert James Manion: The farmer may think
so.


Burt Wendell Fansher: It reminds me a great
deal of the argument put up by my hon friends to my right in regard to the home market-their argument that the home market is of great benefit to the farmer, when in reality it is not. I was going to observe that the larger portion of the bounty goes into the hands of comparatively few men or few companies. Fifteen companies get the major portion of the oil bounty paid. Without giving the names of the companies, I wish to give a few of the amounts of bounties paid to oil operators in the riding of East Lambton for eleven months of the last fiscal year. They are as follows: $2,225, $2,594, $2,181, $4,805, $2,688, $1,592, $3,657, $3,469, $1,200, $6,337, $4,383, and $2,104. These are amounts that are over $1,000; but many of the amounts paid the farmers are below $100. The main purpose of my rising on this occasion is to correct the impression that these oil bounties are of such great benefit to the farmers as we are led to believe. It has been said in the course of the debate that regardless of all political parties in that section of the country which is to-day engaged in oil production the people are unanimously in favour of the retention of oil bounties. I wish to inform my hon. friend (Sir Henry Drayton) that this is not the case. The oil industry in Lambton county has long passed the development stage; the territory has been fairly well tested to a depth of at least 400 feet and deep drilling has not taken place to any large extent.


Mr. PUTNAM:: Can the hon. member
tell us approximately how many farmers benefit at all from the bounties?


Burt Wendell Fansher: I am sorry I cannot give the exact number but I know I am well within the mark when I say that in the riding of East Lambton there are not more than 100 farmers receiving any benefit from oil bounties. There are only about 150 who receive cheques for bounties and of that number some 15 or 20 would be companies operating wells.


Mr. CALDWELL:: And the companies get the major portion of it.


Burt Wendell Fansher: 
Robert James Manion: I have listened with a good deal of interest to the remarks of the last speaker, and until shortly before the conclusion of his speech I had no idea where he stood on the question of oil bounties in his constituency, which is particularly affected. I drew the conclusion from the last remarks he made that as things stand to-day he favours the continuance of the bounties as they are. Am I right or wrong?


Burt Wendell Fansher: No hon. member who
listened to my remarks can draw that inference from them; I do not stand for the continuance of the oil bounties as they are. The oil bounties constitute a protection at the expense of the public for the benefit of a few, the major part of those engaged in the industry being men who have amassed considerable wealth out of it, some of them indeed owning oil fields in foreign countries. Knowing them as I do, I believe a number of them would still be far better off without the bounty than those who are taxed to provide that bounty.


Arthur Meighen: 
Burt Wendell Fansher: There is only about
$80,000 paid in bounties.


Arthur Meighen: Apparently I have
laboured in vain. What I am trying to make out is that if that assistance to the extent of $80,000, which turns over $500,000-


Burt Wendell Fansher: There is an "if" there.
MR, MEIGHEN:	Yes, but I have supported that "if". I think I understand Mr. Speaker, why it is the hon. gentleman made the speech he did. I thought I had made the point perfectly clear; the bounty now certainly sustains the industry, for without it operations would cease. That is perfectly obvious if the figures are correct which have been presented in detail and which have never been refuted in this House. Nothing has been advanced to even modify them;
either by the hon. member (Mr. Fansher), the Acting Minister of Finance this year or the Minister of Finance last year.


Andrew Ross McMaster: May I interject a
question?


Arthur Meighen: When I finish the
sentence. You know, the member for Brome (Mr. McMaster) always sees the result of a sentence a little in advance and .wants to head it off. People do not produce oil to lose. Those, then, who produce above $2.62J quit anyway; with their stopping the overhead cannot be sustained; without the overhead the others cannot produce. So where is the industry? It is all gone.


Andrew Ross McMaster: No, no.


Arthur Meighen: Let me hear from the hon. member for Brome.


Andrew Ross McMaster: If the bounty was discontinued, that might have the effect of allowing the less gushing wells to go out of existence, but would not the gushing wells which are making a profit without the bounty still continue?


Arthur Meighen: I have just stated they
could not, for this reason: the whole production is so small that it is no more than sufficient to warrant the overhead. Perhaps, "overhead" is not the correct word. I mean the pumping, tanking and conduit system necessary to carry the oil so many miles down to Sarnu. You cannot support that system from the production of what my hon. friend calls the gushing wells, those that make a profit without any bounty. They represent onty fifty per cent of the total production; consequently they could not sustain the overhead. Unless you maintain the conduit system you cannot have any wells at all.


Andrew Ross McMaster: Yes, you can.


Arthur Meighen: I do not think my hon.
friend will venture to put his suggestion so that I can hear him.


Andrew Ross McMaster: Yes. I say the hon.
member is looking at the situation as if it was one business with a number of wells of an equal capacity and productiveness. I think he is mistaken. I would say that in this district, as in all districts, there are certain wells which gush a great deal freer than others. The bounty may keep in a state of life certain wells which otherwise would close, but there must be a number of wells which would go on making wealth for their owners and lessees without any bounty at all.
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Arthur Meighen: I have to forgive the hon. member for East Lambton (Mr. Fansher), because I have not succeeded any better with the hon. member for Brome. He has not got my point at all. What he said is apparent and I stated the same myself. There are wells that produce at a lower cost than others, some as low as $2.40. These we will call the gushing wells, to suit my hon. friend.
Mr. MiMASTER: Use a better word if you have one.


Arthur Meighen: There are others producing at $2.50 up to $2.62i, which is the average; then there are others which are not so good and which produce at a cost of $2.70 up to $2.94, as per the figures which I have before me. Now the hon. member says that if you stop the bounty he will agree that all wells which are producing above the average of $2.62^, which is the sale price, will have to stop; but he says those below will keep going. Well, let him follow this. The production per day I think is some 250 barrels -the figure is not important for the moment. This oil runs through conduit pipes, pumps, and tanks, there are in all three systems, until finally it reaches the refinery many miles away. To maintain the interest on the investment in that system the whole amount of oil that goes through now is essential.


Mr. HOEY:: Is that overhead jointly
owned?


Arthur Meighen: I understand so.


Burt Wendell Fansher: Is the hon. member aware that there is a refinery in Petrolia not a mile distant?


Arthur Meighen: The cost of taking the oil down to Sarnia would, I suppose, be on about the same scale as the smaller operation in Petrolia.


Burt Wendell Fansher: Will the hon. member admit that the overhead might be reduced by not sending the oil so far away?


Arthur Meighen: They would not send it to Sarnia unless it was the cheapest thing to do. They do not send it there for fun.


Andrew Ross McMaster: If the volume was reduced it might be cheaper to send the oil to the nearer place.


Arthur Meighen: It might be, but when
you get down to that detail it is admitted that half the production is gone.


Andrew Ross McMaster: No.


Arthur Meighen: Yes, because all above the average will have to go. But I venture
CMr McMaster.]
to say that this solution cannot be found, because I am referring to the facts presented last session by the hon. member for West Lambton (Mr. LeSueur), who has had more to do with this industry than any ten other men in this House, and he knows what he is talking about. The overhead cannot be maintained on half the production; consequently the industry depends upon the bounty. There may be a lagging amount left, but I would gather from the very clear statement presented by the hon. member a year ago that what would be left would be straggling and poor. Virtually the whole industry depends on the bounty. If the farmer in many cases rents and gets an eighth, then his eighth is gone; but all the rest who rent for cash or anything else find their share gone, and the money is diverted into the mid-continental field. This is what we are deciding, and this is what the government has decided in the negative. The government cannot be doing it because it is afraid of big interest control. If ever there was a case where the profits do not go to the big interests it is here, where it goes into very many pockets. It may first of all only reach the number the hon. member refers to. but ultimately it gets to thousands and it sustains a fine district of Canada. If we are going to follow the principle which the hon. member wants adopted in this case, follow it right through to the disastrous conclusion. The government is marching there all right; its feet are on the path-the path which leads to a much more dismal territory than any dream of now.


Robert James Manion: 
Mr. VIEN:: If my hon. friend will permit me a question, what does he mean by a bounty to agriculture?


Robert James Manion: Well, I have my estimates here somewhere; I could give the items to my hon. friend. I do not mean a bounty directly in money to the farmer, but I can give the instances. I have referred to estimates amounting to $6,000,000-


Thomas Vien: Will my hon. friend distinguish between what he calls a bounty to agriculture and any public service like the building of a wharf or the building of a railway, which serves industry just as much as agriculture?


Robert James Manion: The difference is that in
building a wharf or a railway it is for the whole population, but this is not. Here is an agricultural estimate of $5,850,500.


Mr. BROWN:: In regard to some items
included in that estimate, may I ask what about the money spent in eradicating tuberculosis? What about the money spent on this magnificent park down along the canal? Does my hon. friend want to charge all that against the farmers? I am admitting, of course, that that money ought to be paid.


Robert James Manion: I do not know what my
hon. friend refers to when he talks of eradicating tuberculosis and about a park down along the canal. I can read from the items here.


John Livingstone Brown: The eradicating of bovine
tuberculosis is paid for out of the agricultural estimates, and it is not a matter in which only the farmers are interested.


Robert James Manion: That is possible. There
may be a few little items here in which the farmer alone is not directly interested. Now, let me read the items.


Mr. FORKE:: Will my hon. friend permit
me?


Robert James Manion: Yes. I usually bring hon.
gentlemen to my left to their feet whenever I mention these estimates.


Robert Forke: That is because we want to get at the facts. I suppose there is an item included in the estimates for research. Assuming it was possible by scientific investigation to find a remedy for rust in wheat, would that benefit only the farmers, or would it benefit the people of the whole Dominion?


Robert James Manion: That would be a benefit
to the farmers, and certainly it would indirectly benefit the whole Dominion.
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Mr. FORIvE: That is an agricultural estimate.


Robert James Manion: Yes, just as the discovery of Marquis wheat was of benefit to the whole of Canada. But let me mention a few of these items:	Here we have Experimental
farms, $1,400,000. Would my hon>. friend the leader of the Farmers' party claim that that is of any direct benefit to me, that it is of direct benefit to the manufacturers?


Some hon. MEMBERS:: Surely.


Robert James Manion: Well, the whole attitude
of my hon. friends is and always has been that what helps the farmer helps the whole country- but that which helps the manufacturer does not help anybody else. I do not wish to be unfair to my hon. friends, but at times they give one the impression of absolute selfishness in their attitude. I do not mean to say that to hurt their feelings at all, but when they argue that expenditure for experimental farms is of any benefit whatever to me they argue something that is beyond my comprehension.


Thomas Vien: Does my hon. friend compare
an appropriation for experimental farms to a grant of so much per ton of production to a particular industry? Does he not rather think that a bounty must be a payment on the basis of so much say per bushel produced- that is, if he wants to make the comparison?


Robert James Manion: Well, my hon. friend is
now arguing as to how it is done; I am not going into these little details. The point is this: Experimental farms are directly of advantage to the farmer, and agricultural colleges are directly of advantage to the farmer.


Mr. HALBERT:: They are not a bonus.


Robert James Manion: Yes, they are an indirect bonus to the farmer.


Robert Henry Halbert: No.


Robert James Manion: I differ from my hon.
friend; they are an indirect bonus to the farmer. Take, for example, the administration of the Destructive Insect and Pest Act.


Mr. WARNER:: I would ask my hon.
friend if he would consider it worth anything to the implement manufacturers that the farmers are able to buy the implements they make?


Robert James Manion: Yes I do, and I consider it of great advantage to the farmer that he is able to sell his goods to the implement manufacturers and their employees. But that is what the farmer does not see; that is what

he does not admit. This afternoon some speaker derided the home market. Certainly I do say that, in a general way, as this helps the farmer it helps the whole country.


Daniel Webster Warner: Then why is the hon.
gentleman complaining about these estimates not being of any benefit except to the farmer?


Robert James Manion: I was not complaining at
all. I am simply pointing out that the members from the prairie provinces continually take the attitude that we must not help anything such as this oil industry-an industry in which, by the way, I am not interested one way or the other. But I submit that these agricultural estimates are of direct interest and of direct benefit to the farmer, and they cannot be argued to be anything else. By helping the farmer they help the whole country; I do not dispute that, just as by helping the manufacturer we help the whole country. But that is what the western farmer will not admit. He says: If you help the farmer you help the whole country, but if you help the manufacturer you steal it from us. That is the attitude the western farmer takes. Do not let there be any misunderstanding:	I am
not complaining about one dollar of these agricultural estimates, and there never has been any objection to them from this corner of the House; we support them.


Daniel Webster Warner: Who is it pays the biggest part of the money that is given to these experimental farms?


Robert James Manion: I will tell the hon. gentleman who pays the biggest part:	It is the
same people who pay the biggest part of the taxes of this country-the industrial centres. Look over the taxes, see who pays them, and you will find that the farmers do not pay them to any great extent; you will find that the manufacturing and industrial centres of this country pay them.


Robert Henry Halbert: And charge it up in the
prices of their implements.


Robert James Manion: Possibly they get some of it back, and I do not see why they should not. But who pays the income taxes? Ninety-eight per cent of them are paid by the industrial centres of this country.


Oliver Robert Gould: Will the hon. member argue that it is because of laxity on the part of officials of the department that the taxes are not paid by the farmers?


Robert James Manion: I am not charging anything; my hon. friend will not take me away from my point. I was asked by one hon.

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member who paid the bounties, and I pointed out that the industrial centres paid them to a large extent.


Daniel Webster Warner: I would like to know
where those who pay them get the money to pay them with?


Robert James Manion: They do not get it from
the farmers. They get some of it from me, for example, and I am not a farmer, neither am I a manufacturer. But I am quite sure that they get more of it from me than they do from some of my hon. friends who talk more about what they do. Now, if I may be permitted to go on-


Mr. LEWTS:: I would like to point out
that this whole discussion is out of order. We are not dealing with the agricultural estimates.


Robert James Manion: I always notice that my
hon. friends do not like this discussion about the agricultural estimates. Now, Mr. Speaker, I was not going to read all these items; too much of my time has been taken up already.


Mr. LEADER :: If the hon. gentleman will permit me-I do not as a rule interrupt hon. members when they are speaking; this is about the third time I have interrupted anybody. But I wish he would read some of the agricultural items. If he does not, I will read one.


Robert James Manion: I have the floor just now; my hon. friend may read it after I have finished.


Harry Leader: Read the Health of Animals item, for instance.


Robert James Manion: I will read them all if my
hon. friend wants me to:
Experimental Farms	$1,400,000
Entomology	 25.000
Administration of the Destructive Insect and Pest Act	 310,000
Dairying	 230.000
Cold Storage Warehouses	 30,000
Fruit	 182,000
Health of Animals	 2,000,000
(Administration and enforcement of Animal Contagious Diseases Act and Meat and Foods Act).


Harry Leader: Is not that last vote of
benefit to the whole country, rather than to the agriculturists alone?


Robert James Manion: Some of it is of direct
benefit to the population generally, but most of it, I should think, is of direct benefit to the farmer. The next item is Publications, $33,500. These publications deal with agricultural questions. They are not of any special interest to me. and if my hon. friends
do not think they are of any use to them, why not move to wipe out the item? These publications are of no use to the manufacturers, nor to me as an ordinary medical man.


Daniel Webster Warner: When you help the farming industry are you not helping the rest of Canada?


Robert James Manion: That is true, but how
can you help the manufacturing industries in this country without, helping at the same time the rest of Canada? I think that question is just as proper as my hon. friend's. There are farmers in this country beside those in the prairie provinces. There are farmers in Ontario and Quebec, and about 90 per cent of their total products is sold to people dependent upon the manufacturing industries in the two provinces. If you wipe out the tariff altogether, you may temporarily help the prairie provinces, but probably you will ruin permanently the Ontario and the Quebec farmer, and there are as many farmers in those two provinces as there are in the prairie provinces.
Coming back to the question of bounties, I was going on to say when I was interrupted, that generally speaking free-traders look upon bounties as the fairest method of assisting industry. To my mind it is one of the very fairest methods. If you wish to build up an industry, if you give it a bounty you know exactly what it is getting. Questions have been put on the order paper this session with respect to the oil bounties, how much was received in bounties, and what the production was. You can get that information under the bounty system, so if we are going to have any type of production, and my hon. friends apparently agree with me that they are not moving very far this year towards free trade except in the matter of agricultural implements, we might as well have the bounty system.
There are other industries in this country that could be helped to a great extent by bounties, and which have not been helped so far. This year the Ontario government, the good Conservative government which wiped out the Drury crowd, to the great blessing and prosperity of this country, to my mind, have brought in a measure for paying a bounty on iron ore We are importing into Canada to-day iron and its products to the extent of $175,000,000 a year. I for many years advocated in this House, until it became a bit of a joke, that something be done to assist the production of iron ore in Canada. I quit in 1921; that was the last time I spoke on the question. To-day the Conservative
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party in power in Ontario have passed an act providing a bounty for iron ore production in Canada. We are importing practically 100 per cent of the iron ore being used in Canada. The Ontario government sent a message to this government, asking whether they would go halves in giving this bounty to assist in the production of iron ore in Canada and the use of Canadian iron ore in blast furnaces, but so far as I know they have received no encouragement from this government, and consequently they are to-day going to give an iron ore bounty themselves, I understand, the province bearing the whole cost of the bounty to develop the production of our iron ore.
It is a most important question, Mr. Speaker. Here we have a country with hundreds of millions of tons of iron ore scattered over it from the Atlantic to the Pacific. There are hundreds of millions of tons of iron ore in northern Ontario, British Columbia, some in the Maritime provinces, and some right outside of Ottawa. Within fifty miles of where we are sitting to-day there are large deposits of iron ore, claimed to be of very high quality. This iron ore cannot compete with the iron ore in the United States. No one will dispute that if, by giving a bounty or some other form of assistance, we could develop the production of iron ore in Canada, anld use our own product instead of importing this iron ore from the American shores of lake Superior, it would be a good thing for this country. We have running across northern Ontario three lines of railway, and that is one section of this country that is not getting the traffic it might get; it has not the population. The great proportion of the hundreds of millions of tons of iron ore in Canada, exist in northern Ontario, and the great proportion of the railway lines that need traffic are in northern Ontario. Nearly fifty per cent of the whole traffic in the United States comes from the mines, and in Canada we are importing hundreds of millions of dollars worth of iron ore and iron goods of various kinds.
I have here the monthly bulletin) of the Canadian Institute of Mining and Metallurgy, and in an article the Deputy Minister of Mines, Dr. Camsell, gives import and export figures showing that in iron and iron products we imported in 1923, in round figures, $170,000,000; in non-ferrous metals, $40,000,000, and non-metallic minerals, $171,000,000, making a total of $381,000,000. Surely, the building up of an iron industry would be of the utmost importance to Canada, because the iron and steel industry is one of the basic 
elements of commercial prosperity in any country. Before the war, Germany and the United States were rapidly coming to lead the world in the production of iron and steel. England, up to a few years ago, led the world, but Germany caught up, and the United States has now far surpassed her. It would be of vast benefit to Canada to develop this industry, and I think this government has been derelict in its duty in not meeting half way the Ontario government. The reason is, of course, this government was afraid of opposition from my friends to my left, who, at any rate, are consistent and insist on stopping anything in the shape of protection of any kind.


Mr. LEWIS:: Why could not this industry be developed without a bounty? Are there any special reasons why it could not compete with the industry in the United States?


Robert James Manion: I wish to finish by six o'clock, but I will answer briefly. The reason is the iron industry in the United States has got a start. It 'had immense capital to develop it, and hundreds of millions of dollars have been spent on plant, railways and steamship lines. They have a development there which we cannot compete with at the present time. My hon. friend from East Toronto (Mr. Ryckman) tells me that the industry in the United States also started with a bounty. They have millions of dollars tied up in that industry, and our poor little mines in northern Ontario, wdth no capital to speak of, cannot compete with them. The claim is also made, unfortunately, that our iron ore which has been developed up to the present time is not equal in quality to the iron ore of the United States.


Daniel Webster Warner: Could it be developed in large enough quantities to compete with the United States?


Robert James Manion: Yes. we have hundreds of millions of tons.


John Livingstone Brown: I have been informed that the iron ore of Minnesota is very easily mined. Can the ore of northern Ontario be mined as easily?


Robert James Manion: Some of the iron ore in Minnesota can be more easily mined than any we have yet discovered in Canada. Some they can simply dig out with a steam shovel, but that is exhaustible. Jim Hill-J. J. Hill, the great Canadian whom you all know-made the statement fifteen years ago that within 25 or 30 years the iron ore of the United States would be within sight of exhaustion. About 60,000,000 tons a year of iron ore are being

Private Bills
used over there. The United States still has a vast amount of iron ore in the country, but rather than use up its own supply it is looking to other countries, including Canada, to meet its demands. It would be far better, for this generation at least, if we could utilize our own resources and build up in northern Ontario, in British Columbia, in this particular section of Canada, and in the Maritime provinces, a large iron industry. Viewed from every possible standpoint that would be a good thing to do. I submit that a bounty, such as we are discussing to-day, would be one of the fairest ways of establishing such an industry in Canada. I submit further that the government should consider very seriously, before they wipe out the bounties upon oil. They should likewise seriously ponder the question of whether they should not join with the province of Ontario and aid, by other bounties, in the development of industries like the iron industry.
At six o'clock the House took recess.
After Recess
The House resumed at eight o'clock.



PRIVATE BILLS


[Stage Direction]
The House in committee on Bill No. 67, for the relief of Rilla Mpy Freeman.-Mr. Gordon. Mr. Gordon in the chair.
On section 2-Right to marry again.
Arthur Meighen: Why is this clause "right to marry again" inserted?


The CHAIRMAN:: The bill was amended
in the Senate to that extent.


Arthur Meighen: Is there another clause
giving the divorcee the right to marry again?


George Newcombe Gordon: No.


Arthur Meighen: Are we to presume that
the divorcee has not the right and the party granted the divorce has? The bill has been changed. I do not know why the change back is made.


Mr. KAY:: I was on the Private Bills
committee and I might say that a conference was arranged between the Private Bills committee of this House and the Divorce committee of the Senate. They reported back to the Private Bills committee that this was the better form of bringing down the bills. It was agreeable to the Senate committee.	.


Arthur Meighen: The explanation is not
very convincing. The committee is waiting for the Minister of Justice to give an explanation in connection with divorce bills.


Mr. LAPOINTE:: I hope the committee
will do without the Minister of Justice in connection with divorce bills.


Arthur Meighen: We -have an impasse.
The question is why the change has been made back to the old form embodying a distinct clause permitting the divorcer, that is the petitioner, to marry again. I raised the point that that power naturally follows from the dissolution of the first marriage, and as well that to be logical we Should go on and provide special power for the divorcee to marry again. I do not know why the change back has been made.


Ernest Lapointe: I understand this change has been made by the Private Bills committee. I saw something about it in the newspapers, but I should like the chairman or some member of the committee to explain what really took, place. I do not know. I have no objection to letting this bill stand.


George Newcombe Gordon: If I might be allowed
to interrupt, I might say that a conference was arranged with some members of the Senate, and under the authority of Rex versus Mill's, volume 10, Clarke and Finnelly, page 534 it was decided in 1844 that the English canonical law formed a part of the common law of England and that the canonical rule 107 forbids marriage of divorced persons. It was thought there was some doubt as a result of that, and the case of Hodgins versus McNeill, volume 9, Grant, page 305 decided in 1862. seems to indicate that, so I am told by Mr. Mackinnon, a member of this House, who is a member of the Private Bills committee. As a result of a conference between the law clerk of the Senate and, I understand, counsel of the House of Commons, it was agreed between the committee and the members of the Senate-although I do not know whether the Senate officially endorsed it-that it would remove any doubt if this second clause were added.


Arthur Meighen: This seems pretty far
fetched and cannot possibly be the law of Canada, because the divorcee has in hundreds of cases married again.


Mr. HAMMELL:: They did not have the
right.


Arthur Meighen: The custom for fiftyfour years would establish the right.
Private Bills


Ernest Lapointe: This clause was incorporated in the bills passed in former years and I understand that it is only this year that it has been omitted.


Arthur Meighen: That is right.


Ernest Lapointe: It is being adopted
again.


Arthur Meighen: The divorcee has never
been specifically permitted by any legislation to marry again; but the divorcee always has done so. Certainly it is the intention of parliament to continue that right, and if we are going to be so scrupulous and meticulous about the ancient canon law of England we had better go on and provide for the divorcee also.


Thomas George McBride: As a member of that
committee, I might say that it was the Senate that made the change and not the committee of this House. When the matter came up in committee of this House there were present some of the legal department and the question was raised whether it was best to leave it as it was or have the change made. The chairman of the committee suggested that there should be a joint meeting of the committee of the Senate and -the Private Bills committee to take up the matter with the law officers and report back. When their report came back to the committee it was to the effect that it was best to leave the matter as it had been, and we therefore acted accordingly.


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

[Stage Direction]
Bill No. 18, respecting a certain patent of The Fleischmann Company.-Mr. Jacobs.
Bill No. 56, for the relief of Theresa Agnes Sprague.-Mr. Kennedy (Glegarry and Stormont).
Bill No. 57, for the relief of Terry Andrea Maxwell Bruce.-Mr. Boys.
Bill No. 68, for the relief of Jessie Maria Watchorn.-Mr. Rankin.
Bill No. 69, for the relief of Walter Scott Miller.-Mr. Logan.
Bill No. 70, for the relief of Harriet Bertha Wiser.-Mr. Rankin.
Bill No. 71, for the relief of Esther Mary Edwards St. George.-Mr. Chew.
Bill No. 72, for the relief of Mabel Peters.- Mr. Stewart (Leeds).
Bill No. 73, for the relief of William Thomas Trot.

Mr. Stewart (Leeds).

Bill No. 74, for the relief of Lucy Elizabeth Smith.-Mr. Carruthers.
Bill No. 75, for the relief of Florence Luella Patterson Kelly.-Mr. Ross (Kingston).
Bill No. 76, for the relief of Arthur Harold Mingay.-Mr. Rankin.
Bill No. 77, for the relief of Isabella Guild. -Mr. Hudson.
Bill No. 78, for the relief of Albert Lawrence. -Mr. Harris.
Bill No. 79, for the relief of Douglas Lewin. 

Mr. Boys.
Bill No. 80, for the relief of Mary Quinn - Mr. Wallace.
Bill No. 81, for the relief of Marie Darling Irving.-Mr. Wallace.
Bill No. 82, for the relief of Margaret De-Mello.-Mr. Wallace.
Bill No. 83, for the relief of Mary Caroline Dooley.-Mr. Stewart (Leeds).
Bill No. 84, for the relief of Barbara Gibb Duncan.-Mr. Martell.
Bill No. 85, for the relief of Nellie Sinkins. *-Mr. Martell.
Bill No. 86, for the relief of Catherine Jean Livingstone.-Mr. Sheard.
Bill No. 87, for the relief of Alice Maud Knowles.-Mr. Sheard.
Bill No. 88, for the relief of Jessie Ruth Haverson.-Mr. Sheard.
Bill No. 89, for the relief of Arthur Foord. -Mr. Arthurs.
Bill No. 90, for the relief of Harold Gordon Hendry.-Mr. Sheard.
Bill No. 91, for the relief of Karl Peter Hansen.-Mr. Ladner.
Bill No. 92, for the relief of Ethel Hadden. -Mr. Sheard.
Bill No. 93, for the relief of William James McLaughlan.-Mr. Ross (Kingston).
Bill No. 94, for the relief of Alyce Wilson. -Mr. Boys.
Bill No. 95, for the relief of Lemuel Burkett. -Mr. LeSueur.
Bill No. 96, for the relief of William Ewart Gladstone Pettinger.-Mr. Harris.
Bill No. 97, for the relief of Anna Mc-Geachey.-Mr. Sheard.
Bill No. 98, for the relief of Antonio Pietranglo.-Mr. Sheard.
Bill No. 99, for the relief of Ella Vear.- Mr. McQuarrie.
Bill No. 100, for the relief of Anna Welton. 

Mr. Sheard.
Bill No. 101, for the relief of Marjorie Mahaffy Cox.-Mr. Kay.
Bill No. 102, for the relief of Mary Elizabeth Milne.-Sir Henry Drayton.

Customs Tariff
Bill No. 103, for the relief of Georgina Myrtle Potts.-Mr. Mewbum.
Bill No. 104, for the relief of Guy Barrington Hutchings.-Mr. Spence.
Bill No. 107, for the relief of Amy Selain Slater Therrien.-Mr. Jacobs.
Bill No. 108, for the relief of Harold Adrian Proctor.-Mr. Garland (Carleton).
Bill No. 109, for the relief of Harry Charles Arthur.-Mr. Martell.
Bill No. 110, for the relief of Tony Bazar.- Mr. LeSueur.
Bill No. Ill, for tihe relief of Gordon Johnston Hutton.-Mr. Stewart (Hamilton).
Bill No. 112, for the relief of Douglas Carlyle Bell.-Mr. Ross (Kingston).
Bill No. 113, for the relief of Elma Cath-eryne Caulfield.-Mr. Ross (Kingston).
Bill No. 114, for the relief of Alice Bertha Boyce Baker.-Mr. Spence.
Bill No. 115. for the relief of John Lee Williamson.

Mr. Church.
Bill No. 123, for the relief of Nora Pearce. -Mr. Boys.
Bill No. 124, for the relief of Albert Francis Ray.-Mr. Garland (Carleton).
Bill No. 125, for the relief of Irene Mildred Jeffrey.-Mr. Boys.
Bill No. 126, for the relief of Florence Mitchell.-Mr. Martell.
Bill No. 131, for the relief of Ruth Ethelind Jackes.-Mr. Ryckman.
Bill No. 132, for the relief of Wilfrid John Mitchell.

Mr. Simpson.
Bill No. 133, for the relief of Edward James Bentley.-Mr. Sheard.
Bill No. 134, for the relief of Elizabeth Sylvia Cameron.-Mr. Ross (Kingston).
Bill No. 135, for the relief of Wilhelmina Aird McKay.-Mr. Preston.
Bill No. 136, for the relief of Mary Ellen McClelland.-Mr. Garland (Carleton).
Bill No. 137, for the relief of Annie Jane Bridges.-Mr. Harris.
Bill No. 138, for the relief of Florence Rath-bun.-Mr. Thurston.
Bill No. 139, for the relief of William Samuel Morrow.-Mr. Stewart (Leeds).
Bill No. 140, for the relief of Ethel May Macdonald.-Mr. Church.
Bill No. 141, for the relief of Stanley George Harris.-Mr. Sheard.
Bill No. 144, for the relief of Evelyn Eira Awrey.-Mr. Stewart (Hamilton).

[Stage Direction]
Bill No. 167 to amend the Act to incorporate the Board of the Presbyterian College, Halifax.-Mr. Duff.
Bill No. 168 for the relieif of James Koniaris.-Mr. Wallace.

[Stage Direction]
The House resumed consideration of the motion of Hon. J. A. Robb for the third reading of Bill No. 127, to amend the Customs Tariff, 1907.
Robert James Manion: Mr. Speaker, when the
House rose at six o'clock I was pointing out to the House that the imports of iron and other products which we ourselves could produce, and which we had in large proportion in this country, amounted to a very large sum. I have since looked up the figures, and although I unfortunately have been unable to get the figures for last year, I find that two or three years ago the imports of coal amounted to $70,000,000, of oil to $46,000,000, and of iron and its products to $175,000,000, in round figures. These figures may vary somewhat from year to year, but roughly speaking they would represent the average annual importation. When we consider that we have in this country the second largest coal deposits in the world, the United States only having deposits greater than ours, it seems ridiculous that we should import coal to this amount. Of course, it is true that due to -transportation difficulties the coal of the West and the coal of the East is found difficult to be brought into the central part of Canada. At the same time, I am one of those who would be perfectly willing to see some method worked out whereby the people of Canada generally would be able to give some bonus, if necessary, in the shape of freight rates, on, say, the coal of western Canada being brought to the East, and the coal of eastern Canada being brought westward, so that we would be able to correct to a certain extent our adverse balance with the United States as shown in the figures I have just mentioned. I know that last year in my home city we used a great deal of coal from the prairie provinces, and it was very satisfactory. I am entirely of the opinion that we have been pursuing a wrong policy in using anthracite coal where we might have been using our own softer coals. I believe that that, among other things, has been helping to make our cost of living higher. It is another instance, as Jim Hill once said, of the high cost of living being due to the cost of high living.
So far as coal is concerned I think we might well consider the payment of a bonus through railway rates so that eastern and western Canadian coal could be brought to the central part of Canada. There is a crying need for that.
Customs Tariff

It is true that we are not producing much oil in this country, but we have very heavy oil deposits, and that is where the bounty would come in. We could produce part of our own oil and prevent practically that $50,000,000 importation of oil' which we are now getting from the United States.
It was with the question of iron and its products that I was dealing more particularly this afternoon. It is a question in which I am much interested because in 1918, 1919, 1920, and 1921, I spoke in this House along the lines of doing something to develop the iron industry in Canada. I was supported in those years by the hon. member for West Algoma (Mr. Simpson), and by a number of other members, some of them on the Liberal side of the House. I do not know if I was supported by any of the Progressive members, but there were not then so many of them as there are now. At any rate, this is a question which has been before the people of Canada for a great many years. Away back in 1896, a large proportion of the iron ore we were using was Canadian iron ore. To-day we are using practically none that is produced in Canada. There is a point I mentioned before recess, and in the interim I ran across my file and found a letter dealing with this side of the question, that Canada should develop her iron resources-and her oil resources, for that matter, but iron particularly-because it furnishes heavy bulk traffic for the railways. I have here a letter written to me in 1921, after one of those speeches of which I have just spoken, by the commissioner for the National Railways on this very important question. Mr. Green, then commissioner for the National Railways, wrote me as follows:
I have been trying to find the official paper from which X gleaned the information regarding the British government assisting iron production during the war.
He goes on to say that he cannot find it, but that he is convinced that during the war the British government, a free trade government, assisted in the production of iron and iron products in that country. He goes on:
I am keenly interested in this subject, which I believe is a vital matter to t'he Canadian National Railways; in fact. I do not know anything of greater importance to Canada as a whole than the development of our iron resources.
I do not know whether this aspect of the case has struck you, but it seems to me that apart from all the other considerations that we have got to do something as a protective measure, as the exhaustion in the hematities of the United States, the lake Superior region, is within measurable distance, and we do not know when that source of supply may be denied us.
IMr. Manion.]
He mentions there a side of the question I shall deal with in a few moments, but before coming to that, we all know in this House that we have in Canada a greater mileage of railway per thousand of population than any other country in the world, and that is the reason we have on our hands a railway problem, and we can only solve it by increased traffic for the railways and increased population. The development of our own coal and oil resources is one of the ways in which we can increase traffic for the railways and the population of Canada.
I come now to the side of the question he mentions in that letter. He points out that it is possible in the years to come the United States may find it reasonable to stop the export of some of these products into this country. Now probably the very first thing it vrould stop would be the export of iron ore, because, as Jim Hill said, in thirty or forty years the iron resources of the United States will be within sight of exhaustion. When the United States sees that day coming it is not going to permit iron ore to be shipped into this country, and it would be a serious matter if Canada at this time did not look far enough in advance, or had not vision or imagination enough now to develop, to a certain extent at least, her own iron ore resources. I might point out that if a bounty were paid upon iron ore, as suggested by the Conservative government of Ontario at the present time, there would be no bounty paid unless the iron mines were developed. In other words unless there are results no bounty is paid out, and no expense is incurred.
During the dinner hour I went to my room and obtained a report which has a very important bearing upon this question. I had forgotten that report this afternoon as I spoke without preparation. The subject is one with which I am more or less familiar but I did not prepare my remarks and I had forgotten the report in question. It is the report of the Ontario Iron Ore committee, which I had leift lying on my desk and which I have not looked at for some months. This committee-and by the way its report should be of particular interest to hon. gentlemen to my left-was appointed by the late Drury government. This is one of the few acts of that government which I would care to praise. The Drury government appointed a committee whose members I do not know, with the exception of Mr. Cowie. I do know that he is in the iron business in Sault Ste. Marie and has been in it all his life. That committee was appointed for the purpose of

Customs Tariff
looking into the whole iron ore question. With the approval of the House I am going to read a few paragraphs from the report. At the time this report was drawn up the final report had not been printed-this is only a mimeographed copy. The committee say:
The committee appointed by order in council, October 25, 1922, to make research, investigate and report upon the extent and quality of the deposits of low grade iron ores in Ontario, the best commercial methods of beneficiating the same and generally what steps or measures should be adopted to enable the low grade and other iron ores of this province to be utilized in the production of pig iron and steel, have the honour to submit their report herewith.
I have glanced through the report and marked a number of paragraphs which very briefly I wish to place upon the record because they are of interest. But before I do that I wish to repeat that this committee was appointed -by the late Drury government- the Farmer-Labour government of the province of Ontario-and this is the report of the committee appointed to deal with this very question. Their report in brief is to the effect that we should give a bounty to develop the iron ore resources of Canada. However, I am going to read some of their observations and recommendations. They say this:
It is with some satisfaction we assert that, though to-day Ontario iron ore requirements are supplied wholly from the United States, that we could, if stern necessity demanded, produce from our own deposits sufficient ore to maintain our own furnaces in blast.
On page 8, the committee say:
The unanimous opinion of this committee is. that our iron and steel industry will suffer severely as the United States lake Superior ore reserves, now being rapidly used, are conserved to a greater and greater extent for American furnaces and that we must, during the next ten years build up an iron mining industry that will largely free Ontario from the necessity of importing ore.
And then on page 19 they say:
This committee believes then that some of the higher grade magnetites (over 50 per cent iron natural) and siderites, such as are found at the New Helen mine, can be produced to-day at a cost approximately equal to their market value, but there is little in the present iron ore mining situation in Ontario that would tend to attract capital. Some new factor must be introduced if we are to get the industry under way in the near future.
I am not quoting passages particularly favourable to my contention; [DOT] the whole report is along the line I am arguing. The report consists of 175 pages, and I am merely picking out a few passages which give the gist of the whole thing. On page 23, are to be found the recommendations of the committee as follows:
Recommendations
We, the Ontario Iron Ore committee, unanimously recommend and urge:-
(1)	That the province of Ontario provide a bounty of one cent per unit of iron, on each long ton oi merchantable iron ore, natural or beneficiated, produced and actually marketed from Ontario deposits and that such bounty be available to Ontario producers of merchantable iron ore for a period of ten years.
That in brief is their recommendation, that one cent per unit be granted on each long ton of merchantable iron ore. That is to say that if there is one per cent of>
iron produced they get a bonus of one cent; if there is fifty per cent of iron produced they get fifty cents; the idea being that when the iron ore is low grade iron and it is beneficiated, or brought up to a certain degree of iron by beneficiation they give a bounty of one cent per unit. Then on page 24, there is another passage I should like to quote, which I thought was particularly applicable to hon. gentlemen to my left because it is a statement by this committee appointed by the Drury government, and it deals with the same question with which I was dealing before dinner. They say regarding bonuses:
Many people believe that any industry that must be bonused or in some way artificially supported, is unnatural and unworthy of that assistance. Yet in devious ways assistance is being given to nearly every industry. Experimental farms are operated by the governments to give guidance to the farmer. Thoroughbred stock is distributed at public expense. To per petuate fishing, hatcheries are maintained. The credit of the province has been pledged to provide cheap power for the manufacturer. These are but a few of the illustrations that could be used to illustrate the point that bonus or bounty is known under many names.
I shall read three paragraphs more and then conclude. On page 29 the committee give reasons why the Dominion government should help to establish this industry, and I agree entirely with them. The committee say:
Finally, we are of the unanimous opinion that one-half of the bonus recommended should be provided by the Dominion government, and cite the following reasons:-
(1)	The active development of our iron ore resources and the enlarging of our steel industry, will be very effective in maintaining a favourable international trade balance.
(2)	The colonization of northern Ontario is largely dependent upon the mining industry, and that portion bordering the non-productive sections of our National Railways, is dependent largely upon our iron resources.
(3)	Largely increased traffic may be obtained for the National Railways from domestic production of iron ore, and perhaps it would not be unreasonable to suggest that the profit to/be made by our publicly owned railway would, in the gross, equal, and in time exceed the proposed Dominion share of the bounty.
Then, on page 53:
Deducting the 1920 and 1921 shipments from the lake Superior districts, we can calculate an assured ore reserve of approximately 1,477,000.000 tons, and if the average production from this district is taken at 45,000,000 tons, it is apparent that the
9 p.m. positive ore reserves will be exhausted in about thirty-two years. If we include the estimated probable ore reserves, this period is increased
Customs Tariff

to a little more than sixty years, less, in each case, such period as will compensate for a gradually increasing production to care for a growing per capita consumption of iron and steel products and any wider distribution that would result from decreased transportation rates.
Now on page 56, and this is the last quotation I shall give from the report, they say:
The supplies available to open market from whence we draw our requirements, must continue to dwindle at an accelerating pace, and long before the conclusion of the estimated thirty-two year period, we must provide for our own requirements from our own resources, or pay a profit to the United States producers of iron ore that will place our steel companies in Ontario in a position where they will experience real difficulty in competition against foreign prices.
These are just a few paragraphs from the report which will repay the reading by any hon member in this House and particularly the hon. gentlemen to my left, because they oppose bounties, oppose anything in the shape of protection, in spite of the fact that most of the countries of the world have built up their industrial life under protection. The United States iron development to-day is the greatest iron development in the world barring none. It surpasses that of Great Britain. Before the war Germany surpassed Great Britain in that respect, or was about to surpass her. The United States much surpasses Great Britain, and she produces a vastly larger amount of iron and steel products per year than does the Mother Country. The United States built up her iron and steel industry upon a protective system-not by a direct bounty perhaps, but by a high protective duty against iron ores from other countries.
I submit that Canada should develop some of these vast natural resources of which we are continually speaking. Some years ago I used to speak a good deal more about the natural resources of this country than I do now, but I came to the conclusion that it was rather tiresome for the people of Canada to be continually listening to our public men speaking of our vast natural resources when those resources were of no 'use unless we developed them. Unless we develop them we might just as well not have the resources at all. Possibly that is an extreme position because in the future they may be used; but so far as the present generation is concerned unless we develop some of these resources they are of no use to us, or of no use to the country. We might as well talk of the salt of the ocean as the hon. member for East Toronto (Mr. Ryckman) interjects. The point is that we have to fight to-day to have anything done to develop these natural resources. With respect to the oil bounties the Acting Minister of Finance is intending to cut off

the bounty now granted; and yet in the case of iron ore the Conservative government of Ontario at the present time is proposing to adopt a method by which these natural resources can be developed.
Earlier this afternoon hon. gentlemen to my left asked why we could not do this in competition with the United States. Well, it is a common sense proposition. A country which started ahead of another in its development, and is much richer, as the United States is, has a vast advantage over the country which has not done that. There has never been much development in Canada so far as iron ore is concerned. The most we ever took out of our mines, I think, was something like 200,000 tons, and this came mostly from the rich Helen mine, the Magpie mine, and other mines in the Sault Ste. Marie district. Outside of that we have done practically nothing in connection with the development of our resources of iron ore. The United States began to develop its iron resources in the lake Superior region, but the ore there was not the rich soft variety which one hon. gentleman mentioned this afternoon. That was the type of iron which in some of their mines they could dig out with a steam shovel. It was only after they had mined iron ore over a period of years that the type of iron was much like the iron which we have to-day. It was hard, difficult to work, but by the cutting, the digging and so forth which go on to develop these mines, they reached those richer deposits which they have today and they have now the greatest iron and steel development in the world or in the history of the world, so that Canada, I think, might well copy some of their methods.


Daniel Webster Warner: Does the hon. member
want to convey the idea that the hard substance that the iron is found in in the first place is over what they are getting with the steam shovel now?


Robert James Manion: I did not wish to convey anything, but I wish to say that much of their rich ore was discovered after development had taken place. The hon. member is pointing out that some of what is uncovered now is uncovered and dug out by a steam shovel. That is quite correct, and I have no interest in stating anything which is not a fact. But in many cases the rich ore of the United States was discovered after the poorer ore had been worked off the surface, and the richer ore was discovered after they had worked deeper down into the mine. Is it common sense to imagine that after the international boundary was reached the good Lord

Customs Tariff
stopped putting rich ore in the ground and refused to give any to Canada at all? The same iron as in Minnesota extends over the north shore of lake Superior. Why should fate, if you will, have stopped at the international boundary and kept the good iron ore on the American side and left the poorer ore on the Canadian side? I do not believe that was done. I believe we have rich iron ore in this country, and the development of our ore will show that we have.


Thomas Wakem Caldwell: Does the proposed
Ontario bounty apply only to Ontario or to Canada generally?


Robert James Manion: To Ontario. British Columbia offered a greater bounty than Ontario. Some of my hon. friends from British Columbia can give me the exact figures, but I think some years ago British Columbia offered a bounty of something like $1.50 a ton. The bounty in Ontario was proposed to be only 50 cents a ton. Some four or five years ago I did not think that bounty would be of any use and I doubt if it is now; but if it is of no use, it would not cause any harm because the development would not go on. I was on a train coming down with Mr. Cowie, who is on the committee and who is in the iron business, and I discussed the matter very thoroughly with him. He is convinced that a bounty of 50 cents or, at most 75 cents a ton, would bring about the development of iron ore in Canada. Supposing we paid out a few million dollars over a period of ten years for the development of the iron resources of this country, would that not be returned one hundred fold in the railway traffic which it would give, in the markets for the people which it would give, in the development of this vast area which happens to be a gap between the East and the West, and in keeping at home some of the young men and women who are leaving our country and hunting for work in the United States? In all those ways the development of our iron ore resources would bring back one hundred fold what has been lost to the people of Canada. I am finishing, but I wish to submit again-


Some hon. MEMBERS:: Hear, hear.


Robert James Manion: I am pleased there is
something about my address that satisfies my hon. friends to my left. I did not discover this afternoon that there was anything which did.
In closing, I believe the government is making a big mistake not only in cutting off these oil bounties, but in not giving further 191
bounties for iron ore and assisting, if necessary, the carrying of coal from the eastern provinces	and also from the
western provinces to the middle of Canadla. I believe in being consistent in a policy of protection, in assisting the whole country so far as we can. We should try to make Canada more or less independent. Of course, nobody would think of saying that Canada could reach the stage where she would be absolutely independent of the rest of the world. No one is suggesting that; but we certainly should, so far as we can, endeavour to reach the stage where we shall be 'able to support our own people to a large extent, where we shall not be importing tens and hundreds of millions of dollars worth of goods which we have in our own country to a vast extent, where we shall be developing our own resources instead of importing these substances from other countries. When Canada has the second largest deposit of coal in the world, to import fifty to seventy million dollars worth of coal from the United States annually is an absurdity, and it should seem so to our hon. friends to the left.


Mr. WARD:: Has the hon. member a
remedy for the coal situation in Canada? That is wbat we are looking for.


Robert James Manion: I am suggesting one. I
am suggesting that the people of Canada pay part of the freight rates on coal for carrying it from the eastern and the western provinces to the middle of Canada. I have heard reputable railway men state that once we begin to carry coal in large quantites, large amounts would not have to be paid, perhaps none at all. This would mean trainloads instead of simply carloads, and because of handling the coal in large quantites, the cost would run dowm so much that we might not have to pay any bounty whatever. I believe if we can possibly work this out, we should use our own Canadian coal and iron rather than import them from the other side of the line.


Mr. LOGAN:: Is the hon. gentleman in
favour of a duty on anthracite coal?


Robert James Manion: Is there a duty on it at
the present time?


Hance James Logan: None whatever for the last
thirty years. It comes in free.


Robert James Manion: I have not given the question any thought and I should not like to answer it off the bat.


John Evans: Answer it.


Robert James Manion: The hon. member should
answer it himself. Is he in favour of a duty

Customs Tariff

on anthracite coal? I do not choose to answer the question without consideration. Though my hon. friend may be willing to give any idea that comes into his head without any thought, I prefer to think over a question before answering it. I do not apply this to my hon. friend to my left or my hon. friend across the floor at all, but any man with no brains whatever can ask questions that the wisest man in the world cannot answer. I do not like to answer questions without giving any thought or consideration to the subject. I should like to know if my hon. friend (Mr. Logan) is in favour of it.


Hance James Logan: I have wearied this House
advocating a duty on anthracite coal. There is no reason why the rich man's coal should come into this country free while the poor man's coal is taxed, and there is no reason why American anthracite coal should be brought into Canada to the extent of about $50,000,000 worth annually to compete with coal produced in Canada.


Robert James Manion: My hon. friend has good
sense. He has given the question some thought, and I am glad to hear him express his opinion. He is not entirely correct in saying that soft coal is the poor man's coal. As a matter of fact, soft coal is not so much the poor man's coal as the coal of the manufacturer, the large producer and the railways. Nearly all the soft coal used in this country is used by large manufacturing plants and so forth. Since using coal last year of a softer variety, I have come to the conclusion that it is time we should use more of the soft coal and not import anthracite at all from American mines.
I have just one more observation to make and then I shall conclude. My hon. friend from East Lambton (Mr. Fansher) this afternoon stated that only a certain percentage of the bounties paid to oil operators went to the farmer; I think he said that one-eighth went to the farmer and seven-eighths to the producer. There are arguments in defence of that situation. Naturally the farmer when he gets his royalty or rent-whatever one cares to call it-runs no risk at all, whereas the producers who are spending their money on equipment, machinery, and so forth, have always to face the possibility of a loss. So that it is only natural that they should get a little more than those who take no chances. But while it may be true that seven-eighths of the bounties do not go directly to the farmer, nevertheless indirectly all this money goes not only to the farmer but to the rest of the country as well; for everything that is paid out in bounties in

the production of the oil must find its way eventually into the pockets of the people. If these bounties were discontinued, the one-eighth which my hon. friend speaks of would no longer go to the farmer, and the farmer would certainly be worse off in so far as this particular matter is concerned. I am inclined to think that there will be many a farmer who will not vote for my hon. friend after the stand he took this afternoon in regard to the bounties; it seems to me that they will be voting for themselves in voting against him. In conclusion I just want to emphasize this fact, that any money spent in this way in the development of iron, oil or coal in this country goes into the pockets of the people, and that fact is well worth the careful consideration of parliament at the present time.
Mr. R. V. LeSUEUR (West Lambton): This question of oil bounties has been discussed at considerable length already, but before the vote is taken or the subject concluded I think it. my duty to make a few remarks on the situation with regard to the oil production industry in Canada. Coming from the western part of the county of Lambton, where a large proportion of the oil production of Canada takes place, I am naturally more or less familiar with conditions in the industry. Canada's oil production is not large to-day; the year 1923, I believe, saw a production throughout the country of some 158,000 barrels, or approximately 160,000. Of that production, I should say that between 65 and 70 per cent was in the county of Lambton. Obviously therefore the oil industry hhs been and is to-day a very important factor in that county, particularly in the central portion of it. There are I understand 3,570 wells 'being operated in Lambton county at the present time, and there are about 216 power plants in operation, the investment being upwards of $2,000,000. The industry employs directly several hundreds of men, and indirectly many others besides. The wells in Lambton county produce a very small quantity of oil individually; they are all pumped, all the oil having to be raised up to the surface. These wells therefore are in a very different position from what one might call flowing wells. They are nearly all old wells, and there is of course the cost of maintenance to be considered, in the form of new casing and sand pumping and cleaning; so that the upkeep is fairly high. It can be understood, I think, that a well which produces only between four and five barrels a day of oil that must be pumped to the surface is utterly unable to compete with a well which

Customs Tariff
produces 1,000 barrels a day of oil that flows as a result of gas pressure behind it. In the latter case the production is cheap. As regards the royalty of one-eighth or one-tenth or one-sixth as the case may be-it varies to [DOT]some extent-which is paid to the farmer, in the case of a well which produces only a few barrels per day, this royalty constitutes a very substantial part of tlhe earnings. In practically no instance is it possible to pay more than 12J per cent in the way of royalty if the business of producing oil is to be carried on with a profit. A royalty of 121 per cent is usually regarded as the limit. In some sections where the territory is proven and where there are big gushers they pay higher; but that is the exception and the very rare exception.
Besides getting the oil up to the surface in the way I have described, and in the small number of barrels per well which I have mentioned, the producers must gather the oil and transport it to the refinery. That is largely speaking the situation in that district. Last year the cost in a number of individual operations was calculated with, I believe, a very remarkable degree of accuracy, and these costs were found to run from about 82.40 a barrel to over $3 a barrel. I shall mention the cost in the case of each of a number of wells in the principal sections of that field:
No. of wells pumped-	Average cost
40	 $2 40 a barrel
63	
2	42	"57	
2	51	"135	
2	54	"284	
2	58	"75	
2	70	"156	
2	94	"109	
3	00	"


Thomas Wakem Caldwell: On what basis is the
cost figured? Is the interest on the cost of putting down the well included?
Mr. LeSUEUR:	I presume the cost would
be estimated mainly on the cost of operation and the cost of maintenance. I cannot give a precise opinion on that point, but that I imagine is the basis on which the cost is estimated. Now, the average price this year was about S2.03 at the beginning of the year and it. has run to about 82.60 per barrel to-day. The price of oil at Oil Springs-and this is of a slightly better grade-is possibly a cent or two higher; the price will be in that neighbourhood. So that with the price as it is to-day, and when w.e consider that there appears little prospect of its increasing, it is easily seen that the operators of these wells cannot carry on the business without the bounty that is at present paid. I am dealing with this subject from the practical standpoint 191J
of the locality with which I am acquainted, and I sincerely believe that as a practical measure the bounty should be continued. If we reduce it to 26 cents a barrel it can readily be seen, from the figures that have been given, that a great many of the wells must cease operations and go out of business.
There is also this to be considered, that while they are competing with the big fields where the flowing wells enable oil to be produced very cheaply per barrel, they have also to pay duty on a great many of the articles which they use in cleaning out their wells, putting in new casings, and so forth. If at least half of those wells are shut down it is going to disturb the locality very greatly indeed. Practically all the wells to-day ship their oil and by-products to the Imperial Oil Company Limited at Sarnia. The oil is gathered from the wells and taken to a central point, whence it is pumped through a pipe line. There is no question that to-day this pipe line is barely paying its way. If only 60,000 or 70,000 barrels of oil are shipped through that pipe line, which would be the case if half the wells were shut down, the line would have to be closed, which would mean that the remaining operators would have to find a different method of getting their oil to market. There is a refinery in Petrolia, but the operators are shipping their oil to Sarnia. Therefore it would mean a complete reorganization of their transportation in any case, and without the bounty I doubt if it would be worth while for them to attempt this alteration.
If, due to the withdrawal of the bounty, half of the wells cease operating, and as a result the pipe line has to be shut down, the extra cost entailed on the other operators will, I believe, mean the closing down of most of the remaining wells and the practical elimination of the oil industry in that section. As to what that means-and I am dealing with this from the local standpoint-I think there is no question. Petrolia has been and is essentially an oil town. It is a very fine town with all the improvements that make for the convenience of a community. It has a waterworks system, the water being pumped from lake Huron at considerable cost; it has a hydro system, five-eighths of the electricity being used in the operation of the wells, and the town could certainly not support this installation, for with only three-eighths of the current being disposed of the rate would be so great that the use of electricity would be still further restricted. There is a large debenture debt. The town is a centre for the farmers of the
Customs Tariff

neighbourhood and is kept up to a large extent by the operation of the oil wells. There is paid for the oil and put in circulation in Petrolia at the present time about $400,000 per year. With the shutting down of the wells that money must necessarily be paid out for oil brought in from the States.
The result of taking off the bounties would, I believe, be marked and immediate. In the first place, the oil operators would lose their investment almost immediately and the shook would be felt shortly afterwards. In the second place, there would ibe even more vacant houses in the town of Petrolia than there are at present; the debenture debt would be spread over a very much reduced population; the hydro cost would likewise be spread over a smaller population, whereas the installation is now sufficient to meet the needs of a much larger population; in short, the net result would be to practically wipe out Petrolia, or at least to so reduce the population that the debt would fall very heavily upon the remaining residents until it would not be worth while for any one to continue there. That is a situation which I do not think this government should desire-I do not think they do desire it-but that is the situation which I believe will result if the bounties are taken off, and I think it is a situation which the government should not take the risk of bringing about. The keeping on of half the bounty this year means only about $40,000, and the whole of it means not more than $80,000, which is less than one per cent per capita of Canada's population, and yet it enables the community to continue.
There is another feature of the bounty which is worth considering; it is to a certain extent an encourgement for further drilling. There could be no greater advantage to Canada to-day than the finding of an oil field. Very extensive investigations have been conducted in the West and in other parts of Canada, but so far without substantial results, but if the bounty is continued it is some inspiration for men to engage in the hazardous work of exploration for oil.
The main idea of the Minister of Finance in reducing the bounty was to avoid the possibility of a big find of oil in the West harassing the treasury by calling for bounties on a tremendous volume of oil. There is not much possibility of such a discovery taking place at the present time. I think the Minister of Finance stated that so far as payment of the bounty on the present oil production is concerned he would not have taken it off at all, but that his
(Mr. LeSueur.l
action was caused by his fear of a large western production. I believe that that is a sound position. We did suggest to the minister last year that in place of taking off the duty he should limit it to the production of, say, five barrels per well, and that any well producing over five barrels should not receive a bounty on the excess production. That would be a safeguard to the treasury and would eliminate the danger which at that time the minister feared.
Now, I would urge upon the Acting Minister of Finance his serious consideration of the local situation. The taking off of the bounty without question means the practical bankruptcy of the, town of Petrolia, it means the throwing out of employment of a considerable number of men, it means the loss of investment, and it means a chaotic condition in the locality for some time to come. On the other hand, the maintenance of the bounty is really a small matter, only $40,000 for this year, and its continuance would result in the putting into circulation in that section of at least $400,000. and I imagine that the men who earn and receive that money would pay taxes and would contribute towards the general wealth of that section by much more than the amount involved in the bounty. Therefore I would again urge upon the minister, looking upon it purely from the practical standpoint, that the continuation of the bounty is good business, in that it will avoid the chaotic condition which I have described, in fact will prevent the blotting out of the present status of the municipality.


James Alexander Robb: Mr. Speaker, the hon. member
for West Lambton (Mr. LeSueur) has presented a stirring appeal on behalf of industries located within the constituency he represents. It is fair to say to my hon. friend that he, along with others, had already made representations to me regarding these oil wells and what would happen to them if the government persisted in its policy of reducing the bounties. The hon. member for West Lambton has referred to the value of the training school for oil men in that part of Canada-men who train in Lambton and the oil fields of that district and go out to other part? of the world. I am able to testify to that, because Mr. Mc-Garvey, a former oil operator in that part of the country and now operating largely in Europe, was born in the same town where I was born.
The Customs Tariff bill now under consideration has been before hon. members for

Customs Tariff
exactly two months to-day, and they have had ample time to consider it from all angles. Prior to the session hon. members of the official opposition, on the platform and through their press, made a stirring and eloquent appeal throughout Canada for economy-we must have economy, they said, if Canada was to be saved. And to-day we have those same hon. gentlemen urging upon the government on the one hand to jack up the tariff as high as Hainan's gallows so that there will be no importations into Canada and consequently no revenue from the customs tariff-


Some hon. MEMBERS:: Hear, hear.


Henry Lumley Drayton: Nobody here
said so.


James Alexander Robb: The hon. member for East
Toronto, a former member of the government of my right hon. friend who leads the opposition, advocated that this afternoon.


Arthur Meighen: Oh, no.


James Alexander Robb: But they are not advocating
a reduction-


Mr. RYCKMAN:: Excuse me; I happen to be the member for East Toronto.


James Alexander Robb: The hon. member for Centre
Toronto (Mr. Bristol), I should have said. Now, coming back to this question of oil bounties-


Arthur Meighen: I hope the minister was
in when his leader this afternoon promised a new elevator at the coast.


Henry Lumley Drayton: There is an
election there.


James Alexander Robb: Coming back to this question
of oil bounties, it has been represented to us that the oil industry of Canada is largely centred in two counties, Lambton and Kent, and we are told that to save the oil industry in the two counties of Lambton and Kent we must tax all the other people of those two counties and of all the other counties throughout Canada. The last speaker (Mr. LeSueur) who, I imagine, has the figures exactly, said that the production last year was 160,000 barrels. My right hon. friend the leader of the opposition gave the figure this afternoon, as I understood him, as 167,000 barrels, so-


Arthur Meighen: That was the year before.


James Alexander Robb: Well, it is upon those figures that I base my estimate, and that is of that quantity 145,000 barrels were produced in
Lambton and in Kent. The hon. member for West York (Sir Henry Drayton) praised the Minister of Finance, Mr. Fielding, for his legislation in 1904 and damned him for his legislation of 1923.


Henry Lumley Drayton: Hear, hear.


James Alexander Robb: He was sure, he said, that the Minister of Finance intended to deal fairly with the oil industry of this country. Well, we have been subsidizing this oil industry % now for twenty years; surely we have not dealt unfairly with it. It has been nurtured for twenty years. The impression was thrown out this afternoon that the oil bounties were to be altogether removed. The oil bounties by the legislation of last year were not altogether removed; they are cut in two, effective on the first of July of this year.


Henry Lumley Drayton: They stop in 1925.


James Alexander Robb: And they stop, under that
legislation, at the end of July, 1925. It is represented to us to-day that this oil industry will be ruined if we cease the payment of $42.000-because last year the total subsidy paid was only $84,000 and if they have the same production this year they will receive $42,000. So that unless they get another $42,000 the oil business is going to be ruined. Well now, let us see to what extent this oil business is taken care of by the people of Canada. Emphasis was laid this afternoon upon the effect of any change in the bounty upon the farmers of Lambton and of Kent. Taking the production of 145,000 barrels in those two counties, according to the right hon. leader of the opposition the average price was $2.62| cents; that will mean $381,000, and the government paid $84,000. In other words to get a production of $297,000 the government of this country has had to subsidize the industry to the extent of 28 per cent. We contributed 28 per cent of the total production of these oil fields, and to get that we are asked to tax all the other people in the counties of Lambton and Kent and all the other people of Canada. We are told by the former finance minister that if we do not do that the farmers of those counties will be ruined. Well, what about the farmers of the same county if the grass fails and there are no dairy products? What about the farmers of Kent if hog cholera comes in, as it did once before, and their hogs are all destroyed, or if there is an early frost and the corn crop is ruined? Are we going to subsidize these men in that case? It is just as logical to subsidize the one as to subsidize the other. Suppose rust comes along again this fall in western Canada and

Customs Tariff
wipes out the wheat crop; does my hon. friend argue that the government' should subsidize those farmers to the extent of 28 per cent? My hon. friend who represents that county is a good business man, a level-headed, practical man; he will understand very well the fallacy of this kind of argument. I have too much confidence in the industry, the thrift and the resourcefulness of the people of the county of Lambton to believe that they are going to be ruined because the government refuses to pay them a subsidy of $42,000.


Arthur Meighen: I suggest to the minister that he start and multiply over again. He will find that he is away out both in his multiplication and in his percentages.


Henry Lumley Drayton: $442,000 is the figure.


James Alexander Robb: Now, I will give the right hon. leader of the opposition another thought. We had a speech this afternoon from a gentleman who was formerly one of his colleagues, a member of his government. It will be recalled that in the early days after the budget was brought down it was argued from that side that this budget was going to ruin the agricultural implement industry, was going to put them out of business. But this afternoon a former colleague of the leader of the opposition tells us that the agricultural implement manufacturers are better off to-day than they ever were before.


Arthur Meighen: The minister is as badly out on. his facts as on his multiplication. After the last of his many budgets brought down, nobody ever said that any more. He kept shifting the burden from one to the other until finally he had it all off the agricultural implement people.


James Alexander Robb: Who is it on now?


Arthur Meighen: It is On the suppliers, just as the hon. member said this 'afternoon, and where the minister well knows it is.


James Alexander Robb: I suppose my hon. friend will argue it is on the steel men. Well, we have the statement of the steel men published in the Montreal Star, a paper that is not too friendly to this government, to the effect that prospects for the steel industry of Canada were quite bright.


Arthur Meighen: What has been done for them?


James Alexander Robb: Whatever has been done for them, they are not ruined.


Arthur Meighen: I suppose it has been shifted to somebody else.


James Alexander Robb: I have the statement of the director of one of the steel companies of Canada not later than Friday last-he told me in confidence in my office-that the steel industry of Canada was in a 'better position than the steel industry of the United States.


Arthur Meighen: Was it at the recent
meeting that the minister attended in Montreal that he heard that statement? I heard a very different report.


James Alexander Robb: No. It was a gentleman who called the following day to apologize for that.


Arthur Meighen: Better give the name, I think.
Mr. LeSUER: May I ask the Acting Minister of Finance if he thinks his comparison quite fair between rust in the western provinces and the bounty? Rust in a crop is a matter of one year. It does not destroy the ground or the possibility of reaping a crop the next year, but the taking off of the bounty, on the facts as we have them, means the absolute elimination of this industry, with no comeback.


James Alexander Robb: I have said to my hon. friend that we have subsidized this industry for now twenty years, and the subsidy is not altogether being removed as was represented; it is being cut in two. It goes along from the 1st of July this year until the 1st of July 1925 at one-half the previous subsidy. I repeat here in parliament what I said to the operators of these wells, that we propose to look into the claims presented to us. I submit to my hon. friend again that an industry of that nature is surely not going to be ruined by taking away from them, on their own statement, only something like $42,000.
Having said that, Mr. Speaker, I must ask the House to approve the third reading of the bill now before it. It seems to me we have had ample time to consider carefully all the details of this budget. I was glad this evening to have almost the admission from my right hon. friend that it is not so bad as when it first came down. That is something anyway.


Arthur Meighen: I did not say that at
all. Would the minister be good enough and frank enough with the House to give us the name of this secret informant of his? The information is not of much value, of course, unless we know the name. This is the practice of the government always, to give the information, and the authority for it they cannot possibly divulge.

Income War Tax Act


James Alexander Robb: If my hon. friend wants to
turn up the Montreal Star-I cannot give him
the date at the moment, but I will get it for him-he will find the statement there of Robert Hobson, the president of the Canada Steel Company. He should know something about it.


Arthur Meighen: What did he say?


James Alexander Robb: Their business was improving
and they intended to start another furnace.


Mr. MEWBURN:: A few days ago he
said their business was all gone to blazes.


James Alexander Robb: There is another feature of
the debate this afternoon I should like to mention. I want to offer thanks to my good friend the ex-Minister of Finance. He stressed very strongly the point that this was not a political question, that he was making an appeal on behalf of the Liberals of Lamb-ton, who had not been granted the bonus they asked of this government. That is perfectly true, and it seems to me it is to the credit of this government that we are able to withstand the demands of our political friends that we should dip into the treasury. We believe this country wants economy, and we propose to practise economy without disturbing the interests of the country.


Arthur Meighen: Does that apply to Prince
Rupert?


[Stage Direction]
Motion agreed to, bill read the third time and passed.

[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved the second reading of Bill No. 143, to amend the Income War Tax Act, 1917.
Motion agreed to, bill read the second time, and the House went into committee thereon, Mr. Gordon in the chair.
On section 1-Exemption as to children.
Henry Lumley Drayton: I wonder if the minister thinks there is anything significant in the income tax reductions in the United States. What influence will that have, according to the minister's idea, upon our own policy?


James Alexander Robb: I am bound to say that the
income tax reductions in the United States having been adopted, it seems to me we shall have to go very carefully into ours and consider some other changes for the next session of parliament.


Arthur Meighen: Does the minister think
there will be a next session?


James Alexander Robb: Oh, surely. We are not going to have anarchy in this country.


[Stage Direction]
Section agreed to.
On section 2-Inter-company purchases and sales at more or less than fair prices.
Henry Lumley Drayton: I suppose the
effect of this is to prevent associated or holding companies making fictitious expenses a vehicle for evading the Income Tax Act?


James Alexander Robb: It is to make sure that profits earned in Canada-


Henry Lumley Drayton: No, I am not
referring to that section, but to 2 (a): "Where any corporation carrying on business in Canada," and so on. Have I not got the idea right?


James Alexander Robb: My hon. friend is correct.


Arthur Meighen: I understood the minister to intimate that the government contemplated reducing the income tax next session?


James Alexander Robb: No, I said it would be a fair matter for consideration. I made the admission that we cannot ignore the changed conditions in the United States, and that reduction would be a matter for consideration.


Arthur Meighen: I hope the minister will not shock the hon. member for Carleton (Mr. Caldwell) too much by speaking of an increase.


[Stage Direction]
Section agreed to.
On section 2, paragraph (b)-Income partly arising from creative operations within Canada taxable.
Henry Lumley Drayton: How will that
work out in connection with the accounting? There is no price fixed in Canada and how is it going to be carried out?


James Alexander Robb: It will be determined by the
market value of the goods, and by the prices at which they are sold by competitors.


Mr. MARLER:: I should like a little
more explanation of this section from the minister. To what class of people does this apply?


Mr. HANSON:: What is the object of the
section?


James Alexander Robb: I will give the House the
reason for the change. It is not uncommon for foreign corporations or individuals to produce or partly manufacture some commodity in Canada and to ship it abroad consigned to themselves or allied interests, with

Income War Tax Act
the result that while part of the profit ultimately derived is actually attributable to the work done upon the commodity in Canada, it is very doubtful whether as a matter of law any part of such profit can be said to be earned in Canada. The purpose of this section is to enable the Canadian treasury to tax upon a fair part of the profits derived when the goods are finally sold abroad.


Richard Burpee Hanson: Following that up may I
ask whether that would apply to a case where a Canadian company owned and operated, we will say, a sulphite pulp mill and also owned and operated a paper mill south of the line, and shipped sulphite pulp either as a finished product or as a merchantable commodity, or in a soft state, to that mill across the line? Would the subsection apply to such a transaction as that because the product is a finished product when it leaves the Canadian mill?


James Alexander Robb: It would be determined by the fair market value of the pulp. In practice we have discovered that there are companies doing logging in Canada who move their logs to mills in the United States, but put the logs in their return at a reduced cost. We propose to give the department power to determine the fair market value of these logs in Canada.


Herbert Meredith Marler: There is no intention in
this section of taxing the income of a nonresident except as already taxed under the existing act?


James Alexander Robb: No.


Herbert Meredith Marler: There is no question of
defining domicile at all.


James Alexander Robb: None whatever.


Henry Lumley Drayton: It looks to me as if this were a proper subsection. It merely seeks to guard the revenue.


James Alexander Robb: We are safeguarding the
revenue.


Henry Lumley Drayton: That ought to be done wherever the law is found to be weak.


[Stage Direction]
Section agreed to.
On subsection (c)-Proviso, "carrying on business."
James Alexander Robb: This would not affect a house carrying on business generally without any branch houses outside.


[Stage Direction]
Section agreed to.
On subsection 3, paragraph (b)-Non-residents deemed to be carrying on business.
Herbert Meredith Marler: Would the minister explain this paragraph a little more fully?


James Alexander Robb: As the law appears to be at present a foreign business house selling goods in Canada through an agent or employee is in many cases not taxable owing to the actual contract being completed abroad. The object of the proposed amendment is to overcome the effect of this technicality and to ensure that the Canadian treasury will receive income tax upon profits made from Canadian business even although the formality of closing the business should take place abroad. It is further to be noted that foreign corporations closely allied with Canadian operating companies lease, or under royalty permit the use of land or certain articles on which they charge the operating Canadian company a rental or royalty at such a high figure that the profits which should be reflected from the operations of the Canadian company are eaten up by the high rentals and' royalties paid and thus the profit goes abroad free from taxation. The object of this amendment is to render the income from such letting, leasing and royalties taxable because their source is from within Canada. The treasury should be benefited by the profits thus made in Canada. It follows that in the determination of such matters the minister- which in this case means the commissioner in charge-must have some discretion as to determining the profits earned in Canada, especially when considering the foreign expenses and their proportionate part applicable to foreign and Canadian products.


Henry Lumley Drayton: Is this following the English 'act or the American act?


James Alexander Robb: Partly both.


Henry Lumley Drayton: It seems to me it is a mixture of both.


James Alexander Robb: Yes, both.


Henry Lumley Drayton: Under the
English act, for example, in connection with the matter of agencies, there would be no trouble at all. I think the minister has-in fact, I am sure he has-run across troubles similar to those we had with the Imperial taxation authorities at Somerset House in connection with charges made as to business carried on in England. I had in mind, for example, a case where the whole of the process was entirely carried on in Canada, and the ordinary profits entirely earned in this country. The Canadian Excess Business Profits tax was offset entirely -in consequence of the desire of Somerset House to treat the

Income War Tax Act
whole of the profits as resulting from the sale by the agent in the Mother Country. That, of course, would have left the home plant without any profit at all. That is one proposition we have under this section. The next proposition is the reverse. It treats the profits as something earned not through the agency at all, but at the productive source. So we have propositions working both ways. The position in regard to the sales agent here would foe the converse of the position taken in the class of cases I have drawn to the minister's attention in England, having regard to the first part of the section, because here we have the right of taxing profits which arise from sales, through an agent, of manufactured articles imported, we will say, from Great Britain. What would be the position there? Under the law before, we took the position that we have abrogated here, that all the profits were to be taken as coming here. The sale was a mere incident. The profits would arise not so much from the sale as from the manufacture. How is it to be done? I suppose it could be done by treating the goods as coming here at a certain wholesale rate 'and then charging a profit on sales earned by the agent at figures higher than the wholesale rate. If it was done in that way, it would be consistent with the former stand that we have taken. In connection with matters locally, which are dealt with in the second part of the section, matters of royalties, and so forth, will you there have to come down to profits on the wholesaler's or .jobber's rate? You could not probably get under these circumstances on anything sold out of the country the total .profits based on the final sale.


James Alexander Robb: My hon. friend is quite right in the interpretation with the exception of the last part. The royalties are paid in Canada.


Henry Lumley Drayton: Royalties and leases would be; the minister is quite right.


Herbert Meredith Marler: There are two thoughts in this.section. The second part says:
Or any non-resident person who lets or leases anything used in Canada, or who receives a royalty or other similar payment for anything used or sold in Canada, shall be deemed to be carrying on business.
And so forth. Would the effect of that be that, as regards non-residents owning real estate in Canada and deriving income proportionately from that, that income from real estate would be taxable in Canada? In other words, would a person living in England, being a Canadian non-resident, and deriving a considerable portion of income from real estate, have to pay income tax?


Henry Lumley Drayton: Always on his
real estate. That is the present law.


Herbert Meredith Marler: No. The present law is that income tax is regulated by residence, not by domicile at all.


Henry Lumley Drayton: No. That is the way I have been following these sections, and the commissioner is here to correct me if I am wrong. The hon. member is perfectly right in part in what he says. There are two underlying principles. The one is residence, as he says. The other is the carrying on of business. Let us take a Canadian national living in England, the case the hon. member puts. Supposing the Canadian national living in England, has mortgages, has lent money here. They are not taxable. That is not carrying on a business. On the other hand, if that non-resident owned realty in Canada and through his agents here, as he would have to act, received rents, he would be taxable for those rents under the existing law. At least, I know that is how the act has been administered.


Herbert Meredith Marler: Perhaps the minister will enlighten us on that point.


James Alexander Robb: We are trying to do as my hon. friend observes, but we have not been able to under the law.


Henry Lumley Drayton: It has been done under the law.


James Alexander Robb: In practice, in the administration of the act we have discovered an individual who owns in a western city large blocks of houses and office buildings from which he is collecting rentals. He is living, not in Great Britain, not within any of the British dominions, but in a foreign country.


Henry Lumley Drayton: That would not change the principle.


James Alexander Robb: We think that man should
contribute to the revenue of Canada.


Henry Lumley Drayton: But he ought to do so now under the present law.


Herbert Meredith Marler: Supposing an English resident or a person domiciled in England owns the same houses here, is he taxed? Is he considered a resident for the purpose of this tax?


James Alexander Robb: He is carrying on business.


Herbert Meredith Marler: A man who owns real
estate does not necessarily carry on business. Is the minister simply attempting to take situs of the real estate on this question? In
Income War Tax Act

other words, as regards a business block owned in Winnipeg with rents derived therefrom, irrespective of where the owner lives, we are simply taking a situs of the real estate on this question. Is it intended to tax the rent in that instance? If that is the intention of the section, how would it apply to a person domiciled in Great Britain? You will again have the situs brought into consideration there. I understand the minister to say he does not care where the situs is at all. Would the same income tax not be paid in England again and would the person not be paying a double income tax?


Henry Lumley Drayton: Perhaps the
present minister has not had to go into this question yet, but there is double taxation. We have not been able to get this threshed out completely. At one time we had two complete sets of taxation. The point I am trying to make is this. As I understood the matter-and I know I am right from the way in which the department was formerly administered-rents payable in Canada by tenants-and that is how they are payable-to local agents were taxable. The agent was taxed for them and he was held responsible for them. A great number of the non-residents collected the rents through banks or trust companies. Under the law, trust companies have to make a complete return of the rents paid and they are taxed on those rents. While at the same time they have also to make a return on the interest money of the trusts in their hands for mortgages and the like, the law is different, for in that instance the non-resident is not carrying on business here and he is being taxed at home the full amount of the income he receives. If we put on a double tax here, we would be practically saying to the foreign investor: There is no good in investing in Canada. All that this can do is to make the law a little clearer in the case of leases. This is not any change in the law,


James Alexander Robb: There is no change in the
law or in the administration. As my hon. friend has just said, Great Britain and the United States give us credit in part for taxes paid and we reciprocate. We are carrying on in practice as my hon. friend has stated, but there is some doubt as to the legality of it and this is simply to make the act clear.


Herbert Meredith Marler: The clause is an exceedingly broad one. There is no attempt under this clause to apply the principle of domicile

as regards taxation under the Income War Tax Act?


James Alexander Robb: None whatever.
Section 3, paragraph (b) agreed to.
On section 4, paragraph (c)-Annual value of property.


Richard Burpee Hanson: What is the effect of this?


James Alexander Robb: The object of this provision
is to remove any doubt as to the right of a taxpayer in business who owns his business premises free from encumbrances to a deduction of the annual value of those premises. On the other hand, it is desired to allow rent actually paid to an outside party to be charged as an expense.


Henry Lumley Drayton: I think that
again is as the law was before. That is not a change in the law.


James Alexander Robb: No, it is to make it clear.


Henry Lumley Drayton: I do not think it is necessary. It is, however, a good thing to have.
Section 4, pargraph (c) agreed to.
On section 4, paragraph (d)-Reserves, contingent accounts or sinking funds.


Herbert Meredith Marler: Is that part of the act
already?


James Alexander Robb: Yes.


Henry Lumley Drayton: There is one
thing which I suppose the legal advisers of the department have watched. It is perfectly obvious that rent never paid is not a deduction; it is not an expense and therefore it could not be deducted. I wonder whether there is not a danger, when we undertake to specify one thing, that we shall not excuse something else of the same class. We are saying that one thing ought not to be regarded as deducted; well, there are several other things which might be similarly represented. There used to be a general section which allowed pretty full discretion to the department in ruling on these things. If you have not something like that it may be that in naming one thing specifically you are excusing the rest.


James Alexander Robb: Our act is based upon the
English law and a recent decision given in the courts of Great Britain has brought this matter to the attention of the department.


Henry Lumley Drayton: It is under legal advice?

Income War Tax Act


James Alexander Robb: Yes.


[Stage Direction]
Section agreed to.
On section 5-Surplus distribution taxable. Mr. ROBB:	The word "had" in the last
line should be "has". I move that the section be amended accordingly. It is merely a misprint.
Henry Lumley Drayton: Suppose there is an insolvent company which is paying dividends. Is that money to be looked upon as income?


James Alexander Robb: Does my hon. friend mean a
company which is paying dividends out of capital?


Henry Lumley Drayton: Let us take the case of a company which is being wound up. That company, we will say, has $1,000,000 of supposed assets. If the company has on hand an undistributed income of $100,000 and the business is being wound up, will that income be taxable?


James Alexander Robb: Would that $100,000 be
profits?


Henry Lumley Drayton: I am supposing
that it is on the books as being on hand; and the section refers to the payment of a dividend-
To the extent that the company had on hand undistributed income.
In the winding up of the company, according to this, that income will be taxable?


James Alexander Robb: Yes.


Henry Lumley Drayton: It is quite possible that a company may be represented on the books as having on hand an undistributed income which as a matter of fact ought not to be so described. Surely it would not be right, simply because the officials of a company said there was on hand an undistributed amount of income, when in fact there was a large capital impairment, that the shareholders should not only lose their capital to the extent of the impairment but also have to pay taxes on an income they never received. Let us take the case of the Home Bank. I had on the order paper earlier this year a question touching this matter. The Home Bank was taxed on income which was never earned and which never existed; it was entirely a fiction. It was a fiction, the creation of its management for their own purposes, and the government never had any right to tax it. There was never any income, and the question I asked was whether the government had returned the tax to the bank. That is going a good deal further than if the Home
Bank directors at the time they closed down had shown, say, half a million dollars of imaginary income. I should think that the proper and the fair thing would be that, apart from what is declared as income, there should be no taxes on anything except the amount remaining over and above capital in the way of profit.


James Alexander Robb: That is a fair interpretation of the bill.


Henry Lumley Drayton: But that is not what the section says.


James Alexander Robb: We must leave something to
the discretion of those who administer the law; we must provide for all cases. My hon. friend has cited one case; some other case might develop in which this section as it stands would prove necessary.


Henry Lumley Drayton: I do not object to the clause itself but I object to the suggestion that instead of passing proper legislation we should leave the matter to the discretion of the officer who is administering the law. We should know whether we are taxing capital under the name of income or not. The committee can easily put the section into proper shape.


Mr. JACOBS:: I do not think that under
the law the minister would have any such discretion; he has to interpret the statute as it is.


Mr. BAXTER:: The matter might be made perfectly clear I think if at the end of the section there were added the words:
-after the whole of the capital shall have been returned.
I do not think this will express anything else than the section seeks to convey as it stands, but it will put the matter beyond doubt.


James Alexander Robb: I think we would be prepared
to accept the suggestion if my hon. friend would write out the amendment.


Henry Lumley Drayton: Perhaps "shall
have been realized" would be better than "shall have been returned."


James Alexander Robb: The section as it stands is
intended primarily to meet the case of companies which are reorganizing and re-appraising their business. I think myself that it might be just as well to leave the section as it is; it would be wise to leave it to some extent to the discretion of the administrator.


John Babington Macaulay Baxter: In some recent decisions
in England there seems to be some confusion about the subject. I take it we are safe in
Income War Tax Act

analyzing it in this way. So much capital is subscribed, so much capital is paid up. That which is paid up is actually the capital of the business. Now, by profitable investment that may be multiplied many times over and not distributed. But I do not think you can regard that which is retained in the business as really an augmentation of the capital. For a time it may be employed in that way, but it must be severable from the capital. If you are winding the business up, a man takes out just exactly what he put in, and everything over that must be and is income; it can be nothing else. That is why I am using the word "returned." After you have returned the capital, whatever it is, then to my mind, it is quite legitimate that the gov-renment should have power to tax the rest, although it might vastly exceed the capital, because that is income, but income which has not been distributed during the years the company has been in existence.


James Alexander Robb: My hon. friend should read
that in regard to the case of a company which originally sold its bonds at 80 or 90 cents on the $1, with a bonus of common stock. I think all things considered we had better leave the clause as it is and trust the administration to regard the interests of the country. After all, it is the interests of the country we are looking after, not the individual requirements.


Samuel William Jacobs: Not the interests of the
people who compose the country?


Thomas Wakem Caldwell: I think you can get
a better wording. In a reorganization the capital is not returned to anybody, it is still in the business. A better wording would be, "after allowing for the paid up capital."


James Alexander Robb: I should like the committee
to keep in mind that surplus profits are accumulated and tucked away in an effort to evade taxation, and therefore when the time comes to reorganize or wind up the business I think the commissioner should have a free hand to look carefully into the matter.


Henry Lumley Drayton: Is the wording
sufficient if that be the object?


James Alexander Robb: I think so.


Henry Lumley Drayton: What about surpluses, refunds and the like, that are. not described as income at all?


James Alexander Robb: Under the act now if they are distributed they are surpluses and taxable.


Henry Lumley Drayton: Because they
become income on distribution. But there is no distribution on a reorganization.
[Mr. Baxter.)


John Babington Macaulay Baxter: If you leave it as it is, Mr. Chairman, I do not know whether it will carry out the minister's intention, but if it has to be construed I think that while something is to be deemed the payment of the dividend, that something is the property of the company to the extent that the company had on hand undistributed income. I think you will have to go through precisely that process of ascertaining the capital, and that all that is surplus over the capital will be undistributed income. I do not think the amendment which I am suggesting makes a particle of difference in the real construction of the section, but I believe it will help make it plainer to people who have to deal with it. But I cannot see that you can construe this section so you can really tax capital; you will only be able to get at the surplus over capital.


James Alexander Robb: That is all.


John Babington Macaulay Baxter: And it will not reach the case of what you might call watered capital. If the minister wants to be able to squeeze out water, he will have to get some much more comprehensive language than he has here, otherwise while the department may administer the section the way he wants it to be administered, some court will stay the hand of the department.


James Alexander Robb: The House will observe that this deals only with surplus distribution.


Henry Lumley Drayton: Does it say so?


James Alexander Robb: Yes, in the margin.


Henry Lumley Drayton: You cannot read the margin; that is not part of the act at all.


John Babington Macaulay Baxter: Surplus over what? The minister will see if he gives expression to the side note that he must still make up his mind what it is to be the surplus to. Is it to be surplus to the nominal capital actually issued; or is it to be surplus to the amount people have actually paid for that capital; or to what is it to be surplus? You have got to define that first, and then you can easily provide for taxing the surplus, but unless you do define it you will have it in an absolutely nebulous state.


James Alexander Robb: May I give the House the definition of income as it is used in the original act?
For the purposes of this act, ''income" means the annual net profit or gain or gratuity, whether ascertained and capable of computation as being wages, salary or other fixed amount, or unascertained as being fees or emoluments, or as being profits from a trade or commercial or financial or other business or calling, directly or indirectly received by a person from any office or employment, or from any profession or calling, or from

Income War Tax Act
any trade, manufacture or business, as the case may be;
The reference applies only to income.


John Babington Macaulay Baxter: I know, but almost the first word you start out with shows the difficulty of applying it. It is the annual net income. The thing the minister wants to tax, and I want to help him to tax, is not an annual profit, it is what you might call a sweeping up of perhaps a series of years, which is really only ascertainable and only get-atable on the winding up or reorganization.


Henry Lumley Drayton: Would it not make it clear if you said, "undistributed profits"?


James Alexander Robb: I will continue reading the interpretation of income for my hon. friend:
-and shall include the interest, dividends or profits directly or indirectly received from money at interest upon any security or without security, or from stocks, or from any other investment, and whether such gains or profits are divided or distributed or not,-


John Babington Macaulay Baxter: But that is all controlled by the word "annual".


James Alexander Robb: I do not think so.


Edmond Baird Ryckman: Mr. Chairman, I am in entire sympathy with the minister, I know what he wishes to tax and I should like to see appropriate language used to effect it.
I quite appreciate the definition of income which has been read, but this bill declares that there
-shall be deemed to be the payment of a dividend to the extent that the company had on hand undistributed income.
We all know that under the definition which the minister has read a dividend is taxable, and properly so. Adverting to the case which has already been referred to, the winding up of a company where the capital has been impaired, it would seem that there certainly must be a provision that it should not be deemed that any money which was paid upon that distribution should be taxed unless it were in fact a dividend or a profit or a gain, as the minister read. What would the minister say of this case, which comes into my mind on the spur of the moment? The stock of the Bank of Montreal, for instance, stands to-day in the neighbourhood of 230 or 235. I have no doubt that if there was a winding up of that bank

it is, to be sure, an incorporated company in perfect solvency- the shareholders would be entitled, we will say, to something in the neighbourhood of the market price. But under this section as drawn, if any part of the purchase price paid for those shares was in the nature of undistributed stock, then any part of the purchase price above par would be subject to tax, which I am sure is not the intention of the minister.


Henry Lumley Drayton: That is just
what it does, though.


James Alexander Robb: These are profits that were
realized.


John Babington Macaulay Baxter: I am just beginning to
realize some of the possibilities of this provision. Suppose reorganization is part of a process of amalgamation with another company. The shareholders collectively own the entire assets of company A, and in order to make the business more successful, or perhaps to prevent its being a failure, they decide to amalgamate with company B. Just at the moment when it may be necessary to make use of all the resources of both companies, you step in and inflict a tax upon what they are using as capital, even though it may not be so in direct terms. I know the minister does not want to prevent any real business reorganization that is healthy in its character, but he does want, I think, to get at the condition where people are putting one bucket of water along with another and attempting to fill the puncheon.


Samuel William Jacobs: It would be watered stock.


John Babington Macaulay Baxter: It might be all water and
no stock, as we sometimes see.


Henry Lumley Drayton: I take it that
what is meant here is not a change in company ownership or name, as you have in at amalgamation, but a distribution of money to the shareholder's of the company. On the question of reorganization, suppose you have one company coming with a capital of $100,000, another company coming in with a capital of $100,000 and an amalgamated company with a capital of $300,000. Under this section the shareholders of the new company, having got their stock in the new company to the extent of 150 as against 100 in the old, the department would treat the extra 50 as a dividend paid by the new company and make that chargeable with the 10 per cent corporation tax. That is how it seems to me this would work out.


James Alexander Robb: If the surplus earnings are
distributed as stock, why should they not be taxable? My hon. friend took that view in 1920, as the act clearly indicates.


Henry Lumley Drayton: I entirely agree. But what puzzles me is while I think that is the intention of the department, the section does not appear to carry out that intention.
Income War Tax Act


James Alexander Robb: It has been drafted by the
legal officers. I have, of course, great respect for my hon. friend's views.


Henry Lumley Drayton: Ordinarily the
property of a company consists of its assets. It certainly does not consist of scrip certificates-stock; for that is only an evidence of ownership of the company property; it is not a distribution of the property of the company. Now, this provision says:
On the winding up, discontinuance or reorganization of the business of any incorporated company the distribution in any form of the property of the company shall be deemed-
And so on. The issuing of the shares of stock is not a distribution of the property of the company. I do not think the section is drawn in such a way as to carry out the intent of the department-that is, if the intent be that in the case of amalgamation, where you have profits in both companies which add in the amalgamated company 50 per cent to their joint holdings, they are to be taxed. Well, they will not be under this, because there is to be no distribution of the property of either company-the old companies, the amalgamated companies or anything else. Of course, it might be done if you read the section as referring to the two original companies and having nothing to do with the amalgamated company, but in that case again there is no evidence as to the value.


Samuel William Jacobs: I suggest that this clause
be held over with a view to seeing whether it cannot be improved upon.


James Alexander Robb: No, I think we had better
make some progress. We have been at this now for some time.


Samuel William Jacobs: You may make progress in
the wrong direction.


James Alexander Robb: I do not think so.


Henry Lumley Drayton: Perhaps we
had better pass this on the understanding that the Senate, which looks after the proper wording of these sections and corrects a great deal of the bad work we send them, should look after it.


James Alexander Robb: I will have the commissioner look into the observations of my hon. friends opposite, and if it is found that it will work better with an amendment in the Senate, then we will consent to that. That is quite reasonable.


Edmond Baird Ryckman: May I cite another
instance that will be before the commissioner? Take the case of a mining company that has carried on under business management and is

profitable, but because of the property being exhausted each year they carry an amount to reserve account in order finally to take care of the shareholders, in order to have enough when the property is exhausted to return to the shareholders their capital. Suppose that company was wound up-and that is the end of every mining company, on the exhaustion of its property-this provision says:
The distribution in any form of the property of the company shall be deemed to be the payment of a dividend.
But that is not dividend; it is a return of capital. This section would not deal properly with a case of that kind. We are all of the same mind: we desire to get this into appropriate form. I think the suggestion is a good one that the matter be referred to the commissioner, together with the points we have mentioned and the cases we have cited, and anything else that may occur to him in that connection. If that is done I am sure there can be a redrafting of the section that will be satisfactory to everybody and that will accomplish the desired end.


James Alexander Robb: When the act was originally drafted the thought my hon. friend (Mr. Ryckman) has just presented was considered and was provided for as follows:
With the following exemptions and deductions:-
(a) such reasonable allowance as may be allowed by the minister for depreciation, or for any expenditure of a capital nature for renewals, or for the development of a business, and the minister, when determining the income derived from mining and from oil and gas wells, shall make an allowance for the exhaustion of the mines and wells.


Edmond Baird Ryckman: But what is now proposed will be subsequent legislation.


James Alexander Robb: We are only providing for
income.


Samuel William Jacobs: This section evidently refers only to surplus; the side note indicates that this was the intention. We all agree as lawyers that that would not be taken into consideration in the interpretation, but that no doubt was the intention of the draftsman.
I agree that if it goes out of this House, such changes as are necessary may be made when the bill reaches the Senate.


John Babington Macaulay Baxter: I am quite willing that
that course shall be pursued, but I want to point out to the minister this as well, because he may, while he is at it, try to reach the end he intends to get at. It seems to me it would be comparatively easy where two companies are involved in the reorganization, to bring about, by a sale of the assets from one company to the other, a state of affairs by which there would not be any

Income War Tax Act
distribution in any form of the property of the company. There would be a very large loophole open, and I think the minister might take that into consideration.


James Alexander Robb: I will do that.


George Newcombe Gordon: The amendment is
withdrawn.


[Stage Direction]
Section agreed to.
Edmond Baird Ryckman: I do not think we should leave the work of this House to the Senate. Surely if this section should be put in some other form to accomplish the end the minister has in view, it can foe done here.


James Alexander Robb: May I point out to my hon.
friend that the legal officials of the department have carefully gone over this, but we have the advantage here to-night of the legal knowledge of members of the House, and I think it is only fair after hearing them that we should have the opportunity of determining what is best.


Edmond Baird Ryckman: I understood that the
section was passed without any amendment or change at all.


James Alexander Robb: It is passed on the understanding that the legal officers will be requested to go into it again and take cognizance of the observations made here.
On section 6-Partnerships.


John Babington Macaulay Baxter: Does subsection 3 (a) in
any way conflict with the provision in the Income Tax Act at present? I have not had an opportunity of comparing them, but I think that under the Income Tax Act you may base your statement either on your book accounts or on your cash receipts. Some people do one, some the other. It is as broad as it is long over a period of time. Is this intended to alter that at all, because I note it says, " whether withdrawn or nc-: during the taxation year?" I know it is a very common thing in my own profession simply to put in the income tax statement based on the actual cash receipts, because it is in fact impossible in legal business to estimate from day to day just what the charges are in a particular matter, and therefore the profession I think invariably uses the cash receipt system. I take it this is not intended to interfere with that at all. If it is, I would like to know it, because it would require considerable discussion.


James Alexander Robb: It is not intended to interfere with the practice outlined by my hon. friend.


Mr. MILLAR:: I do not know whether
the question comes up under this clause, but it is probably as applicable here as anywhere else. I refer to a ruling of the commissioner that the fees paid by a lawyer to a bar association were deductible from income before calculating the income for taxation; in other words, that they were not subject to taxation.


John Babington Macaulay Baxter: It is too trivial to talk
about, is it not?


John Millar: No. The principle is there, no matter what the amount is.


John Babington Macaulay Baxter: It is only five or ten
dollars.


John Millar: Yes, but the principle is
there just the same.


James Alexander Robb: A lawyer cannot accept cases before he has paid his license fee. It is a legal tax upon the business.


John Millar: Would the fees paid by
a dentist to his dental association, and by a doctor to his medical association, be exempt in the same way?


James Alexander Robb: Only where the fees are compulsory under the laws of the province.


[Stage Direction]
Section agreed to.
On section 7-Tax to be a lien.
Henry Lumley Drayton: In connection
with this whole section, there has been a great deal of difficulty over the question of these liens. The mortgage associations have pointed out that they will have to withdraw from business under the old law passed last year. They have shown that loans cannot safely be made and certificates cannot properly be got, and that it is impossible for a lawyer to give a proper certificate. The question I am going to ask my hon. friend is this:	Have
the sections been submitted to the loan associations, and if so, are they satisfied with them? It is in the interests of everybody thar there should be no difficulty about people being able to borrow money on mortgage


James Alexander Robb: They have been consulted.
This is from the Toronto Board of Trade, giving a list of those who attended the meeting. They are as follows:
Vice-President, Bond Dealers' Association of Canada. Secretary, Canadian Bankers' Association.
Secretary, Canadian Life Insurance Officers' Association.
Member Legal Committee, Canadian Manufacturers' Association.
Legal Secretary, Canadian Manufacturers' Association. President, Dominion Mortgage and Investments' Association.

Income War Tax Act
Vice-President, Ontario Associated Boards of Trade and Chambers of Commerce.
Immediate Past President, Toronto Board of Trade.
President, Toronto Board of Trade.
Secretary, Toronto Board of Trade.
Secretary, Toronto Builders' Exchange and Construction Industries.
Vice-President, Toronto Real Estate Board.
They all approved of this legislation.


John Babington Macaulay Baxter: The first section says it
is to be a lien upon the assets of the taxpayer. That, I take it, would include both real and personal property. Then subsection (3) provides that the lien shall not have priority over any sale or pledge of personal property made to a bona fide purchaser or pledgee, for value, without notice of any unpaid assessment of the vendor or pledgor. Real estate is not dealt with. Take the case, not of a loan company, but of a private individual loaning upon mortgage. How is he to get any knowledge of this thing? If he applies to the income tax department, I assume the rule of secrecy will forbid any information being given out to him. You cannot reveal how much a man is taxed. How does he get the information?


Samuel William Jacobs: He will find out when the
assessment is made.


John Babington Macaulay Baxter: He may be required to produce his receipt, but you have to wait quite a time before you get your receipt. You pay in the dark and wait till the department adjusts it. I am not complaining of that ; I do not see that there is any other way, but it is not possible for the proposed lender to know for quite a time whether the borrower has made a correct calculation of his income tax and whether the department has approved of it. After all, is there need of a lien upon real estate?


James Alexander Robb: Aes, I think so. The taxpayer who desires to borrow the money will go to the inspector of taxation for the district, and will get a certificate that there are no assessments outstanding upon which we have a lien.


John Babington Macaulay Baxter: Not every man can pay
his taxes a month or two in advance, and in the latter days of April, for instance, the offices are crowded. How in the world, at such a time, can the inspector of taxation determine whether the calculation is correct or not? He may not have had an opportunity to dissect the man's statement, and how can he drop all other business and take up this case for the purpose of giving a statement? There is a certain period of the year when it becomes well-nigh, if not altogether impossible to get one's receipt without waiting. 
It is rather a serious thing. I do not want to see any escape the taxation. I think there are too many escaping now, but I do not want to see any undue hindrance put in the way of a man who is compelled to borrow money on mortgage and may find himself absolutely held up and unable to get the requisite certificate or satisfy the lender that his property is clear from a lien of this kind.


James Alexander Robb: There will be no undue
hindrance. I point out to my hon. friend that the lien only comes into effect after the account has been properly audited.


Herbert Meredith Marler: I should like to ask the minister a question regarding subsection 2 of section 7. I quite understand that when the certificate is given by the legal officer showing there are no arrears that certificate holds good as regards any securities so executed, but would that certificate also hold good in the case of pledges made to banks and of securities th'at were substituted for the securities originally hypothecated or pledged? Supposing a person went to the bank and pledged:	as collateral several
hundred shares of 'a certain stock, or various classes of stock, and came back later on and under precisely the sarnie pledge substituted other securities? Now, the actual hypothecation would be the same act but the securities would be different securities. It is an important question I am putting to the minister as regards banks and other institutions.


James Alexander Robb: The opinion is that the
certificate would hold good except the case came under the Bulk Sales Act or a similar statute.


Herbert Meredith Marler: I can take it the interpretation of the section is that once the waiver is given as regards the inclusion of a security, that securities substituted under that are still free from the lien.


James Alexander Robb: May I read paragraph 3 to clear up the point; the language is pretty clear:
The lien hereby created shall not have priority over any sale or pledge of personal property made to a bona fide purchaser or pledgee, for value, without notice of any unpaid assessment of the vendor or pledgor, unless the sale is within the provisions of any Bulk Sales Act or similar statute.


Herbert Meredith Marler: If the term "personal
property ' is made to apply to movable property there, it is clear; but I was using the term "personal property" more in the line of goods and chattels than stocks, bonds

Income Werr Tax Act
and merchandise. It applies then to what we ordinarily understand as movable property?


James Alexander Robb: The commissioner tells me that is what they understand as personal property.


Herbert Meredith Marler: So the question I ask is fully covered by subsection 3 in accordance with the opinion of the minister?


James Alexander Robb: Yes, I would say so.


John Babington Macaulay Baxter: The answer may be applicable to the province of Quebec-about that I can express no opinion-but I would say that the term "personal property" in all the other provinces does not merely mean ordinary chattels, visible chattels, furniture, and that sort of thing; it includes every species of property which is not land or a freehold interest in land. For instance, a leasesold right in any of the English speaking provinces is personal property. Stock, shares, bonds, all that character of property is personal property. There is no use of anyone representing the department to say they interpret "personal property" as meaning goods on the shelves in the store, or something like that. You cannot limit the meaning in that way. The law is definite and until the act is changed there can be no such limitation. The department may not be enforcing the law but it will not be obeying the law it has called into being if it does not enforce it. Now as to the difference between real and personal property, the minister proposes to enact by this paragraph that the lien shall not have priority over any sale or pledge of personal property made to a bona fide purchaser or pledgee for value without notice of any unpaid assessment of the vendor or pledgor. Suppose it is real estate. It is not a very common thing, perhaps, in the eastern provinces, but in the western provinces it is an extremely common thing to have an agreement for sale. Suppose such an agreement has been entered into. Is it intended that whilst an agreement to sell personal property shall be taken out of the lien, if the agreement relates to real estate the lien shall attach even if there is equal ignorance, equal lack of knowledge, and equal lack of notification? Surely it was never intended to make a distinction of that character. I cannot see why they should not be on the same basis; cannot see that when a person honestly but ignorantly and without possibility of knowledge contracts to buy a piece of real estate we should penalize him and give better treatment to the man who undertakes to buy a piece of furniture. It does not seem 192
reasonable, I do not think such could be intended.


James Alexander Robb: There is no penalty to a man if he purchases land and has a certificate, but in the administration of
11 p.m. the act real estate is not recognized as personal property.


John Babington Macaulay Baxter: The minister says if he
has the certificate. But I am trying to get him to sie that subsection 3 applies to a case where he has not got it. The subsection reads "the lien hereby created", and it is created after mailing a notice of assessment to a taxpayer. That lien, as created by the mailing of a notice, is not to have priority over a sale of personal property made under what circumstances? To a bona fide purchaser for value without notice at all. There is no need of getting a certificate there. If, for instance, there is an assessment against a big dry goods firm, a wholesale dry goods firm and you mail the notice. That dry goods firm is there and I go in and buy several thousand dollars worth of goods, several bales of woollens, we will say. Just because I do not know anything about it and just because I have bought in good faith without notice and for value, the law very properly, I think, says that that lien shall not affect the goods that I have bought. If it were to do so, you would not be able to carry on business. Where is the moral distinction between that case and the case of a man who, with equal amount of knowledge, with equal honesty, with equal good faith, has for value bought the right to have a bit of real estate at a future date? Why is he left open to this lien and the man who buys the dry goods is safe?


Samuel William Jacobs: Surely the hon. gentleman
sees a vast difference between a piece of immovable property and movable goods which are transferred into half a dozen hands sometimes in as many days? In the matter of immovable property, it remains there for all time. No person thinks of dealing in immovable property until he has a certificate of search made of the property. As I understand the matter now, a certificate must be obtained from the department as to whether the tax has been paid or not. If that were to be extended to movable property, you could not do business for five minutes in this country.


Henry Lumley Drayton: Does my hon.
friend see why money bona fide paid for immovable property should stand in a different position from money bona fide paid

Income War Tax Act

for movable property so far as this act is concerned?


Samuel William Jacobs: Money bona fide paid for
immovable property! I cannot see how my hon. friend does not see the distinction, or how it does not suggest itself to him at the moment. When you buy immovable property, your very first act is to send the transaction to your notary, your lawyer, in order to get a certificate of search of the property. You do not buy it without knowing whether there is an encumbrance on it or not. The very first act is to investigate in order to find out whether there is any charge against the immovable property. How can you find out whether there is any charge against movable property? You cannot do that on account of its very nature.


Henry Lumley Drayton: There is such
a thing as a chattel mortgage. There is such a thing as registration.


Samuel William Jacobs: Not under the law of my
province.


Henry Lumley Drayton: There is under
our law. We can find what liens are on movables just the same as on immovables. They have to be registered under our act. Apart from that my hon. friend is wrong when he says that everyone who buys a piece of real estate goes to a lawyer. Many do not. When a man bona fide pays money, should he lose it because he pays his money bona fide in buying an agreement of sale for a piece of property?


Samuel William Jacobs: The very first thing he
should do is to investigate whether the man who sells really owns the property or not. That is what the question really is. There is a very well known case of a confidence man ivho sold a stranger in Chicago the Masonic Temple for a few thousand dollars. He showed the man the building and the man bought it. That is what my hon. friend evidently has in mind when he says that people buy property bona fide without investigating whether the person who sells it has the right to sell it.


John Babington Macaulay Baxter: What I am trying to lead
up to is this, that under our system if a man has a little bit of a mortgage or a lease that is running for more than three years, if he has anything that practically invades the dominion of the real estate, he has at his peril to put that on record, or otherwise he may lose his right. The law requires the individual to do that and the penalty is the possible loss of his rights. Instead of

having a system that is bound to bring about conflict, confusion and hardship, would it not be much easier to have a very simple registration provision by which, if the department thinks it necessary or wise to have a lien, it should file some record of that lien in the ordinary registration offices of the country? I am referring to the Englishspeaking provinces. The man searching his title would then find it all right, and if through neglect he did not search the title he would have to put up with the consequences.


Samuel William Jacobs: As regards assessment for
municipal taxes, there is no necessity for having registration. When you buy property it is your business to see whether the taxes have been paid to the municipality or not.


John Babington Macaulay Baxter: I know that but I know
that very often mistakes occur in connection with it.


Samuel William Jacobs: That is why there are
lawyers.


Mr. COOTE:: Has the minister made any
provision, or does he intend to make any provision for a case such as I am going to .suggest to him in which a farmer has had a serious loss in his farming operations for possibly two or three years and then has a good crop which renders him liable to assessment for income tax? He has become heavily indebted during those poor crop years, and on selling his crop and turning the proceeds over to the bank, he is later assessed by the Income Tax department for his operations of the previous year. When he goes to the bank for money to pay his income tax, he is refused the money by the bank, although the bank has received the total proceeds of his crop, and the farmer then is pressed by the Income Tax department for payment of the tax. I have known at least one case to occur such as I have suggested to the minister, and I believe there have been a good many such cases. I think the minister might make some provision in the act whereby the farmer could give a lien to the department on a portion of his crop before he has to sell it and turn the proceeds over to the bank. The bank very often holds a claim upon the farmer which really forces him to turn the proceeds over to it. Has the minister considered that? Is he willing to make any change in the act to protect that man?


James Alexander Robb: We do not anticipate any
further changes in the act from what have been already presented to parliament. My

Income War Tax Act
hon. friend brought this matter to my attention before, and it is fair to say that there is room for consideration of the points which he has outlined. This does not affect farmers any more than it affects the general business community of the country. Boards of trade have made the same representations to us on behalf of business interests as have been made by my hon. friend. This is a matter that we shall have to consider when taking up the tax question during the year.


George Gibson Coote: One man told me that he
had his horses seized by the department for income tax and he had become liable under just such circumstances as I outlined to the minister. The minister says that farmers are in exactly the same position as business men.


James Alexander Robb: They are in no worse position than business men.


George Gibson Coote: I think if the minister will
consider the question carefully he will see that the farmer is in a worse position because he is dependent upon nature for the quantity of crop he will receive. Very often it is beyond his ability to ward off the poor crop which nature gives him. He is always speculating with the weather, and no matter how good a farmer he is he will have a poor crop some years and a good one in others. Some effort should be made by the department to deal with t'he farmer's case. Certainly it is a hardship in those cases where the farmers have had their goods seized for income tax.


James Alexander Robb: I have no recollection at
the moment of any farmers' horses having been seized for income tax, and I am surprised * to hear that this has occurred. If my hon. friend will inform me of any particular case I shall look into it. I can assure the committee that the law will not be applied discriminatingly to any particular class in the country.


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

Henry Lumley Drayton: I think, Mr. Speaker, that the minister ought at this stage to move the adjournment of the House. We have done considerable business to-day and we have got through it good humouredly. We were kept here until half past one this
morning and I do submit to the minister that he should now move the adjournment.


James Alexander Robb: I was here as late-or as
early-as was my hon. friend yesterday. We had an interesting day discussing higher politics yesterday and I should like to get down to some practical business now. As far as I remember, there was very little remaining to be done in connection with the Sales Tax bill, and if my hon. friend would be good enough to let that measure through I should be glad.


Henry Lumley Drayton: The minister
undertook to give me some information regarding that legislation, and as a matter of fact there are questions on the order paper in reference to it not yet answered.


James Alexander Robb: Well, then, would there be
any objection to taking up the legislation regarding trust and loan companies?


Arthur Meighen: I would remind the minister that the government has met with not a particle of obstruction to-night.


James Alexander Robb: I am not saying it has.


Arthur Meighen: Yesterday we got through a piece of work which ordinarily an opposition would be justified in discussing a good deal more than one day. It was at a late hour that we concluded last night and, speaking for myself, it was after two o'clock when I got home. Now the government is urging us at 11.15, after considerable work has been done, to proceed with further legislation- the same hon. gentlemen who when in opposition used to whine, after themselves delaying matters until midnight, if we tried to get a few things done before quitting.


James Alexander Robb: We will do as my right hon. friend wishes; we will be courteous and adjourn in the hope that to-morrow we shall be able to make some progress.


Mr. GRAHAM:: In the circumstances, Mr. Speaker, I move that the House adjourn.


Henry Lumley Drayton: What business will be taken up to-morrow?


George Perry Graham: We will proceed with the business of the Acting Minister of Finance and afterwards take up the estimates of the Department of Trade and Commerce. If we get through with that we will take up the estimates of the Department of Marine and Fisheries and after that the estimates of the Department of Public Works.
Business of the House


Arthur Meighen: Shall we take up all the bills of the Minister of Finance?


James Alexander Robb: I should like to take them up.


Mr. SPENCER:: I understand that tomorrow afternoon was set aside for the debate on the question of extending the work of the Banking committee. Is that right?


James Alexander Robb: I had a conversation with the chairman of the Banking and Commerce committee and I understood he had spoken to hon. gentlemen opposite. I may say that a number
of hon. gentlemen are leaving for Quebec city and they are anxious to be present when the debate takes place; some of them desire to speak on the subject. I understand too that there are some gentlemen who are absent. If it is agreeable to hon. members we will defer the debate for a few days until those who are away have returned.


Henry Elvins Spencer: May I point out that it has been already deferred three times.
Motion agreed to and the House adjourned at 11.18 p.m.



END OF VOL. Ill