1933-05-02

[Stage Direction]
Fifth report of the select standing committee on banking and commerce.-Mr. Matthews.

Mr. E. R. E. CHEVRIER (Ottawa):: I beg to move:
That the petition of the Genter Thickener Company praying for the passing of an act to revive and restore patent No. 209,565, together with the report of the clerk of petitions thereon, be referred to the select standing 53719-283J
committee on standing orders for the purpose of considering the suspension of standing order 92 in relation thereto.


[Stage Direction]
Motion agreed to.
GRADING OF HAY AND STRAW On the orders of the day:
Mr. A. W. NEILL (Comox-Albemi):: I wish to draw attention to an error that occurred in yesterday's proceedings. It will be found at page 4474 of Hansard. Bill No. 22, respecting the inspection and grading of hay and straw, was in committee and I endeavoured to speak on the second and third sections but was told by the chairman that that was out of order because everything had been passed previously except the preamble. The preamble was agreed to and that is all that was done, but the bill went through third reading and was passed. I now find that yesterday was the first occasion on which this bill was in committee, so not only was I deprived of the opportunity of speaking on it but this house was put in the position of passing a bill consisting of only half a dozen formal words in the preamble. If ever litigation arises or prosecutions occur under the act it will produce a rather interesting situation.
WORLD'S FAIR CHICAGO On the orders of the day:


Hon. W. D. EULER (North Waterloo):: I would ask the Minister of Trade and Commerce whether the government has received an invitation to take part in the so-called world's fair in Chicago, and if so whether the invitation was accepted, and if not why not.


Hon. H. H. STEVENS (Minister of Trade and Commerce):: The two railways in Canada in conjunction with the Department of Trade and Commerce, under which exhibitions come, are taking a reasonable economic part in that fair.



WAYS AND MEANS


[Stage Direction]
Hon. E. N. RHODES (Minister of Finance) moved that the house go into committee of ways and means.
Mr. E. J. GARLAND (Bow River):: Mr. Speaker, before the motion is voted on, I desire once more to raise a question of supreme importance to the people of Canada, and particularly to the people of the provinces of Quebec and Ontario. I wish for a short time to discuss the Beauhamois situation with particular reference to the proposed reorgan-
44S6
Beauhamois Power Project

ization, the effect of which unquestionably will be to turn over to the Holt interests this tremendously valuable project.
If hon. members have had the opportunity of studying the proposed reorganization they will doubtless have been as surprised and astounded as I have been that the government has permitted the matter to go to the point which it has now reached. I say surprised and astounded because on a previous occasion when an even better proposal wag submitted this government would not approve of it and the proposal fell through.
The present capitalization of the Beau-harnois Power Corporation is briefly as follows:
First mortgage bonds, none of them publicly issued but used for the purpose of collateral security with the banks and to secure this government for its guarantee of advances and to secure the banks for their advances, amounting in all to $22,495,000.
Collateral trust six per cent bonds, the original issue due October 1,1959, amount $30,000,000. These were subscribed for by the public generally but principally by large interests in eastern Canada. Common stock was issued at that time of no par value to the amount of 1,720,000 shares.
The proposed new capitalization of the whole set-up is as follows:
First mortgage 5i per cent bonds due 1973, $39,332,000.
General mortgage five per cent bonds which are to replace the present collateral trust bonds, $36,000,000. Hon. members will there notice an increase of $6,000,000, which I shall explain in a moment.
Common stock of no par value, 762,000 shares.
It should be kept in mind that the possessors of the new shares will control the whole concern. Up to the present time the bondholders are the people whose money has contributed to the construction of the project to date, and that is practically the only money that has been used by the concern other than the amounts advanced by the banks and guaranteed by the government, amounting to $16,060,000 and the $6,000,000 advanced by the banks direct, or a total of about $22,000,000. The banks are apparently to be asked, and I presume may already have agreed to accept, $24,000,000 of the new issue of first mortgage 5i per cent bonds for their $22,000,000 of advances. As to whether transactions of that kind are permissible under the Bank Act or not I am not going to discuss at the moment, but I do submit that it is quite improper under ordinary conditions for the banks to advance money on long term bonds of the
IMr. E. J. Garland.]
character of which these bonds will be. Secondly, I have referred already to the replacement of the original collateral trust 6 per cent bonds of $30,000,000, by the issue of $36,000,000 bearing 5 per cent. The $36,000,000 is to enable the original bondholders to receive for each thousand dollar bond a new bond of $1,200. This of course has been held out to them as a most attractive feature, but the facts are that there goes with the new bond an agreement that all interests will be waived for over four years. And presumably the $200 increase over their equity is for the purpose of reimbursing them for interest not paid up to this date,-for no interest has been paid on the bond.
With regard to the stock, it is interesting to notice that there is a provision made for the replacement of the entire original stock issue, roughly 1,720,000 shares. The actual issue was 1,800,000 shares, but the difference of 80.000 shares is that which ex-Senator Mc-Dougald was recommended, advised, instructed or coerced into returning for cancellation. Personally I have no objection to the transaction. I think it was quite proper that they have been restored, because they had been used for the purpose of paying for that quite worthless concern known as the Sterling Corporation. That leaves 1,720,000 shares. The new share issue is as follows: 172,000 shares to replace the 1,720,000. That is on the basis of one for ten, and should dispose of the matter. It might be all right if it did, but the fact is that it does not. There is an additional issue as follows: 150,000 shares to go to the present debenture holders. This 150,000 shares does not reflect to any fair degree the investment which they have made in the concern. In addition to that there is a straight grant of 200,000 shares to the Holt interests, to the Montreal Light, Heat and Power Company. For what? For agreeing to underwrite an issue of $13,500,000. For that they are to receive 200,000 shares of the new stock issue. On top of that there is to be a bonus issue of
240,000	shares to accompany the sale of the $13,500,000 of bonds which the Holt interests are to underwrite. At the present time the debenture holders and the stockholders will find considerable difficulty in being able to finance the new issue directly. So, sales of debentures to the public are not likely to be very large-that is, of the new debenture issue. The result will be that of the new $13,500,000, most of it will be subscribed, probably, by the Montreal Light, Heat and Power Company, in return for which they will receive the proportionate amount of shares. At the present time, because of their holdings in the Jacques

Beauharnois Power Project
Cartier Company they will have a complete set up right at the start of over 270,000 of the
700,000	shares. And with their other holdings, and those of their associates, will have complete control of the company.
At this stage I wish to register my unalterable opposition to the Holt interests being permitted to secure control of this corporation. Let me suggest to the Prime Minister and to hon. members that when Mr. Tasche-reau and his government introduced the charter for the Beauharnois Light, Heat and Power Company, and put it through the house he urged as one of the reasons to justify his action that it was necessary to create a competing factor in the power market. Now, with the acquiescence of this administration and with more than the approval of that same Quebec government to which I have just referred, this competitive factor is being completely eliminated, and the Holt interests are being made supreme. If hon. members will recollect the debate on the Beauharnois power project they will remember that it is the largest power development known at the present time in North America. It has a potential development of something like two million horsepower; it exceeds either the Muscle shoals or Boulder dam projects in its importance and the extent of power capable of being developed therefrom. The owners or possessers of that power development will become, with their collective holdings, the greatest power trust in North America. Let that sink in. I ask hon. members if that does not imply the biggest power trust in . the world. Are members of this house, who represent the people, to sit quiescent while the governments, provincial and federal, permit the creation of so powerful a trust in connection with a natural resource which is so essential to public welfare, as hydro electric energy ? I for one do not purpose remaining silent.
At the outset I mentioned that this is not the first proposed agreement or reorganization that has been submitted. Mr. White, vicepresident of the company, announced to a meeting of bondholders on June 10, last, that Montreal Light, Heat and Power Consolidated had made an offer some time in July of 1931. In his report he states that:
Under these conditions we felt it would be possible during August and earlv September to sell first mortgage bonds. No stipulations were proposed affecting the standing of holders of either the debentures or shares.
In other words the original set up in respect of the debenture holders and shares would remain unaffected. He continued:
We were, however, unable to make headway in this direction as the proposal did not
commend itself at that time to the Dominion government.
What has brought about the change of heart on the part of this government? If the proposal at that time was not acceptable, why was it not acceptable? And, on the other hand, why as the proposal now offered acceptable? That implies two things, by the way. It implies, first of all, that the government has been exercising, as I can show, a very powerful directional interest in the Beauharnois development. It has gone to a point which implies, dn their action, the right to direct, the right to control, the right to effect. I ask if they are going to remain quiescent in this matter. Are they going to permit the formation of this huge power trust in the hands of a group of people, whose records stand clearer before the people of Canada to-day than they have at any other time, as a pirating group of unscrupulous promoters and financiers, whose transactions involved the people of Canada in losses, it has been estimated, running into sums which would approximate the national debt.
Then, going back to the question of reorganization, may I submit to the government that even the debenture holders are not being fairly treated. On investment, they have up to this date, contributed by far the greatest share of funds for development. Under the new proposal they are now asked not only to forego their interest for four and a half years, without compensation, but without any enhancement at the end of that time for the contributions they have made to the concern. Of course, even in the beginning, as is clear to any student of this concern, these debenture bonds were not as represented. Just about as slick a deal as you can imagine was put over on the people. They were not as powerful, even, as the common stock, for these bonds bear less than the common stock, receiving only a portion of the income pledged which the common stock might receive. So, looking at it from the point of view of the debenture holders I submit the following, namely, that there has been subscribed to date roughly $30,000,000. We have to make an allowance for the commission paid, making the actual cash subscription 127,000,000. No income is to be received for four and a half years, or until October, 1937-if then. The interest, therefore, will amount to, it is estimated, about $2,700,000, which is never to be paid. The interest that the debenture holders must forego amounts to about $8,100,000 which, again, may never be paid. Five per cent compound interest on the interest losses amounts to about $1,926,000; or the debenture holders' contribution at the time of com-
Beauhamois Power Project

pletion of the first stage of this project will have amounted on paper to $42,726,000 or 54-7 per cent of the total capital investment.
The common stock that under the new proposal is to be allotted to these people who have contributed 54-7 per cent is only 19 per cent-to be accurate, 19-69 per cent. The Dominion government has contributed to date a guarantee amounting to $16,000,000 or about 20-23 per cent of the total capitalization. They are to receive none of the common stock. The banks have contributed approximately $6,-
500,000	or about 8-22 per cent, also they are to receive none of the common stock. The province of Quebec has contributed $1,352,000 or 1-71 per cent; they too will receive none of the common stock. But Montreal Light, Heat and Power, if they purchase all the new issue will have contributed by -the end of that period $12,480,000 or 15-77 per cent and will receive in shares a controlling interest. The common shareholders' contribution at this time is approximately nothing, the proceeds of sales of these shares were not funds that came to the treasury of the Beauhamois. Any cash transactions that took place were purely open market transactions as between individuals. The common shares to be allotted are 172,000. So collectively the common shareholders at the present time plus Montreal Light, Heat and Power control together 80-31 per cent of the total share issue.
It has been alleged that $13,500,000 will be required to complete the project to the point of production of 500,000 horse-power. I have consulted others on this matter, I have even taken the trouble to have inquiries made of Mr. Sweezey himself. It is contended that that is a gross overestimate, that it will not cost over $9,000,000 to complete the contract. So there is an overissue of bonds authorized amounting to somewhere aibout $5,000,000. Attention was drawn to that in a public statement made by H. G. Pepall in Toronto the other day, as published. in the Globe of Friday, April 28. I do not wish to refer to it at greater length than simply to quote the following:
The official figures therefore show that some $5,000,000 more than is actually required is being raised, or the official estimates of construction of $14,446,000 are in error to the extent of 33 per cent.
The Prime Minister on one occasion in this house gave voice to sentiments that were very close to the views held by faon. gentlemen in this comer. I ask him once more to remember them. I ask the house to listen to them. Speaking on May 18, 1932, the Prime Minister said:

I believe that there is no government in Canada that does not regret to-day that it has parted with some of these natural resources for considerations wholly inadequate and on terms that do not reflect the principle under which the crown holds the natural resources in trust for all the people.
That outstanding statement of his-I would say it was the most brilliant and accurate statement he made last year-while it may be charged by some people to verge on socialism, nevertheless is in my opinion absolutely accurate, and enunciates a principle which should be applied to such projects as the one which I am discussing. This project is not one which concerns merely the province of Quebec or the province of Ontario; it concerns the whole Dominion of Canada. It is a project involving construction on a river which is not a provincial river, or merely an interprovincial river, but an international river. The government has power over it in connection with navigation rights, it has power over it under the British North America Act in connection with the power that results from the development of a canal, and it also has the further power of doing what it did last year in respect to the canal, declaring it to be a work to the general advantage of Canada. There is no difficulty with regard to the government recognizing its rights to take over a project so enormously important to the people. No one knows better than the Prime Minister the tremendous influence of electrical energy on our industrial development, on domestic facilities, and on the scientific building up of the nation. He has himself on a previous occasion referred eloquently and fervently to the immense importance of power to a nation such as ours. We may well be proud of it, for as far as I can find out we have if not the first, the second greatest power resources of any nation, having at the present time a power development already established approximating 6,300,000 horse-power, the last figures I could secure. By the way, each horse-power of electrical energy it is estimated can do the work of ten human beings. We therefore have in hydro-electrical energy, just one source of artificial power, the equivalent of 63,000,000 human beings, artificial human beings, it is true, ready to go to work for us, provided that power can be reserved for the people, to do their work for them effectively and efficiently, without overloading them with costs as a result of private development.
I would ask the government if they do not think it is high time to make either a private investigation on behalf of the government itself, or once more a public investigation, to

Beauhamois Power Project
uncover the truth, all the truth, with regard to certain matters which have become known in the last two years, or better dtill in the last year. A new concern has been discovered that apparently has been interested in this Beauharnois business from the beginning or shortly after the beginning. It is called the Jacques Cartier Company. This company was created apparently by the group who held shares in the original company. The Jacques Cartier Company consists approximately of the following: Dominion Securities Limited; AVood, Gundy and Company, Limited; Montreal Light, Heat and Power Consolidated; McDougald and Henry, and Newman, Sweezey and Company. Their holdings in the pool are reported to be approximately as follows:
Shares
Dominion Securities	 115,000
Wood, Gundy & Co	 175,000
That 175,000 has since been transferred to Montreal Light, Heat and Power.
Shares
Montreal Light, Heat and Power. 320,000
These were secured as a result of purchasing the interests of F. P. Jones.
Shares
McDougald and Henry	 220,000
Newman, Sweezey & Co	 120,000
So that is clear that the Montreal Light, Heat and Power have the controlling interest, possessing wed over 51 per cent of the stock.
This concern has a peculiar history in two respects; first, in respect of Senator MoDougald's payment on behalf of the Sterling Corporation. Perhaps that is not the correct way to put it, but it seems that when the government instructed Doctor McDougald to return the moneys paid-or would you call it the equity given for the securities?-he had
30,000	shares in the pool. The balance had to be found. The balance was found in the pool, I think-that is something I want the government to tell us. Has Doctor McDougald paid back the 80,000 shares, and have they been cancelled? I cannot get the information on that. The only information I have in regard to the matter is from the Financial Post of March 18, 1933, which brought to my attention for the first time the existence of this Jacques Cartier Company. The Financial Post relates that there was some trouble in regard to this question of transfer of the 80,000 shares of Beauhamois A stock to be surrendered and cancelled. I do not want to refer to it at length, but I hope that when the government replies, a statement will be made as to whether this block of shares has been cancelled, because until the 80,000 shares of class A stock
issued have been cancelled it is held to be unlikely that any plan or reorganization will meet with approval at Ottawa.
But there is a further fact in connection with this company that is of concern. It seems that the Holt interests, anticipating a development sooner or later on the Soulanges section of the St. Lawrence river, made application for and received a charter from the Quebec government for the construction of a canal. This was well known to the late government; the matter was discussed at an inquiry held in Ottawa on the application of the Beauhamois Light, Heat and Power Company on January 30, 1929. Mention was made of this Soulanges charter, and at page 119 of the report on the application of the Beauharnois company this evidence appears:
Mr. McCarthy rose apparently with the idea that he owned the Soulanges canal.
Mr. McCarthy: No, no.
Mr. Geoffrion: He said, "We own a canal." The canal he owns is in his clients' dreams. The position of_ these particular clients of my learned friend is an extraordinary one. They have no grant from Quebec. They have a charter. Anybody can get a charter; charters go floating around. They have nothing but a charter; they own nothing, and they are asking you to refuse us an approval from the navigation point of view of plans for the development of whatever that is ours for seventy-five years, your jurisdiction being only over navigation. simply because they have a man who would like to develop our property himself. I suggest it is the same as if when I am asked for a building permit in order to build on my own land another member of the municipality, one of my neighbours, were to say, "No, I want you to permit me to build on that man's land instead of himself." It is about the same thing.
I direct attention to that evidence simply to indicate that this Soulanges interest possessed, as Mr. Geoffrion said, absolutely nothing but a charter. Yet I am informed that they were able to transfer that for apparently its nuisance value, for one hundred thousand shares of class A stock in Beauharnois,^ or its equivalent, held by the Jacques Cartier company. I submit to the government, Mr. Speaker, that if it was right- as I contend it was-to request Doctor McDougald to return the eighty thousand shares that he was coerced into paying out to the Sterling corporation, it would be right for this government to insist that this block of shares that was transferred for property that did not even have the appearance of right that the Sterling corporation possessed, should be returned to the company also. This Soulanges canal and power project, this Holt project, which now is a factor in giving them control of the stock, in effect had no value or rights whatever beyond the
Beauharnois Power Project

possession of a charter, and as Mr. Geoffrion said charters were floating around, I might say, like thistledown on a summer day.


Alan Webster Neill: Floating on water.


Edward Joseph Garland: Yes, or
floating on water, as my hon. friend from Comox-Alberni (Mr. Neill) suggests. The chief reasons why I urge upon the government serious consideration of the advisability of declaring this to be a work in the national interest and expropriating it for the people of Canada are not only because of the enormous power development and the control over industry and people that this entails but also because of the gigantic profits that can be made out of it under its present financial set-up, and further because it concerns the whole question of the waterways. I submit that if the government permits the private development of the Beauharnois section, which is the richest section of the whole river for power purposes, first because of the engineering features and secondly because of the quantity of power that can be developed there, they are going to leave the Lachine section, in which the development of power is not economically profitable, requiring an enormous capital in comparison to the amount of power involved, to the government to develop. It will mean that sooner or later, in carrying out the waterways project, this government will have to undertake the development of the Lachine section itself at the expense of the taxpayers, while the Montreal crowd, the private interests, get away with gigantic profits, which would be more than sufficient to finance the entire Canadian share of the waterways project.
Let us consider that for just a moment. It is estimated by some that it will cost about $13,000,000 to complete this power project, though as I have said, well known engineers have suggested that it will not cost more than $9,500,000 at most. It has been estimated also that the completion of the entire power project will cost in all about $70,000,000. The earnings on contracts already entered into will amount to about $6,000,000 a year as soon as the power is available. The actual operating costs, on the basis of about $2.50 per horse power, will amount to about $750,000 a year, so there will be a net operating revenue of $5,250,000. It is also expected, as we might have suspected from our experience with the hydro-electric in Ontario, that there will be a surplus of power over and above the estimate made on the water flow, and in this case the surplus is estimated at about 100,000 horsepower. At present there is in existence in the 
province of Quebec a measure which permits the exportation of part or all of this power. It will be seen that this additional 100,000 horse-power is clear velvet, and the prospective earnings on which are estimated at $1,100,000, making a total net operating income of $6,350,000 per year. Interest charges will amount to $2,S00,(KK), so the net profits may be estimated at $3,550,000 per annum.
Now let us take the other side of the case. Let us suppose that it costs $18,700,000 to complete the canal for navigation, and remember .that work is not to be done by the Beauharnois power corporation at all. It must be done now by this government, which has taken over the canal; it has .the deed in its hands and the agreement has been signed. That $18,700,000 must be contributed by the Dominion government for the construction of locks, lights, services and so on in connection with navigation. A new development has taken place, however, and this is most extraordinary. The canal which was taken over last year amid such applause is now worthless; you cannot move a boat up it. You can barely float a light barge on that canal. Why? That is so because it has been found necessary to put in a dam, and at the present time in the Beauharnois canal, about three and a half miles from its inlet at lake St. Francis, near the location of the first railway bridge, there is a dam which cost about $200,000, a permanent dam that cannot be removed. Let us understand the significance of that fact. It means that when the time comes for this canal to become a part of the great waterways project this government will have to build a new spur canal in order to get around this darn. A few days ago I had a conversation on this subject with one of the chief engineers of the department, and he told me that it will cost at least $4,000,000 to build this new canal, with a check gate for the purpose of creating stall water on the upper side. With regard to the feasibility of the project from this point of view, those who have studied canal propositions know that there must be a certain radius of curvature. This canal is built on the basis of a five thousand foot curvature, and if that is not maintained seagoing vessels of considerable length and weight will have difficulty negotiating the necessary turns or curves. If, therefore, the inilet or outlet of the new canal required as a result of the building of .this dam does not fit in with the needs of vessels of this kind the entire canal may be ruined forever. I am really convinced that the engineer's estimates in connection with what will be required to make it navigable are conservative. I believe .that the

Beauharnois Power Project
cost will not be $4,000,000 but in excess of that sum, but for the sake of our discussion we will take the figure he suggests, namely, $4,000,000. You must then add the $4,000,000 to the $18,700,000 already required.
I come now to the Lachine section. The report of the joint board of engineers, which I have under my hand, and other documents as well, have indicated an estimated cost of the Laohine section of $53,000,000-that is, simply to make it part of the great waterways scheme-or a grand total cost of $75,000,000 in order to make this part of the river navigable under the waterways scheme. I submit that if the Dominion government would expropriate this concern and issue bonds required for the construction of the rest of the canal, at the same rate of interest, they would make sufficient profit on the present contracts alone, plus this 100,000 horse power, to pay for the entire construction, and on top of that have a net profit of $750,000, which by the way might be applied to the deficits in connection with the Montreal harbour project or something of that kind. These figures are based on the completion of the power project up to the first stage of 500,000 horse power.
I have already intimated that under private ownership there is no security for the people of the province of Quebec. There is no guarantee any longer of even competitive rates, for they are left at the mercy of the Montreal Light, Heat and Power Company and its associates-an inhuman position, I contend, in face of the rates they are charging in comparison with those that obtain under the provincially owned hydro electric project of Ontario. Remember, I am not proposing that the government should go into the business of distributing power, but I am urging that it should take over this enterprise, which is the natural heritage of the people, and develop it as part of the great waterway system, and it should then undertake to sell power to whoever may distribute it in the province, exactly on the principle of the hydro electric of Ontario. Private interests are developing and selling power at $15 per horse power and I am satisfied that it could be sold, as I am informed it is now about to be sold to United States interests, at $12 per horse power or less. I have no doubt that is possible under public ownership; I am absolutely convinced of it from information I have secured in the matter.
I am definitely and unalterably opposed to the export of power. When a few years ago this question came up first, Mr. Taschereau accepted the idea of the Beauharnois Light, Heat and Power Company coming into existence. I have already stated two reasons why, and I wish now to refer once again to one of those reasons; it was to supply the power requirements in the province of Quebec. In other words, it was urged that there was not at that time sufficient power and apparently Mr. Taschereau wanted this done. Now note that before this power becomes fully available-only a small part of it is now available -Mr. Taschereau comes forward and urges that they should be permitted to export power because they have too much. Surely that is perfectly absurd. I submit further that once Canada exports power it can never get it back again. You can never permit the establishment of municipalities, industries, plants, homes and so on on a natural resource upon which people will depend so utterly, and hope eventually to recover that resource. You cannot do it short of war, and I protest most vigorously against the proposal that the provincial government of Quebec, apparently with the acquiescence of this government, should permit the export of power.
I am not alone in my opinions in this regard, or at least I hope I am not. Certainly at one time I was not, for in this house the Right Hon. Arthur Meighen himself, in the year 1925, when this question of the export of power came up in connection with Carillon, used language which I should be very proud to use in this matter. He said:
The asset that Canada has in its water-power could not be appreciated by any man however gifted, even four years ago, to say nothing of sixteen or twenty years ago, as it can be appreciated to-day. . . . There may be American capitalists who will sign agreements that the power is withdrawable; but if they do, they know- it is withdrawable on paper, but that never in actual fact can it be withdrawn.
He had some other trenchant things to say about it:
Now the fact is that an application as astounding in its audacity as any ever presented has been before the government for months, lying in the government files, and lying there without repudiation, without one negative word going to those who are behind the application.
I should like to know whether those words are not absolutely applicable to-day, whether this government has not had in its hands for weeks a permit for the export of power. In answer to my question some weeks past there was a clear evasion of the matter so far as I could see, and I hope the Prime Minister will reply to that point. I submit to him that he has no right to consent to the export of power from this dominion, not even on the yearly basis.


Mr. MERCIER (St. Henri) :: Isn't the hydro electric of Ontario exporting power?
Beauhamois Power Project


Edward Joseph Garland: Yes, it is exporting power because it took over a concern which was under contract to export power before the hydro took it over; that is all; it does not export power itself.


Mr. MALCOLM:: Yes, it does.


Edward Joseph Garland: My information is that it does not.


James Malcolm: Yes, it does.


Edward Joseph Garland: In any case, that does not detract from my argument, because I contend that it should not be done. Ontario should not be allowed to do it any more than Quebec, and this government has a right to prevent it in either case. There is a definite responsibility on the government t.o prevent this being done.


Mr. CHAPLIN:: It was done previously by companies which the hydro bought out.


Paul Mercier: It is the same thing.


James Dew Chaplin: It is not.


Edward Joseph Garland: The information given by the hon. member for Lincoln is the information I have, namely, that in every case where power is exported by the hydro electric of Ontario it was agreed upon by the companies before they were taken over by the hydro electric commission.


James Malcolm: I do not like to interrupt the hon. member, but the hydro electric of Ontario is exporting, under the guise of off-peak power, substantial quantities to the United States, which were not exported at the time the power companies were taken over.


Edward Joseph Garland: Then I am
opposed to it definitely, just as I am opposed to this. I suggest with all deference to the government that the remainder of this Beau-harnois development should now be declared to be a work for the general advantage of Canada. Secondly I suggest that this government should create a federal hydro commission to supervise and complete this power development and any other that may be required as a result of the creation of the St. Lawrence waterway.


William Daum Euler: May I ask my hon. friend a question?


Edward Joseph Garland: I am sorry, I have not time in my forty minutes. Thirdly, I suggest that when the time comes the whole project should fit in as a proper part of the waterway system. In support of that position,

in. case anyone raises the constitutional question in this matter, let me say this. If hon. members will turn to subsection 10c of section 92 of the British North America Act they will find the following as coming within Dominion jurisdiction:
Such works as, although wholly situate within the province, are before or after their execution declared by the parliament of Canada to be for the general advantage of Canada or for the advantage of two or more of the provinces.
I submit that there is power under that clause to declare this work to be the national advantage. I refer hon. members also to section 108, which reads:
The public works and property of each province, enumerated in the third schedule to this act, shall be the property of Canada.
Clause 1 of the third schedule reads as follows:
Canals, with lands and water-power connected therewith.
These are within the control of this government.


Mr. LAPOINTE:: Then existing.


Edward Joseph Garland: I submit
that this canal should be declared to be in the national interests and that the power incidental or ancillary to the construction of the canal should be taken over by the government in the public interests of Canada. A federal hydro commission Should be created and the government should undertake the further development of this project in the public interests.
The matter of power is enormously important because of the reasons I have just suggested. It should be taken over and made use of, not only for the benefit of the people by means of lower rates but in order that the profits obtained thereby shall not go into the private pockets of Sir Herbert Holt and his associates but be used for the construction of a deep waterway which will prove to be a national asset. If hon. members will read some of the documents which have been issued in connection with this waterway they will find that practically every engineer has suggested that the power developed should be used for the purpose of defraying the great cost of canalization. I should like to refer to the report of the Canadian national advisory committee. I quote from the majority report which appears on page 19 of a white paper published by the government in 1928, entitled St. Lawrence Waterway Project, as follows:
We believe that the first concern of this committee should be, and of the government will be. the national aspects of the proposed undertaking.

Beauhamois Power Project
It continues:
We believe that if a reasonable time were permitted in which to enable the resultant power to be economically absorbed the development of this national section would be undertaken by private agencies able and willing to finance the entire work, including the necessary canalization, in return for the right to develop the power.
That statement implies that private interests will be allowed to develop the waterways upon the understanding that they construct the canal. No agreement to that effect is to be found in connection with the development of the Lachine section by the Beauhamois interests. The minority report, signed by Mr. Beaudry Leman and Mr. Ade-lard Turgeon, two eminent French Canadians, contains the following:
It would appear of great importance that the crown retain permanently its proprietory rights in all the improvements connected with this vast undertaking and pertaining to both navigation and power development. It is not difficult to visualize the immense value to Canada of retaining the control and disposal of such a large amount of hydro-electric energy admirably situated and which may be advantageously developed. In respect of an undertaking of this magnitude, which may insure the prosperity of many generations of Canadian citizens, the permanent ownership of this great Canadian heritage should not be surrendered to private interests but the operation of the power works developed by such a project could be leased or farmed out, under conditions to be studied and determined.
I submit that the conditions as they now exist are not in the public interest and I urge the government to again take into consideration this whole matter but in the meantime express its disapproval of the proposal or proposals which are to be put before the bondholders in Montreal, I believe to-morrow. After having made further adequate investigation of the matter, the government should seriously devote itself to the task of taking over this project in the interests of the people of Canada.


Mr. ROBERT GARDINER (Acadia):: Mr. Speaker, before you put the motion I should like to say a few words in regard to this matter. The question of the development of this particular section of the deep waterway scheme by the Beauhamois Power Corporation was first discussed in this house on May 22, 1930. At that time I had the privilege of introducing the matter. On that occasion the house was given such information as was available but further information has come to us from time to time. May I say that I heartily approve of the presentation of the subject matter made this afternoon by the hon. member for Bow River (Mr. Garland), and I support him in his contention. It is not
my purpose to take up much time of the house, but I should like to bring forward one phase of this important question which the hon. member for Bow River did not touch upon to any great extent. I refer to the control of the price or the charges which this company may make for power when it is once developed and being delivered to the people. Most hon. members will remember that the present Prime Minister (Mr. Bennett), then leader of the opposition, took part in the debate on May 22, 1930. I well remember how he castigated the government of that day because it had not taken proper precaution to see that once power was developed the people of Canada would be able to obtain it at reasonable rates. I have searched all the orders in counoil I have been able to find which have been passed by the present government with reference to this Beauhamois project and I must confess that I have failed to find one sentence which purports to do that which the present Prime Minister said in 1930 the then government was delinquent in not doing. I submit that as far as the protection of the public is concerned, the present government has not done any more than the former government did to protect the people from the payment of high rates to the company. The present Prime Minister is reported on page 2418 of Hansard of May 22, 1930, as follows:
When the government of this country had the opportunity to exercise control; when they granted permission to this corporation to carry on it3 operations-for, mark you, it could not function for one day and could not market a kilowatt of power without approval by the government of its plans to divert water from the lakes and stream above to the lakes and stream below-it should have exercised that control. In the face of the story we heard to-day the present situation constitutes an outrageous proposition.
In my professional career I have had to do with a great many such enterprises, and I have an idea what would be just compensation for men who promote, foresee, and have vision.
Then he goes on to say:
In the light of what was stated this afternoon, will any member stand in his place and say that the promoter's compensation is just when we begin to talk about a hundred million dollars? It staggers our imagination.
On the next page, page 2419, the Prime Minister made this statement:
But what position are we in? The power that once belonged to Canada and to all the people-and I have a very strong conviction when I use those words-has now passed irrevocably out of our hands. The price at which that j>ower is to be sold for Canadian development is to be passed upon by three managers for the next ten years. That is what it means.
Beauharnois Power Project

The Prime Minister went on in the same strain and I could turn over another page and find similar quotations to those I have just read, castigating the government of that day because they had not taken proper steps to see that the people would be protected in the sale of this power. I quite admit that the Prime Minister was correct at that time, but if he was correct then, is he not just as correct to-day in taking action having for its purpose the control of prices which the people will have to pay for the power developed from this project. In my judgment the government, because of the legislation that was passed late in the session of 1931, has had all the opportunity and all the power necessary to see that the prices charged for the use of this power shall be within reason; but what have they done? They are in exactly the same position as was the former government. As far as the present government is concerned it has done nothing whatsoever to protect the people in that regard; it is in exactly the same position as the former government, and I might refer to the words of the Prime Minister when he dealt with that subject. If the former government was delinquent, as it was according to the Prime Minister's statement, then I submit that the present government is equally delinquent, more particularly in the light of the declaration which the Prime Minister made on May 22, 1930. I could quote for the benefit of the house several very admirable remarks which were made by the Prime Minister at that particular time in support of the contention I am now making, but I do not wish to weary the house to that extent.
I wish to call the attention of the house to another phase of some importance. Speaking in the House of Commons on April 18, 1932, the Prime Minister made a statement with regard to the position of the Beauharnois undertaking and the policy of the government. This had been asked for some time previously, I think, by the hon. member for North Waterloo (Mr. Euler), and on April 18, 1932, the Prime Minister said, at page 2105 of Hansard:
The government by every means in its power will endeavour to do the following: (a) secure continuance of the enterprise; (b) secure the rights of those who bona fide have put their money in that enterprise; (c) secure proper control and management; (d) take such other steps as may be necessary when terms and conditions are fixed, as will ensure the greatest possible benefit to this dominion as a whole by reason of the undertaking now being declared to be a work for the general advantage of Canada.
It is well known to members of this house that because of the inability of .the company

to find sufficient funds the government finally decided to guarantee the banks for advances to complete the work. The money advanced to the company under this guarantee amounts I understand to something like $16,000,000. Prior to that the banks had advanced to the company something like $6,500,000.
What is the position to-day? As far as the canal and as far as the power works are concerned, they are practically completed, although there may be some slight expenditures necessary actually to complete the canal and the power plant. The largest amount of expenditure still to be made is for the control works in the St. Lawrence river, and it is estimated that these improvements which are necessary to control the water in the St. Lawrence through canalization in the Beauharnois section will cost from $9,500,000 to $13,000,000. There is some difference of opinion between engineers as to what the total amount will be, but whether it is $9,000,000 or $13,000,000 is not the significant point at the moment. The fact remains that this expenditure will take place over three or four or five years inasmuch as this kind of work can be proceeded with only very slowly.
The point to which I wish to direct the attention of the house is that the government in order to ensure the completion of this work put the credit of Canada behind the undertaking. They guaranteed the borrowings from the banks to .the extent of $16,000,000. At the same time I think it is only fair to the Prime Minister and the government to say that they extracted from the company mortgage guarantees in the proportion of two dollars for every one dollar advanced under that guarantee, the mortgage guarantee being held by the banks. Now the point is this: The government as far as I understand it have stopped the financing of this company. If in the Prime Minister's opinion on April 18 of last year it was necessary to see to it that this work was completed and that the government would ensure its completion, may I ask the Prime Minister in all seriousness why it is that the government have stopped short in supplying the necessary guarantees for advances from the banks at this particular time? Why did the government stop when the canal and the power house were practically completed? Is it because of the fact that the Prime Minister realizing the importance of the Montreal Light, Heat and Power Company, desires to see that company get control of this particular development? Has the government stopped the supply of funds for the completion of this project at a point where the collateral trust bondholders will be forced to accept the pro-

Beauharnois Power Project
posals of the Montreal Light, Heat and Power Company? That is the question which I think is uppermost in the minds of those who have been following this transaction.
I have already quoted the statement which the Prime Minister made last year, and I shall quote again from the same page, from the Prime Minister, what is necessary to my argument. It would appear that on the sixteenth day of September, 1931, the premier of Quebec saw the Prime Minister of Canada, and the premier of Quebec and a cabinet colleague suggested that it might be advisable to permit the Montreal Light, Heat and Power Company to secure control of this project because of the fact that they were in a position both to manage and to finance its completion. What does the Prime Minister say?
I intimated that that proposal did not commend itself to the government at that time. Within a week Great Britain went off the gold standard, and financing by any body or group of men became impossible. The government continued, however, to take the responsibility-
And so on. If it did not commend itself to the government at that particular time to permit the Montreal Light, Heat and Power Company, namely the Holt interests, to secure control of this valuable project, what is the opinion of the government to-day? Have they changed their mind in that regard? Are they willing to-day to permit the Holt interests to get control of this project? What is the answer of the government to that question? If they have changed their minds, what has made them change? If they have not changed their minds, what is the government going to do about the situation? What action are they going to take to see that the project will continue to develop? I believe it is important enough for the Prime Minister to make some statement in regard to the possibility of what will take place to-morrow. Hon. members must bear in mind that the collateral trust bonds were sold not only in Canada but in other countries as well. They were sold in small denominations, as well as in large. What hope has a small bondholder against a crowd like the Holt interests to secure justice? So far as I am concerned I shall say this, Mr. Speaker, that I believe these collateral trust bondholders should be protected. I believe any person who has put actual money into this concern, any person who has real money in it, should be protected. I hove no objection to that. But we are considering the situation in so far as the capital stock of the company is concerned.
There is practically no capital invested at all,-'the whole transaction has been carried out on borrowed money. Yet those who control the common stock of this company are going to determine what shall be the fate of these bondholders. I submit the government could very well, and with justice, take over this project as part of the great seaway enterprise which we intend to build, and probably will build in the near future. It gives me a great deal of concern, when I contemplate the possible cost to the people of Canada of a deep seaway. More particularly is that so if the government, when through canalization they create a head of water, do not take advantage of the opportunity to make the best use of that head of water in the interests of the Canadian people. I have no objection to the government securing to the province of Quebec the rentals to which, under agreement, she is entitled, until such time as the question has been decided by the court of final jurisdiction as to who has the rights or as to how these rights are to be distributed. To that extent I would keep faith with Quebec; I think that would be justified.
But the point I wish to emphasize more particularly is that if we are going on to develop this seaway we must see to it that so far as proper development is concerned the Canadian people secure the benefit of such development, not only through facilities for navigation but through the development of power. I would withhold consent to the development of the seaway until such time as the government had placed before this parliament a policy which will take care of that particular situation. I believe the seaway will come, but unless it is properly handled it is going to be an expensive affair for the people of Canada.
Now, may I add my word to those of the hon. member for Bow River in asking the government to do its duty by the Canadian people by taking over this project, and making it a national concern. Pay to the province of Quebec the rentals which are due under agreement until such time, as I have already stated, as final decision has been made. By that means the Prime Minister will have done something really worth while for the people of Canada. These two great provinces of Ontario and Quebec, where most of our manufacturing is done, have no coal. But they have something to-day which is much better than coal, namely the energy derived from the waterpower,-white coal or white power, as it is termed. To-day that is far more important than coal. The cost to manufacture
Beauhamois Power Project

goods by means of this energy will depend to a great extent upon what the manufacturers will have to pay for the use of it. That is a matter which not only concerns the central provinces but the maritimes and western provinces as well. I believe the people of western Canada are getting tired of carrying the burden which they are carrying. May I point out to the Prime Minister that only reoently there took place in Australia something which should be of great concern to the government of this country, namely the decision of the people of western Australia to withdraw from confederation. How long can this country expect the western and the maritime provinces to carry the load they are carrying? If the government would take advantage of every opportunity to reduce costs of production so that lower prices may be secured, then I think probably the rest of Canada would be satisfied. But if we throw away this heritage and permit it to be exploited by a set of gangsters for which the people of Canada have no use and who have probably done more harm to Canada than any other class of people I can think of-if the government is going to permit that kind of thing to go on, then I am not very much impressed as to the future unity of Canada.


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: Mr. Speaker, on two previous occasions I have attempted to back up, as well as I could, the presentations made with regard to Beauharnois by the hon. members for Acadia (Mr. Gardiner) and Bow River (Mr. Garland). I feel I cannot do other than add my observations again to-day. I know that in one of the editorials of a recent edition of a western newspaper it was pointed out that the net results of the efforts of the hon. member for Acadia, leading the group in this comer in his presentation of the case had been simply to take away a certain enterprise from a small corporation, and turn it over to a large one. I think perhaps that is not altogether an unfair criticism. But I should like to say that this is not the fault of hon. members in this comer of the house. Several years ago we did our best to expose something which we believed was inimical to public welfare, and which involved a very serious graft and a very considerable amount of political corruption. We did our best to present our point of view to the public, and there is no doubt at all that certain individuals were exposed. The public were aroused. As everyone knows a committee of this house investigated the matter up to a certain point; then it was dropped. However certain mem-
bers of the Senate were found guilty of practices which made it necessary that they should be dealt with.
All that was done. Public attention was called to the matter, and the whole question was then placed squarely before the present government. If we in this corner have failed to secure what we set out to accomplish, namely the nationalization of this great power scheme, or the bringing it in some way under the control of the public and making the power developed available for the use of the public at the lowest rates possible, it is not the fault of the members in this comer. The government itself must be held accountable for the situation.
It seems to me almost incredible that the
government to-day can sit silent, refusing to give any statement with regard to a matter of this importance. Some of us may be regarded as cranks, we may not be taken very seriously from the political standpoint, because of the smallness of our numbers, but let me say that this is a matter that arouses tremendous interest throughout the entire dominion. We were blamed a few years ago because we had not carried the matter further. We had not the political weight to carry it further at that time. We could simply put it up to the country and the government. The government had full power to deal with the question, and to a certain extent the government did deal with the question. It realized that the enterprise must not fail, and it came to the assistance of the bondholders. It gave certain guarantees to the banks. But there it stopped.
Now I cannot see that at this stage of this session any useful purpose would be served by covering again the ground that we so thoroughly covered on previous occasions, but I would suggest very briefly one or two points. As has been urged by previous speakers, the rights of the collateral trust bondholders do not seem to be protected. They are protesting against this, they are calling upon the members of this house to do something to protect their rights. It seems to me that we as members have a duty to voice these protests and call upon the government to take some action. The government apparently believes itself so firmly entrenched that it can well afford to disregard not only public opinion on general questions but actually the cases brought before it by members of other parties. I say that the rights of the collateral trust bondholders are apparently not protected. Further than that I think it is obvious from the statements made by the hon. member for Bow River that the navigation rights on the

Beauhamois Power Project
St. Lawrence are not protected. We have perhaps certain safeguards in the fact that we now technically own the canal, but it is going to cost us a great deal more than necessary to develop it, and our rights in that regard do not seem to be protected under the present arrangements.
Of course the real difficulty is that we and the public generally cannot find out exactly what the present arrangements are. The government in this and some other matters is preserving a secrecy which has hitherto been unknown in public affairs in Canada. They think themselves free to give information or withhold it, and justify their position on the ground that information is not in the public interest. We are not willing to admit that this policy is in the public interest. When the bondholders come to us begging for protection, when we are told that the government itself is constructing a dam which may mean ultimately a very heavy expenditure for a branch canal, it seems as if we are entitled to some statement from the government as to what is going on.
Further than that, it would not seem that the public are protected. There is no indication that the public will be safeguarded in the rates that may be charged in days to come. That protection is taken care of in many affairs, but apparently it is not -being given in this case. This great power development would in effect be turned over to the Montreal Light, Heat and Power Consolidated, which for years has so successfully exploited the city of Montreal.


James Dew Chaplin: Did -the hon. gentleman say that the government was constructing this dam?


James Shaver Woodsworth: I understood from the hon. member for Bow River that a dam had been found necessary and had been constructed under the direction of the department and that this action would -make necessary on the part of the government a spur -canal in order to make the canal available for navigation purposes.
Further the dominion claims have not been pressed. When this matter was discussed before the supreme court several years ago an excellent case was made out for the right of the dominion to control the canal. I cannot see why this matter could not and should not have been carried further, before handing over the whole enterprise to the province of Quebec. I can remember some years ago reading rather carefully that document, or parts of it, and I found that Hon. Lucien Cannon acting at that time for the dominion, presented what to me as a layman seemed a very
effective case. I cannot see why the present Conservative government should let Quebec have its own way in a matter of that kind. It seems to me the case might have been referred-


Ernest Lapointe: Did my hon. friend also read the judgment, which was really the authority?


James Shaver Woodsworth: Yes, I read the
judgment, and as I was about to say I cannot see why the case should not have been carried to the privy council, as is done in a great many other cases. Again and again the judgments of our courts have been reversed. I do not think we can take the judgment of the supreme court as final.
Still further, as regards power being exported to the United States, it seems to me that Canadian interests have not been carefully considered. A few years ago it was very generally considered that it was rather a dangerous thing to permit the export of power to the United States. I do not quite see why that export should now be permitted, without careful consideration by the people of Canada. Here again is where I as a layman am somewhat confused. Has the Quebec legislature or the government of Quebec the authority to permit the export of that power?


Mr. CAHAN:: It has never assumed that
right, nor has it ever suggested it.


James Shaver Woodsworth: Then that power
lies here with the Dominion government. Am I right?


Charles Hazlitt Cahan: Undoubtedly.


Mr. BENNETT:: He has already made a statement on that point, why continue?


James Shaver Woodsworth: I may have been
careless, but it has not come to my knowledge that this government has taken a clear cut line in that regard.


Ernest Lapointe: A licence has to be
issued by this government for the export of any power.


James Shaver Woodsworth: Well I think a
statement of government policy should have been made in that regard.


Ernest Lapointe: It is in the statute.


James Shaver Woodsworth: But what is the
government doing about it? Are the interests of Canada adequately protected? These are points I want to know something about; I have no knowledge, and I think the public has no knowledge. It seems to me that this is an issue of sufficient importance to be brought to the attention of this house. I know that
449S
Beauharnois Power Project

it is the government that in the last analysis decides such matters, but at least there can be some public discussion of the matter, and some opportunity for the public at large to express itself. At the present time we are not granted that opportunity, in fact this is simply another instance in which, rightly or wrongly, we are getting away from the idea that parliament is the body that has authority with regard to the most important matters that concern this country. Apparently the house is to be sidetracked, neglected, ignored, the government claiming absolute right to decide these most important matters of public policy with scant regard to the wishes of the people as expressed through their chosen representatives. I do think the Prime Minister should make a statement to this house, even if for no other reason than to enlighten our ignorance and clear up any misconceptions that may generally prevail. I think we should have a statement from the Prime Minister with regard to the points we have raised to-day. I do not think it is too much to ask that the public should be informed' very definitely with regard to the protection being given Canada in the matter of power export, the protection being given the bondholders, any action that is being taken by the government to reserve for Canada its fundamental rights in connection with this canal and any action that is being taken to safeguard the financial interests of this country. I know that some years ago my hon. friend the Secretary of State (Mr. Cahan), for whom in common with all hon. members of this house I have a very high regard, took the position that we must concede that this was entirely a provincial matter. I cannot concede that point, and it does not seem to me that the country is willing to concede it. I would rather take the position, as I did in the house two or three years ago, that the St. Lawrence river is on a different basis from many other streams and that the power developed there is also on a different basis from the power developed locally in other areas. I take it that the St. Lajwrence is essentially a national and an international stream, and that under those circumstances we cannot deal with this matter in a provincial fashion. I think that unless we are careful this administration may surrender claims which ought not to be surrendered with regard to the effective control of this great river.


Mr. DUPUIS:: Upon what authority is my hon. friend basing this opinion?


James Shaver Woodsworth: I have given my
authorities at some length in previous dis-

cussions, and I cannot see that there is any very useful purpose to be served by citing those authorities again. The hon. member will find them in the speeches of the hon. members who presented the case previously.


Vincent Dupuis: It is not in the British
North America Act.


James Shaver Woodsworth: Yes, it is in those
portions of that act read only to-day by the hon. member for Bow River (Mr. Garland) .


Vincent Dupuis: Does the hon. gentleman
suggest that the British North America Act makes a difference between the St. Lawrence and other rivers?


James Shaver Woodsworth: Yes, it does. It is all very well for the former Minister of Justice (Mr. Lapointe) to shake his head; I heard him suggest a little while ago that these clauses in the British North America Act applied only to canals already in existence when the British North America Act was passed, but I do not think that position can be successfully maintained.


Ernest Lapointe: Would my hon. friend
apply the same theory to the Niagara river, which is also navigable, and would he claim the developments which have been carried on there instead of leaving them under the control of the hydro commission of Ontario?


James Shaver Woodsworth: Ultimately that
claim may be made, but the Niagara river is in a different position.


Ernest Lapointe: Where does the hon.
gentleman find that?


James Shaver Woodsworth: There are two
points I might mention, Mr. Speaker. One is that I think a very good case could be made out for the continuity of ownership of the canal, ever since the original grants were made to the Roberts. This canal has been changed; its location has been somewhat altered; certainly it has been enlarged and it has assumed an altogether different position in the public life of this country, but there were certain grants made in the very beginning which have continued through the yeara in one form or another, which it seems to me would offer a very strong presumption in favour of the rights of the dominion in connection with that canal. There is a recognition of this in the fact that certain rental payments are 'being made to the Dominion government to the present day.
Then there is the other aspect of the question. The St. Lawrence river is a navigable stream; it is proposed to make it part of an

Beauhamois Power Project
international waterway, and again and again the engineers have asserted that there seemed to be no reason why the cost of the canalization should not be borne by the water power developed. If the late government had been a little more energetic and forward looking they would have started the development of the canal, and almost automatically the control of the power would have come into the hands of the dominion. Unfortunately the federal government was slow in acting and * the power development was started first. The province of Quebec claimed certain rights because of that power development, and later on the Dominion government considered that we had to fall in line and that the canal had to be carried on as an independent enterprise, with the cost borne by the Dominion government. But even though that action was taken in the past it seems to me that we still have the power of asserting our control over this enterprise. As the hon. member for Bow River urged, it is quite within the power of the present administration to declare this a work for the general advantage of Canada, and I think under those powers, which are undoubtedly under the British North America Act, we might control the whole situation, both as to canalization and water power, and thus save this enterprise for the people of Canada. In another connection last night I directed attention to the tremendous control which, through the years, had been secured by Sir Herbert Holt over various financial and industrial enterprises in this country. To-day it seems as though we are playing into the hands of Sir Herbert Holt and adding still more power to that possessed by a great corporation that has already almost strangled the industrial and financial life of this country.
Once more, Mr. Speaker, I would urge that if we have not been stating the facts correctly to-day the government should set us right, for some of us are honestly perturbed about the whole situation. We feel that in our speeches to-day we have represented the fears and the hopes of a large number of people in Canada.


Richard Bedford Bennett: Mr. Speaker, when a discussion of this kind is contemplated in the house it has been customary for notice to be given to the leader of the government or some minister concerned with the matter in question. No notice was given and therefore I do not propose to traverse the matter at length, though I may do so later. This discussion indicates at once that it is not always desirable to rely upon briefs prepared outside and given hon. members of this house to read in this chamber. I make 53719-284
that statement very carefully and I know exactly what I am saying.


Robert Gardiner: Just what does the Prime Minister mean by that statement?


Richard Bedford Bennett: I mean exactly what I have said, and just that; the hon. gentleman can read it in Hansard, and he will know what I mean. I read some of the speeches delivered in previous years before they were made. Let us have no misunderstanding about,the position of affairs. This afternoon in this house three hon. members charged that power was to be exported from Canada, that an arrangement had been made to export power from this country. Three hon. members made that statement, one after the other, in this chamber.


Robert Gardiner: Who were the three
members?


Richard Bedford Bennett: The hon. member for Bow River (Mr. Garland), the hon. member for Winnipeg North Centre (Mr. Woodsworth) and the hon. member for Acadia (Mr. Gardiner).


Robert Gardiner: I did not make that statement during the course of my remarks.


Richard Bedford Bennett: Then if my hon. friend's words did not mean that they meant nothing; they were simply an endeavour to fasten on the government some responsibility which does not belong there.


Edward Joseph Garland: The hon. member for Bow River referred to the bill passed by the Quebec legislature.


Richard Bedford Bennett: And he made statements about this government. It is not as though the hon. member were an ignorant man; he is a gentleman of culture and education, and he knew perfectly well that there was a law on the statute books of the dominion stating very definitely that no power can be exported without the consent of the governor in council; he knew perfectly well that no such consent or licence had been given.


Edward Joseph Garland: Quite right.


Richard Bedford Bennett: Then that settles it.


Edward Joseph Garland: I referred to licences that might be granted.


Richard Bedford Bennett: The statement was made the other day that no licences had been issued.


Edward Joseph Garland: I wanted to know if licences were going to be issued.


Richard Bedford Bennett: That illustrates the course that has been continuously and persistently pursued by the hon. gentlemen who have spoken this afternoon. There have been no

Beauharnois Power Project

licences issued for the export of power from this dominion. What is more, if the hon. gentlemen had been as industrious as they might have been they would have found that the principle asserted by Mr. Meighen as to the danger and the difficulties which would follow the granting of licences for the export of power and the building up of communities was known to every member of this administration and of this house. None of the licences ihat are outstanding is new; every member of this house knows that they are not new licences. The only new licence issued under that statute, so far as I know at present, is one with respect to natural gas in western Canada, and if my memory serves me, it was issued by the late government, with the consent of the attorney general of Alberta, and renewed by this government.
Now, there is no foundation in fact or otherwise for the assertion that any licence for the export of power has been granted by or asked for from this government in connection with Beauharnois-not any. And, secondly, the statements that have been made with respect to the bondholders and their position are questions that involve a long and tedious reading of the facts for which no opportunity has been afforded any member of this government in order that the matter might be dealt with this afternoon. At the appropriate time, if it is thought desirable, a statement will be made; but to spring a discussion of this kind upon this house and then expect that any member of the administration is going to follow with a detailed analysis and, failing that, to be charged with not having dealt with every factor that has been presented is something unheard of in the previous practice of this house. Moreover, it is something that will not conduce to the orderly discussion of public matters. When the opportunity arises, if it is thought desirable, a statement will be made.


Hon. W. R. MOTHERWELL (Melville):: I have not received any invitation to speak on this occasion, but sometimes I speak without invitation. I am not going to enter into the differences between the government and our friends to our left, but if the stand consistently taken by the hon. member for Acadia (Mr, Gardiner) throughout the west last year is right, that this property, this water power, belongs to the Dominion of Canada- that was the report that appeared in the press -I would point out that no expropriation proceedings would be necessary because the property would be ours without having recourse to such proceedings. And that impression was left on my mind by my good

friend the Minister of Immigration and Colonization (Mr. Gordon) in the speech which he made as chairman of the Beauharnois investigation committee. He gave a very good speech on that occasion, from his standpoint, and one statement appears to have been overlooked by the house and the country. After stating that campaign funds were quite necessary, he said-


Richard Bedford Bennett: That was the Jacques
Cartier company he was talking about there; that was what the issue was about.


William Richard Motherwell: We shall see when we read his statement. After making that remark in regard to campaign funds, he put in the usual "but":
But those who contribute to a party's coffers, inspired only by the hope-and in time something more than hope-that they will, by reason thereof, be able through the influence of that party to alienate from the people of the country the resources that belong to them- those contributions, I say, and those who make them cannot be too strongly condemned.
So that if there is not a direct statement, at any rate there is a very direct implication there, on the part of my good friend the Minister of Immigration and Colonization, that this property which we were talking about belonged to the people of Canada, and that anyone who dared to alienate it for political purposes was worthy of severe condemnation. Now that was what the whole blessed report was based upon, and it is no wonder the hon. member for Acadia took up the same refrain all through the west and pleaded that everyone should come and help to save this great property of ours. The cry was, "Let us nationalize it like the hydro in Ontario." And who was the one that stood in the way? Well, that is the situation. I am not going to quarrel with the government just now over this question because I have other fish to fry of more importance to me; that is to say, the gentlemen to our left. Let me turn to the interesting speech delivered on that occasion, the discussion of the Beau-harnois report, by the hon. member for Winnipeg North Centre (Mr. Woodsworth) after the report was submitted by the Minister of Immigration. In the course of his remarks he was interrupted by the hon. member for Lincoln (Mr. Chaplin), who deserves my thanks because he brought out some interesting information. I quote from Hansard:
Mr. Chaplin: Did you not do something last year to change the law?
Air. Woodsworth: Yes.
Mr. Chaplin: Why did you do it?

Beauhamois Power Project
This is what I want to call attention to:
Mr. Woodsworth: There was on the statute books a law which prevented corporations from contributing to campaign funds. We all know that this law was very largely a dead letter; it had never amounted to very much.
He is apparently an authority on it.
But that legislation had the effect of prohibiting labour unions from contributing to campaign funds. We had tried our best to introduce an amendment to exempt labour unions from this clause as they contributed openly. That amendment was turned down on one or two occasions, but last year on the third reading, when there was no opportunity to go into the matter in detail, I introduced an amendment removing that particular clause from the criminal code, and the house accepted the amendment. 1 will not discuss the question whether, in view of the present situation that was a good thing or not; but I do know that campaign funds came from corporations long before that amendment was adopted.
Mr. Chaplin: It was not in the criminal code but in the election act.
Mr. Woodsworth: I accept the correction; it was in the election act.
Mr. Hanson (York-Sunbury); You weakened the law.
Mr. Woodsworth: Possibly.
This is the new breed of reformers we have to-day, and they are actually trying to justify themselves for taking away the prohibition to corporations, giving campaign funds, opening up the door in order to make it lawful and proper to receive contributions. The hon. member (Mr. Woodsworth) admits on the previous page that he received a contribution himself from the central committee. The hon. member for Winnipeg North Centre said they got only $100 from the central labour committee. Well, it is very much like saying, "Don't do as I do but do as I tell you."
Let us see whether I have put a proper interpretation on the conduct of the hon. member for Winnipeg North Centre. His excuse was that he moved to have that prohibition discontinued and removed from the statutes because it was not carried out, because the law was broken. I wonder how many laws would be left on the statute books if all those that were broken were abolished. The law against stealing would certainly be soon rescinded; the law against murder would only have had time to dry on the books before it would have had to be removed, according to the principle laid down by the hon. member for Winnipeg North Centre. I say therefore that the excuse he gave was no justification for the removal of this particular law, because that principle carried to its logical conclusion would leave destitute the shelves that contain the statute books of the country, because the laws are all broken as far as I know.
53719-284J


James Shaver Woodsworth: May I suggest that penalties are attached to most laws.


William Richard Motherwell: All right, that will be taken care of; the electors will prescribe some of the penalties probably. For fear I am too severe in my interpretation of what my good friend from Winnipeg North Centre has done with respect to this matter, let me say I do not attach all the blame to him. He took the initiative in passing that legislation. But he was not satisfied with having been turned down twice by the government of that day, for in the face of an agreement not to bring the matter up a third time- according to a statement made by the then solicitor general, it was agreed not to bring it up in the house-the hon. member for Winnipeg North Centre did bring it up in committee of the whole and did prevail upon the house to accept his amendment to the Election Act. That is why to-day campaign funds may be made legally and properly; it is because of the initiative he took on that occasion in that direction. The parliament of Canada of course must all be held responsible. Had the hon. member not however taken the initiative, that law I believe would not have been changed as it was changed on that occasion. I hold the hon. member for Winnipeg North Centre more responsible than, any other hon. member in this house for having made legal and proper campaign funds donated by corporations. How will I support this view? I would like in support of my contention on this subject, to direct the attention of the house to some remarks made by the Prime Minister in 1931 and on the following day when speaking on the same subject. I desire to take this opportunity of thanking the Prime Minister for his candor on that occasion. The Prime Minister is reported on page 4409 of Hansard of 1931 as follows:
The law as amended at the last session permitted corporations to make contributions, and that amendment was made at the instance of the gentleman from Winnipeg who has spoken to-day.
The only member from Winnipeg who spoke that day was the hon. member for Winnipeg North Centre. The Prime Minister continued:
That is the position. Contributions were made legal and proper, but in preceding elections that was not so.
The Prime Minister then went on to discuss another matter with which I will not deal. According to my interpretation of those remarks, the conduct of the hon. member for Winnipeg North Centre as I have just described it was supported in toto by the Prime
Beauhamois Power Project

Minister. He held .the hon. member for Winnipeg North Centre as being primarily responsible for making legal and proper contributions made by corporations. If they are legal and proper what then is all the rip and row about, especially from the far C.C.F. comer?


An hon. MEMBER:: They are not coming in very fast.


William Richard Motherwell: Earlier in the
session I had occasion to make painful reference to the motion moved by the hon. member for Winnipeg North Centre asking for the setting up of the Cooperative Commonwealth Federation. At that time nobody seemed disposed to set them up. I was very sorry that the government thought it advisable to adjourn the debate upon that interesting motion. I am almost of the opinion that they were culpable and working in collusion with the C.C.F'ers. Had there been a vote at that time it looks as if our friends over there the modern reformers, would have been divided. Rather than have that calamity befall them so early in their career, the government moved the adjournment of the debate before a vote could be taken. I may be doing my hon. friends on the government side an injustice in saying that was their purpose, but it is up to them to give a better explanation of their actions at that time.
I have had occasion to quote certain statements made by Mr. Williams who is ripping around the country calling the Liberals and Tories such terrible names. I do not intend to deal with him at this time as I have done so formerly, but I will refer to a Mr. Coldwell. This gentleman is a labour follower of the hon. member for Winnipeg North Centre and is the head of the farmer-labour aggregation in Saskatchewan which have affiliated with the Cooperative Commonwealth Federation. He is the first lieutenant and right bower in Saskatchewan of the hon. member for Winnipeg North Centre and is promulgating these governmental nostrums which we hear from time to time. He spoke in Saskatoon at the birth of this organization. He did not say anything very nice about the Conservatives but my hon. friends will have to take it. In fact, he did not say anything very nice of us either. Here are his words:
The Liberal party by that action-
That was the action of voting against Senator Meighen's motion against Senator MoDougald and Senator Haydon. Hon. members will recall that famous speech about screaming; the Liberals had an opportunity

of screaming with the screamer but they did not take it. Mr. Coldwell continues:
-stood self-condemned and the farmer-labour groups must not accept any part of that stigma by uniting with the Liberal party.
How can they expect to be united with the Liberal party?


Mr. HANSON (York-Sunbury):: I can remember when you were after them.


William Richard Motherwell: Once bitten, five
times shy. The quotation continues:
But, said Mr. Coldwell, the Liberal party was not the only one that had accepted bribes. The Conservative party, also, was "born in sin and nurtured in corruption." In 1874 in the House of Commons, Sir John A. Macdonald, founder of the Conservative party, was accused of receiving money from the forerunner of the Canadian Pacific railway and resigned on that account.
He is not quite correct historically.


Mr. HACKETT:: The sentiment is all
right.


William Richard Motherwell: This is the man
who is going to bring us a new 'heaven and a new earth if we will just set him up. The report continues:
There was nothing to choose between the two old parties. Farmers and Labourites must work for a new policy that would banish a system that had clogged the wheels of industry and which had proved itself to be a debt creating system.
He then goes on to the usual Russian stunt on collectivism and production. I am sorry to take up so much time of the house but for the last week or so I have been sitting here as tight as a knot on a log. If there is anyone to be blamed for my taking up time, it is our friends to my left. While they did not give me an invitation to join in, I have availed myself of the opportunity.
Hon. friends to my left have been posing as the saviours of the country and have been introducing a new social order which they promise will put us on easy street. If they could do that, we should give them an inning but they are the last ones on earth who can do it. I am not willing to experiment with a try.
I shall come back now more particularly to Beauharnois. I am not an authority upon power matters but I have looked upon this project as being one of the finest and soundest on the North American continent. I sat around the council table for days helping to place restrictions around this project when it first came to the Dominion government for approval. We surrounded it with so many safeguards in the interests of the public that

Beauharnois Power Project
some of us feared that it could never operate. Our restrictions had to do with navigation and with the administration and carrying out of the provisions of the Navigable Waters' Protection Act. We had nothing to do with the licensing or ownership of the waiter power as that was Quebec's do. Had we taken any other stand than we did take, we would have been derelict in our duty in the premises.
Now let us see what were the results of our hon. friends to the left taking the initiative in respect to that Beauharnois inquiry.
I concede to them the right to do that if they wanted to. I was connected with investigations in any younger days, and I took both the responsibility and some of the odium that always go with it, but the occasions were not anything like this. What has been the effect of hon. members to my left breaking in at that time, the most critical time in the history of the Beauharnois project, and having an investigation, when that action, justified or not, almost put the whole project on the rocks. It, of course, gave the hon. member for Winnipeg North Centre an opportunity to explain why he took the initiative to make campaign funds legal and proper.


James Shaver Woodsworth: It was not made proper.


William Richard Motherwell: Either say it a little louder please or keep quiet. The effect of that investigation was that this big project which otherwise 'might have been completed before the depression struck it was held up because of the great hullabaloo set up all over the country, the government of to-day taking a very pronounced part therein. That was when they did snuggle up to the C. C. F., and make no mistake about it, and it was done for the purpose of injuring and misrepresenting the Liberal party. The result was that in dollars and cents the project went more or less to pieces. It could not get funds to complete the work, and the government had to give guarantees for something like $16,000,000, if the work was to be proceeded with. I do not know how much more the government will have to guarantee. I think they are pretty well through, but $16,000,000 is a pretty snug sum to pay for the privilege of having these gentlemen in the " haw " corner of this house, and now these hon. gentlemen, after preaching all over the west that this was Canada's Beau-hamois property, this was also our power, and this was our water too, call on the government to expropriate the property which they wrongly claimed belonged to Canada. The Acting Minister of Immigration will have to take some responsibility in that connection, for he too said that it was our property and our power. That
was his whole argument. I have read his speech in Hansard, and I can put no other interpretation upon it. If my hon. friend himself can explain it any differently I will be the first one to acknowledge that I was wrong because I am rather disposed not to believe wrong of my hon. friend. He got some notoriety when he was chairman of the Beauharnois committee, and he certainly pulled it in great style his way. But he was wrong there. He founded his whole argument on a wrong assumption. That is neither here nor there, for as I said before I have other fish to fry, and I want to fry them properly thi3 time. I say that we are out already to the tune of $16,000,000 as the result of that inquiry. How much are we in?


James Dew Chaplin: In the valley of humiliation.


William Richard Motherwell: The Prime Minister has said 'that campaign funds are necessary in connection with our governmental institutions. I could quote some of his statements, but I have not the time just now. In addition to being out $16,000,000 already, it is going to be a difficult matter to raise funds to complete the enterprise, for so far we have only developed one-quarter of the power. I am sure the Acting Minister of Immigration will excuse me if 1 just go on a little bit further with the quotation which I gave a few moments ago because it is very interesting in the light of what has transpired since. It is well put and I want all the house to hearken unto it. At page 4355 of the Hansard which I have already quoted he says:
In connection with this project I must confess that I am unable to divorce myself from the view that the contributions to campaign funds that were made from the company's funds-
Mr. Sweezey subsequently swore in the Senate committee that that was not the case:
-which came from the sale of bonds to the people, were made for the purpose of influencing those who might be returned to power.
"Those who might be returned to power." Who were returned to power? Those hon. gentlemen opposite are the ones who were meant. Admittedly. I take the words of the minister himself, "those who might be returned to power." The quotation goes on:
-and those who took them, those who collected them, receive in the committee's report the condemnation they deserve.
Before the power development can be properly completed, and three-quarters of the power development still remains to be done, it will be necessary to go to the Quebec government to get a further charter and licence; and to get the use of the whole water of the
Beauhamois Power Project

St. Lawrence it will be necessary to come to this government for such protective precautions and provisions as were provided for before, or better if possible. Well, you know what is stated here, that the contributions were given because of the expectation of getting certain things from the government which happened to be elected.


Mr. CORDON:: From now on they will have to go to the parliament of Canada.


William Richard Motherwell: If hon. members
then talked in innuendos and implications I cannot help it. Let anyone else put any other interpretation upon it if he wants to. I put my own interpretation upon it, and I will go further and say that if we had been returned to power, if Quebec had given the charter, they would have presumably sought to get the balance of the water. I do not know that they would have got it. I do not think, speaking for myself, that they would have, except on very good terms in connection with the locks that would be and had been necessary. But that did not happen anyway, and we do not need to speculate on that. My hon. friends opposite are sitting on the government benches, and the problem is up to them. The Prime Minister has said very little about it this afternoon, but he is going to say more on some more appropriate occasion. That is what he has been doing for the last two or three years; it is always, something is going to be done for Canada to put us on our feet.
That pretty nearly oovers, Mr. Speaker, the hurried notes that I made 'while hon. gentlemen of the C.C.F. were speaking. I did not know any more than the Prime Minister did that this matter was coming up this afternoon. Referring to the request of the hon. member for Bow River (Mr. Garland) that the government should expropriate the Beauhar-nois property, I want to compliment the Secretary of State upon his reply last year to the hon. member for Winnipeg North Centre (Mr. Woodsworth) who invoked the government to seize-seize, mind you-this Beauhamois property, and then create an issue of the matter and let the case go to the privy council and be decided on its merits. The Secretary of State got up and bluntly stated in reply that he did not see any difference between that and any other kind of banditry. He took the ground that the government was not justified in committing an aot of despoliation and burglary just to create a specific issue to go before the privy council. Besides, our own supreme court, so far as the case went before them, showed a decided inclination to the view that both the power and the water belonged
[Jrir. Motherwell.]
to the province of Quebec. Do not make any mistake about that. Nobody has challenged that view in court and nobody is likely to. That was also the view held, and is so stated, by the present Prime Minister of Canada, that the water and power do belong to Quebec. After preaching wrongly for a year that this power did belong to the people of Canada, what is the use of hon. members to my left now coming along and saying that Canada should now expropriate something which we already have? That shows the hypocrisy of my hon. friends, the duplicity of them, the humbug of them-trying to fool and exploit the people. Their political war material is running short. They are parading around the country and are not receiving, apparently, the response they expected. They are boiling up again with some alleged new dope. They take a great deal of credit, and are the only ones, according to their views, who stand up in public and protect the inalienable rights of the people of Canada. They are running short of new ammunition and they want to warm Beauharnois over again. That is what they are trying to do, and I am going to raise my voice, supposing I never say another word in this parliament, against that kind of humbug and duplicity on the part of hon. members who pretend, without justification, to be better than anybody else. Instead of that they are, in my experience, a good many degrees worse.
However, I will make some exceptions to that statement. I have always taken the ground that there were two or three over in that corner to whom my remarks would not apply. Then hon. members in the corner have complained that guarantees were given by the government to save the project from ruin. What would have happened to it if they had not done so? I do not wish to be understood as taking <the brief for the government -God forbid that anybody should do that. But what would have happened to the project? Hon. gentlemen in the comer of the house have raised such a row throughout Canada that you could not sell a Beauhamois bond if you gave it away. Either the project had to become a piece of wreckage or the government of the day had to step in.
I do not like to think that I am saying anything which pleases the Minister of National Revenue (Mr. Ryckman), but I have to be fair.


Mr. RYCKMAN:: Do not let me stop you.


William Richard Motherwell: I have to state the facts. Because of that I must point out that

Beauharnois Power Project
in my view they could do nothing but what they did. And if a loss ultimately falls upon the Dominion of Canada here are the birds, over here in this left hand corner, who will be largely responsible.


Ernest Lapointe: Mr. Speaker, like the hon. member for Melville (Mr. Motherwell), I have not received any invitation to express my views either on behalf of the government or on behalf of those who have engineered the debate. Like my hon. friend, also, I think it is rather interesting, in view of recent developments, to read the statements and allegations which on different occasions in the past were made by the right hon. leader of the government (Mr. Bennett) and some of his associates. However at this time I do not wish to refer to those statements. I do not wish, either, to express any view as to which interest should control the Beauharnois company in its present difficulties. I do not believe that this is the proper tribunal before which the matter should be discussed, until a decision is reached.
My purpose in rising however is to refer to one or two matters to which allusions were made by the hon. members for Bow River (Mr. Garland) and Winnipeg North Centre (Mr. Woodsworth) and, to a lesser degree, by the hon. member for Acadia (Mr. Gardiner). They referred to the advisability and advantages of public ownership of public utilities. In some respects I would agree with them. I have had the privilege of representing the Quebec city council before the legislature on two occasions with regard to the municipalization of electricity. And after the consideration of that matter and the studies connected therewith I do not hesitate to state that compared with the rates paid by people in Ontario the people of my province pay too high a rate for electric lighting and electricity for different uses.


James Dew Chaplin: The people in Montreal say they get it cheaper than we do in Ontario.


Ernest Lapointe: They are wrong about it.


James Dew Chaplin: Yes, they are very wrong.


Ernest Lapointe: I agree with the hon.
member that they are wrong.


James Dew Chaplin: There is no doubt about
that.


Ernest Lapointe: But I think that is a
matter which should be discussed in the province of Quebec by the province of Quebec. And no matter how pleased I may
be that some of my friends in the corner share my views in regard to certain matter's,
I really do not invite their collaboration on something which is really a provincial matter of the province of Quebec. I do not believe that by intruding themselves in the discussion of this matter they will help al all its solution.
Hon. members say that the development of the St. Lawrence river is national in its scope, and that as a result of that line of reasoning the power belongs to the people of Canada. I should like to refer to one mistake which was certainly made by the hon. member for Bow River, who in this was supported by the hon. member for Winnipeg North Centre. Let me tell those hon. gentlemen that at the time of confederation the legislative powers were divided, and set out in sections 91 and 92 of the British North America Act, the residue of powers being left with the Dominion of Canada. But not only were the legislative powers divided at that time, but assets and properties were divided. In that instance, instead of the residue being left to the dominion it remained in the hands of the provinces. Properties which were transferred to the Dominion government are all enumerated in the British North America Act. And when hon. members mention canals and waterpowers connected with them, they must bear in mind that the expression applies to canals then existing and to waterpowers then existing. Nobody can contradict that statement before the courts, and it is a principle accepted by all authorities. The same applies to harbour and lake improvements. In connection with a case only a few years ago in which the harbour commission of Montreal was involved, the privy council decided that the bed of the river, which was not then part of the harbour of Montreal, had not been transferred, was still provincial property, belonged to the grantee of the property, and had to be paid for by the harbour commissioners of Montreal in the event of their wanting to use it.


James Shaver Woodsworth: Was not the contrary position taken by Mr. Cannon and others who represented the Dominion government?


Ernest Lapointe: Could my hon. friend
expect otherwise? Mr. Cannon was presenting the case for the federal authorities and against the provincial authorities. He had to argue the best he could on the side of the federal government, but what creates the authority is not the argument of Mr. Cannon, nor that of Mr. Geoffrion, or Mr. Lafleur who were on the other side, but the decision given by the supreme court of Canada. I would b*
*1506
Beauhamois Power Project

willing to accept the view of my hon. friend that possibly this case should be sent to the privy council in order that a final adjudication should be made on it. Perhaps so. But surely my hon. friends have no right to consider this property as being owned by the Dominion of Cahada, in view of the decision given by the supreme court in that instance.


James Shaver Woodsworth: But surely the
ease is arguable.


Ernest Lapointe: My hon. friends make
another mistake; that is to consider the St. Lawrence as in a different position from that of other navigable rivers. There is nothing either in the British North America Act or in any law of the land that makes a special case with regard to the St. Lawrence river. It is a navigable river. As I told my hon. friend in the course of his speech, if his argument is good in regard to the St. Lawrence it would be just as good in regard to the Niagara river, which is also a navigable water. But no one ever claimed that the dominion had any ownership of the water power in that case.


James Dew Chaplin: Exactly the same as on
the Niagara.


Ernest Lapointe: Exactly as on the
Niagara. The banks of the St. Lawrence river are the property of the province of Quebec. My hon. friends should take that into consideration when they discuss the matter of rates. One of them said that no care had been taken as to rates which should be charged there. The Beauharnois company or the Montreal Light, Heat and Power or whatever company is in control of that property is a provincial company, subject to the laws of the province of Quebec. Their rates have to be controlled by that province. There is a public utilities commission there. Perhaps I do not like some of the decisions of that commission, but if the tribunal is not what it should be it is for the Quebec legislature to change it or strengthen it; it is not a question to be settled by this parliament. In spite of the good intentions and good will and kind1-ness of my hon. friends I appeal to them to let the people of the province of Quebec settle their own business.


Edward Joseph Garland: May I ask the hon. gentleman a question before he sits down? Is it not true that this government did expropriate the private property of the Beauharnois company in the case of the canal? If they had the power to do that in the case of the land and appurtenances of the canal, have they not the same authority in regard to power?


Ernest Lapointe: They had the power in regard to the canal because it relates to navigation, there is no doubt that this government have control of navigation and have the right to take over any necessary property for that purpose. But that would not justify them taking over the property for the purpose of generating electricity.


William Daum Euler: Since our friends from the west and others from the province of Quebec have taken part in this debate, perhaps it might be fair for one from the province of Ontario to say a few words, although I will say at the outset that I am speaking for myself alone and not for the province of Ontario. I speak because I have some sympathy with the thought that it is regrettable that a great natural resource such as this, capable of developing some 2,000,000 horse-power, should pass into the hands of private interests.


Some hon. MEMBERS:: Hear, hear.


William Daum Euler: I had that thought at .the time when I happened to be a member of the government which had. to pass upon the question of giving permission for the diversion of 50,000 cubic feet of water from the St. Lawrence river. As far as I was concerned I had some hesitation-I am betraying no confidence in saying so-in giving the permission as long as there was any hope that that water power belonged to the Dominion of Canada. But not being a lawyer or an expert in these matters, and having before me, as other mem-bera_ of the government had, the definite opinion of those supposed to know, that the power belonged to the province of Quebec, it seemed to me that there was no other course to take than that which was taken.
Later on the Beauharnois company got into difficulties as we all know-
Mr. LaVERGNE: It belongs to Quebec because Quebec took it.


William Daum Euler: Before I leave that point I would like .to make a reference to a suggestion of the hon. member for Bow River (Mr. Garland). He seems to think it is competent for .the government of Canada merely by a declaration of this house to acquire water powers which otherwise belong to the province of Quebec. If it were possible without prejudicing the vested rights of the province of Quebec, I think I would be inclined to vote for such a declaration. But -I do not believe it is possible for us to acquire the power in that way. I said before that I felt it was regrettable that this great natural resource should pass into the hands of private interests,

Beauharnois Power Project
especially into the hands of so colossal a monopoly as now has its grip upon the water powers of the province of Quebec. I 'have no brief to speak for the province of Quebec, but I believe the time will come, if it has not already come, when the people of that province will regret that these powers were allowed to pass into the hands of these great private interests and monopolies. On their behalf as well as on behalf of the people of Canada generally I do not like to see tlhe power of these interests still further increased by allowing them to get control of the Beauharnois. At the time the matter was under discussion in the house I had a few words to say. The Prime Minister then said-I have not his exact words, but they were to the effect that the power belonged to the province. I made the suggestion that the dominion might develop the power. He said that that was impossible except by agreement with the province of Quebec. I suggested that the federal government might, by purchase if you like, acquire the interests of the then shareholders of the Beauharnois corporation. In that case the government would not be infringing on provincial powers. They would merely as shareholders be in the position which the then shareholders of the Beauharnois company occupied. The Prime Minister did not take kindly to that suggestion. He said in so many words that the government had no intention of so doing. With that I am not finding any fault at the moment, but I say that the situation has changed very substantially since that time. The company fell into difficulties and in the opinion of the government it became necessary to assist the further development of the Beauharnois corporation by a guarantee of loans made by the banks of Canada to the extent of some $16,000,000. So to-day the Dominion of Canada has that substantial financial interest in the Beauharnois project.
I make now a suggestion, which I know will not be received with favour by some, and will perhaps be regarded as a far-reaching socialistic idea, but it is in line with my ideas in regard to public ownership. I make the suggestion because of the fact that we are now in a position that it seems difficult to get out of. We have two contesting interests, two contesting groups of financiers, trying to get control of the Beauharnois corporation, and in the fight that is going on between them the interests of the Canadian people, and the interests of the bondholders in this concern I imagine are not being very well served If we have already $16,000,000 in this enterprise, and they need something like $13,000,000
more to complete the project-perhaps less than that-besides which the claims of the banks amounting to some $6,500,000 may have to be protected, why should not this government in the general public interest, and perhaps finally in the interests of the people of the province of Quebec, take over the whole project by acquiring all the common stock and owning the concern? I am not saying they should go into the business of distribution of power, but they could generate the power, and then we would have a project that at least would be self-sustaining; then we could absolutely ensure that the people of the province of Ontario, as well as the people of the province of Quebec, would not be paying through the nose as they will have to do if these natural resources remain under private control.
Now I am going to make perhaps the most socialistic suggestion of all. Not long ago some of us, I think my hon. friend from North Bruce (Mr. Malcolm) and myself, had a little discussion with the Prime Minister with regard to what some might call inflation. I am not an unconditional inflationist, but on a previous occasion I did say that I would not be afraid to experiment a bit with controlled inflation. We made the suggestion a few weeks ago that we might at least try out the issuance to a moderate degree of federal currency*, without gold backing, for such purposes as the construction of public buildings and other works of a public nature. It just occurs to me now that the Beauharnois project might be an enterprise in connection with which we might very well conduct that experiment. Personally I should not be afraid, though of course I have not the responsibility that must be assumed by the members of the government, to duplicate if necessary the inflation that was practised by this government last fall to the extent of some $35,000,000, in order to complete this project. I think we might retain this natural resource in the hands of the Canadian people by the issuance of federal currency in that manner. Then you would have a concern owned by the people of Canada and bringing in a revenue which ultimately would take care of the whole cost of the undertaking, at the same time preserving for the Canadian people-and that is more particularly in my mind-this great natural resource, which should no tbe allowed to fall into the hands of private interests.


Mr. MORAND:: Has the hon. member in mind the redemption of those notes over a period of time?
Beauhamois Power Project


William Daum Euler: Certainly; I think that is one of the merits of the suggestion. Out of the revenues obtained from the development and sale of this power you could retire all those federal notes in a reasonable time.


John Thomas Hackett: With or without interest?


William Daum Euler: Without interest.
Mr. ARMAND R. LaVERGNE (Mont-magny):	I had not intended to speak on
this question, Mr. Speaker, but I should like to put myself on record, coming from the province of Quebec, in favour of the suggest tion just made by the hon. member for North Waterloo (Mr. Euler). I listened to the arguments presented by the ex-Minister of Justice (Mr. Lapointe), and while it may be a controversial question my opinion, for what it is worth-


Ernest Lapointe: We never agreed on this.
Mr. LaVERGNE: I think we have agreed quite often lately, but I think it is a very controversial question as to whether the Beauharnois water power belongs to the province of Quebec or to the Dominion of Canada, though I think there is no doubt with regal'd to the oanal. The hon. member for Quebec East (Mr. Lapointe) has admitted that as yet the question is not settled. Very often a judgment of the Supreme Court of Canada meets with a sad fate at the hands of the privy council, and until we are masters of our own destiny and the day comes when the king has his own privy council in Canada it is possible that the judgments of the Supreme Court of Canada may continue to fare badly when they come before the imperial privy council.


Ernest Lapointe: My hon. friend from
Bow River (Mr. Garland) does not believe in appeals to the privy council.
Mr. LaVERGNE: Neither do I believe in appeals to the privy council in England. Being a monarchist, as is very well known, I believe in the right of the subject to appeal to the king, but I believe appeals to the king should lie in appeals to the Canadian privy council.


Mr. POULIOT:: When the Prime Minister is away.
Mr. LaVERGNE: I do not care to discuss personalities on this question, because I think the matter is far too important. In my opinion, however, taking the very letter of the British North America Act it is not so very certain that the Beauharnois water power belongs to the province of Quebec, and when
'Mr. Morand.]
I say that I do not think that, with my bad past, I shall be suspected of betraying the narrowest interests of the province of Quebec or the minority in this country. How does it happen that in this case the province of Quebec claims ownership of the water power? It happens simply because they put their hands on it and took it, and in no other way. One day the government of Quebec decided that they owned that water power, which until then had been acknowledged to belong to the dominion; the provincial government took it and sold it to a private company by an act of filibustering, which has been quite a common practice with the government of that province in the last thirty years. To-day the people of Quebec are in the grasp of the greatest octopus that ever spread its tentacles over that province; I refer to the electricity trust in Quebec, and we may say that this has happened with the complicity of the premier and the government of Quebec. There is no doubt about that; no one knows it better than my hon. friend from Quebec East, who, not more than a month ago, was fighting for the rights of the citizens of the city of Quebec with that very electricity trust which to-day is laying another of its tentacles on the parliament of Canada.
I think there is a higher point of view in regard to this question. The suggestion of the hon. member for North Waterloo is very interesting. It would give the people of Quebec a chance to have electricity not at the exorbitant rate they are paying now but at an acceptable or manageable rate. Look at the city of Montreal. When you cross over the street to the city of Westmount you find that the price of electricity is only one-fifth the price in the city of Montreal, though they occupy the same geographical territory. So I think if nothing else offers, and if we cannot prevent that company from falling into the hands of Sir Herbert Holt, to call him by name, the suggestion of the hon. member for North Waterloo should be accepted.
There is still another point of view, however. Speaking as a man with the reputation of being a narrow nationalist, I think the St. Lawrence is not an asset of Quebec; I believe it is an asset which belongs to the whole dominion, and I think the rights of the dominion with regard to navigation and other matters should be safeguarded not only for the people of Quebec but for the people of Canada as a whole. I am a Canadian from the province of Quebec. In the past I have never hesitated to go against my party or any other party, and I have never considered what my future party might be, when I have

Special War Revenue Act
felt it necessary to defend the rights I thought were sacred to the minority in this country. At the same time I want to see built up in Canada a national spirit and a national unity, and that will not be done by claiming what we might call the crumbs of rights which do not exist and at the same time letting go our most sacred, guaranteed constitutional rights. We can never build up Canadian unity in that way. I have always claimed, and still claim, that the English speaking people of this country are willing to treat us as partners, even if they have not gone so far as we have gone so that they may treat us as brothers. If we are partners we on our part must play the game if we expect them to do so. As a citizen of Quebec, as a Canadian of French descent and as a nationalist, Mr. Speaker, I believe that the St. Lawrence is a national asset in which the people from the far west are just as much interested as we are in the province of Quebec. I think the government has a great part to play in saving that national asset for the people of Canada, and at the same time it can do a great deal for the province of Quebec by saving that province from the octopus which is controlled by the financiers of St. James street, Montreal.


William Richard Motherwell: May I ask the hon. member for North Waterloo (Mr. Euler) how the Dominion of Canada can acquire this property by purchase or otherwise without the consent of the Quebec government? If it can be done I am almost disposed to agree with my good friend to my left in the remarks he made.
Mr. LaVERGNE: It could be taken to the privy council.
Motion agreed to and the house went into committee, Mr. LaVergne in the chair.



SPECIAL AVAR REVENUE ACT

The CHAIRMAN:: There is before the committee the following amendment:
Provided that the tax hereby imposed under subelause (i) shall not apply to the materials enumerated in customs tariff items 139 and 140, when sold in packages containing not more than five pounds each.


Mr. RHODES:: I wish to withdraw that amendment, or rather to amend it by substituting for the word "five" the word "ten."


Mr. YOUNG:: Will the minister explain the reason for this?


Edgar Nelson Rhodes: I find that the householder can purchase one ten pound tin at a lower rate per pound than two five pound tins, and it is for the purpose of making the commodity cheaper to the householder that I have increased the limit from five to ten.


William Richard Motherwell: I have not so far said anything with regard to the sugar duties and I do not see how I can allow this to go by without protesting. After hearing some of the letters read yesterday on behalf of the women and children of the country, and listening to the protests that came from every quarter on this side of the house, yes, and the silent protest of the rear-guard supporting the government-because I know they entertain such protests-I am wondering whether the minister is not considering the advisability of abandoning this tax. Before I go any further I would ask him whether he has seriously considered this matter.


Edgar Nelson Rhodes: We gave the proposal every consideration before bringing it down. The government is under no illusion either as to the burden the tax imposes or as to the absolute necessity for it. Had it not been for the dire need of securing much-needed revenue the proposal would not have been brought down. We simply must have the revenue, and it is because of that absolute necessity that we have brought it down. We did our considering before these proposals were introduced.


William Richard Motherwell: I take it then that all precautions were taken and that every thought was given the matter from every angle before the tax was imposed. Well, that is all the worse for my hon. friends; their blood will have to be on their own heads, because they have brought in this tax deliberately, and after hearing the protests that have been made on all sides they are not prepared to yield one iota. They need not be surprised then if events should prove that this was really an act of self destruction on their part. If there was one bit of evidence lacking that this government intended to commit political suicide that evidence is furnished in this tax, because I cannot imagine anything more destructive to them throughout the constituencies than putting into the hands of their opponents a weapon like this to flay them with-and it will be used to the limit; make no mistake about that. The government, through the Minister of Finance, declare their intention of going ahead with this tax and they will have to take the full responsibility for it.
If I rightly understood the minister the other day, the first attempt to impose this tax resulted in a loss of some 82,000,000 out of an estimated revenue of $20,000,000. That is not a good start, and when the officers of the government, after due investigation, suggest a loss of S2,000,000 to the treasury, you may
Special War Revenue Act

be perfectly sure that it will not be less than that but rather a great deal more. You will find on further investigation that it is likely to be another million. But suppose we put it at $2,000,000; I predict now, notwithstanding that apparently we are approaching the time when we shall have better commodity prices and when people will be able to buy this very necessary foodstuff, sugar, that less sugar will be sold during the next twelve months than has been sold in the past year. Why? Because the commodity has been made artificially dearer. A great many people will not take half a teaspoonful in their cup, and a great many will do without it altogether. I predict a loss not of $2,000,000 but of many more millions in this estimated revenue of $20,000,000 because of the inability of tens of thousands of people to put even a little nibble of sugar in their tea. The hon. member for Red Deer read a communication and I too have received one. It is not under my hand at the moment but I can recite the substance of it. The writer is a lady and she says, "We have been in the habit of having two iced cakes per week, and now we will have only one." There is one instance where the revenue is cut in two, and there are, I believe, tens of thousands such.


Mr. McINTOSH:: Following up the remarks of the hon. member for Melville, may I say that the government is creating a piece of fiscal machinery in this sugar tax which will help to grind it to pieces from coast to coast. " The mills of the gods grind slowly but they grind exceeding small," and the government will be exceeding small by the time they meet the opposition which a tax of this kind will arouse from one ocean to the other.


Raymond Ducharme Morand: Rather a sweet way of going out.


Cameron Ross McIntosh: Perhaps so, but bitter for the people taxed. Last night I was making an observation in connection with the sugar tax when the house rose. I said that the liquor tax had been reduced $2 per gallon and the Minister of Finance, in putting forward his point of view with regard to this reduction, said it was made from the standpoint of revenue. He said that a still lower reduction would give a greater return. May I impress upon the Minister of Finance that when the question of reduction is in his mind -I am referring to the reduction of S2 per gallon upon liquor-when he has fiscally dealt with liquor he- ought to carry his reductions a little further and cancel this sugar tax. By taking that action I believe the minister would

bring credit to his government and to his department. It is a most obnoxious tax and even though the government may be in need of revenue, I, for one, do not believe it is necessary to tax sugar.
Last night I was making an observation in connection with the argument used by the minister to support his two million leakage statement that certain daily newspapers had interpreted ministerial opinion to the extent of saying that a tax would be levied on sugar, tea and coffee, when the budget was brought down. The minister said that the newspapers had not been correct in their prediction with regard to tea and coffee although they had guessed successfully with regard to sugar. The minister referred to the predictions made by the Canadian press with regard to budget taxation and used these to support his argument that the government was not responsible for the leakage. That is one point of view taken by the government with regard to the daily newspapers of Canada. When we were discussing the radio estimates the other night we had an example of another point of view. At that time we were told that as far as the criticism of the daily press in connection with radio estimates was concerned, the press did not know what it was talking about. There we have two points of view, one to the right and one to the left. More than likely the government will be soon taking a third position, a compromise position in regard to the functions of the daily press.
However, I do not imagine it makes much difference to the press whether or not it satisfies the viewpoint of the government in regard to this sugar tax, or whether its constructive criticisms against the radio estimates have been upheld. May I add that it is my deliberate opinion that the daily press is complementary to good government in Canada. We need to have not only the best news service from the press, but we need also editorial opinions. An editorial opinion will help to complete and safeguard the work of self government in Canada. It will make it more efficient and help democracy as we have it in Canada to function more successfully from coast to coast. As far as the government supporting or not supporting the daily press in its opinions is concerned, it matters not. As we said the government will next be occupying a compromise position, a kind of half and half position, a milk and water position or, as has been whispered to me, a mugwump attitude. Whether or not this or any other position is taken, as a newspaper man I say that it does not make very much difference. The press

Special War Revenue Act
will go on doing its constructive and development work by giving a lead to public opinion thus building up a power throughout the country which will be conducive to good and sound government.
In making this protest against this tax I am supported by practically all the organized bodies of public opinion in my riding. I have received protests from the organized farmers, the organized farm women and other bodies in the Turtleford district, in the Jackfish district, in the North Battleford district in the -far north, in Redberry, and other districts throughout my constituency. North Battle-ford constituency has a population of 53,000, and this tax will mean a tax burden of over 8100,000 to that constituency. The city of North Battleford has a population of 6,000, and its sugar tax will represent a payment of $12,000. This is a very heavy tax, and, as I say, the organized men and women of my riding are opposed to it. The mothers in my riding are out and out opposed to this tax. I have had letters from many of them protesting against it. To illustrate, may I state I had a letter from Mrs. Woodward who lives just outside the city of North Battleford, She represents a number of the rural women and she and those associated with her unhesitatingly oppose this tax and asked me to do my part in parliament to have it withdrawn by the government. I therefore protest against the imposition of this sugar tax. The idea of these men and women is that the government could find other means of raising the S20,000,000 required. Luxuries could be taxed more easily than sugar whidh plays a part in every home in my riding as well as throughout the country.
Further, a depressed period is a very poor period in which to bring forward a tax of this kind. Every family is taxed to its utmost, every mother, father and child is suffering in the depression through which we are passing and they will have to suffer more from day to day because of this tax. As a member from western Canada I again protest against it and I do hope the government will see fit to change the tax.
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock. PRIVATE BILL



THIRD READING

[Stage Direction]
Bill No. 41, to incorporate the Sarnia-Port Huron Vehicular Tunnel Company-Mr. Gray.


[Stage Direction]
The house in committee of ways and means, Mr. LaVergne in the chair.
Mr. GIR0UARD: The Minister of Finance stated last night that his department had investigated the sates of sugar made by every refinery in Canada for the month prior to the delivery of the budget. Would he have any objection to stating to the committee the quantities of sugar that were involved, by which refineries the sugar was sold, and to whom?
Edgar Nelson Rhodes: I am sorry that at the moment I have not the figures here, and whether or not it would be wise to give them to the committee I could not say. They disclose that the amount of purchases of sugar were not as great as popularly supposed. As a matter of fact the estimate which was given to me by the officials of the department was that something less than ten per cent of the yearly consumption was the result of the acceleration of sugar purchases for the month prior to the delivery of the budget. The estimated loss of revenue was something under 82,000,000, and the exact figure now is something less than one and three-quarter million dollars. I could obtain the information for my hon. friend if he so desires.


Mr. DONNELLY:: There seems to be an impression that most of these purchases of sugar took place in British Columbia. Was it confined to one district or was it more or less universal throughout the dominion?


Edgar Nelson Rhodes: I have not the figures before me but I may say that the purchases in the west, in British Columbia, were larger in proportion to those in other portions of the country, and the percentage diminished until it came to the east where the purchases showed the smallest percentage of all.


Mr. MacLEAN:: Can the minister state the total amount of money that it is estimated these new taxes will bring in? I do not think any estimate has yet been given except as to the sugar tax.


Armand Renaud La Vergne: We are considering the sugar tax.


Alfred Edgar MacLean: My objection to the sugar tax is that it is an exorbitant tax on the farmer and consumer. Possibly the people were prepared to pay a tax of a quarter or half a cent a pound on their sugar, but when it comes to taxing this one article two cents a pound it is a very heavy tax indeed. Personally I would have not so much objection to
Special War Revenue Act

these taxes if hon. gentlemen opposite were making what could be reasonably considered a good use of the revenue they collect. Last year and the year before they made an estimate of the amount of revenue to be derived from the new taxes that were imposed, and I think that for the last two years their estimate was that the new taxes would bring in something like $133,000,000. On account of the business of the country failing off the revenue feill short of their estimate. Nevertheless those new taxes were imposed with the idea that they would bring in that much increased revenue. When our friends opposite were on this side of the house they criticized the Liberal government of the day for their expenditures, but if you will look over the expenditures under the present government you will find that notwithstanding that they are not carrying on any public works throughout the country but are allowing wharves and breakwaters, lighthouses and other public works throughout the country to fall into decay, they are still spending more money yearly than the Liberal government spent when they were in power. If you will look over the estimates when the Liberal government were in power you will find that only in one year did they exceed $400,000,000. Their expenditures ran from $370,000,000 to $381,000.000. $351,000,000, $355,000,000, $358,000,000 $378,000,000, $388,000,000. $398,000,000. But what about 1931 and 1932, after this government came into power? In 1931 the expenditures under this government w'ere $440.000,000 and in 1932 $454,000,000, or an increase of $42,000,000 in 1931 under this government over the $398,000,000 spent by the Liberal government, and an increase in 1932 of $56,000,000.
As I said, we would not object to these taxes so much if our friends opposite could show that this extra revenue was being put to a good use. It is true that the government is carrying on some relief work but that cannot account for the tremendous increase in the expenditures especially when public works throughout the country are being neglected to the extent they are.
I wish to protest, Mr. Chairman, as vigorously as I can against this exorbitant tax on sugar. I said at the beginning of my remarks that a tax of a quarter or half a cent, or even one cent a pound, might have been tolerated by the country, but here you are imposing a tax of two cents a pound on a commodity which is the chief article in the manufacture of the products of two or three industries of this country, the candy industry, the biscuit manufacturing industry and the bakeries. It is really singling out these industries for 
special taxation, as well as the householder, and it is absolutely unfair. I know that the Minister of Finance wants to get revenue, but I think that some other way could have been found, and when that revenue is going to entail the sacrifices that this sugar tax will impose upon the people of this country I hope that our friends opposite will be able to show us next year a better record of expenditure than they have been able to do in the past.


Edgar Nelson Rhodes: Mr. Chairman, I must express my surprise at some of the remarks of my hon. friend from Prince. He says he would be content that increased taxation should be imposed if he were satisfied that the government were exercising economy, and he goes back to conditions of a few years ago. In the first place let me say to my hon. friend that so far as the estimates of the yield of taxation are concerned they are made under the most hazardous circumstances, so far as regards our being able to predict conditions twelve months ahead, conditions so hazardous as to be without precedent in the history of the world. There is not a single country in the world, not one, in which a chancellor of the exchequer or a minister of finance has been able to make with any degree of accuracy an estimate of the probable yield of a certain set of taxes over a period of twelve months, because of conditions which everybody realizes are abnormal. Our estimates of taxation last year were based upon the best assumption and best hypothesis we could set up at the moment. Nobody could foresee the tremendous shrinkage in business that took place not only in this country but throughout the world, not so much a shrinkage in the volume of business as a shrinkage in the value of commodities.
In his references to expenditures my hon. friend entirely overlooks several factors. In the first place we have to provide deficits and capital moneys for the Canadian National Railways which run into something like $70,000,000 a year. That is a condition which we have to face, not a theory; it is an actual set of facts. If the Canadian National Railways were able to carry on within themselves we would not have to impose one additional cent- of taxation this year-not one. My hon. friend overlooks the fact that there are certain statutory increases, for example in the case of old age pensions, which so long as the present legislation remains as it is must be made without any reference whatsoever to the government. We have to meet this year increases of nearly a million dollars-I am using round figures and speaking without notes

Special War Revenue Act
-.because of the increased subsidies due to the provinces arising out of the increased population shown by the last census. We have to meet the interest charges upon the increase in the debt due to the fact that we are not able to pay out of current account not only for unemployment relief but for deficits on the Canadian National Railways. And every time we add to the national debt we add to the interest charge, which is fixed and inescapable.
The hon. member has spoken of possible reduction of expenditure. Again I am compelled to resort to making a statement without having notes before me, but let me say to him that during the last three years this government has reduced controllable expenditures, if in that sum is included the $14,000,000 by which we expect to reduce expenditures this year, by no less a sum than $81,000,000. Furthermore we have been at great pains, so far as the civil service is concerned, without placing any undue strain upon it, to save every passible penny wre could. As a result of an order in council passed two years ago we provided that there should be no increases, that statutory salary increases should be abolished, that all positions then vacant should be abolished, that no post would be filled unless cause were shown in the individual case, and that as the attrition took place, which is natural in a civil service numbering at that time about 60,000 people, the vacancies arising through natural causes should not be filled, with the not result that we have reduced the civil service in the past two years by upwards of 4,000 employees, with a consequent saving to the public treasury of some millions of dollars. It may be urged that by more drastic economy we might be able to effect further savings, so far as so-called controllable expenditures are concerned. Let me point out, however, that if we reduced every cent of controllable expenditure, closed up our civil service, dismissed 56,000 employees, paid no members of parliament, judges, or lighthouse keepers, dismissed the mounted police, dismissed the penitentiary staffs-in other words, if we closed up the business of the country, with the commitments which we have undertaken we would still have a deficit this year of $26,000,000. That is to say, if our revenues were equal to those which would be received upon the basis of the taxation imposed by the budget prior to this one, the deficit would be as I have mentioned.
The government would welcome any suggestions my hon. friend cares to offer as to how we might effect further savings. If I were to add together the accumulated demands which are made upon the treasury, not only from outside sources, but by those who are the first to criticize the government because it does not reduce expenditures-and in that I include hon. members of this House of Commons-we would have added each year many millions to national expenditures. The best evidence we can obtain as to what the yield from a given form of taxation may be is from those who have been in the public service for years 'and have served the country faithfully, men who have had a background of many years of experience; but even the best intentioned officer or the best intentioned Minister of Finance is not a seer. He cannot project his mind into the future and 'tell exactly what .conditions will be. My hon. friend wants to know what these taxations will yield. Our estimate is that altogether they will yield $57,000,000, but that figure will be subject to change, because there have been some variations.
Mr. McINTOSH [DOT]. That includes S20,000,000 from sugar?


Edgar Nelson Rhodes: I have given the figure
that was in our minds at the time the budget was brought down.
I shall now direct my remarks to the tax on sugar. I know it is not papular; no tax is popular. If 'there is one thing more than another which strikes me daily it is this, that the people of the country at large have a realization that the government must have additional revenue. Invariably, however, the attitude is this:	"We realize you must have
additional taxation, but you must get it from somebody else-not from us." The bulk of telegrams I receive, and many of the letters, begin this way.-I could read them, almost, with my eyes closed: "We realize that 'the government must have increased revenue, but you must get it from somebody else." The sugar tax will not be popular; I realize that. It may not be popular even from a political point of view; in fact, we may as well admit frankly that it will not be. But it will have one Wholesome effect: It will serve to bring home to the people of this country the fact that the only money the government has to expend is the people's money, and the only money which comes into the treasury is that provided by the people. There are only two sources of revenue for any treasury; one is from the taxes which the people themselves pay, and the other is from borrowings upon which the people themselves must provide the interest through increased taxation. I believe one wholesome and beneficent result
Special War Revenue Act

of the sugar tax will be to bring home to our people the realization that if they are going to insist upon the government embarking upon expenditures, they must be prepared to pay the bill.


Ernest Lapointe: Yes.


Edgar Nelson Rhodes: The hon. member for
Quebec East realizes it, yes-but the people of the country do not. That is the amazing thing. I have in my mind two resolutions which I received from a board of trade in one of our Canadian towns. The first endorsed the suggestion of the Canadian chamber of commerce to the effect that we Should reduce expenditures. The next, if you please, asked us to add a list of commodities to the stabilization fund which would 'Cost Canada several millions of dollars each year. That attitude is more or less common not only in the minds of individuals but throughout organizations. They seem to have the idea- at least some of them-that the government is a thing apart, that we have some sort of golden cornucopia that we can turn over, and from which dollars will spiliL out. They are now coming to the realization through the sugar tax that the money we spend is the money they provide. I believe in the last analysis this same tax will have a wholesome and beneficent effect upon our people, because it will bring home to them the fact that we spend only their money. As a result of this taxation, and having that fact brought home to them, I am sure they will minimize their requests not only from the federal government-and I speak not of the government of the day but of all governments-but from provincial and municipal bodies. We will not be asked to embark upon such great expenditures, and our people will cooperate [DOT] to the point where we shall be able to live within our means. The sooner that condition is brought about the better for all concerned.


Alfred Edgar MacLean: Just a word in reply to my hon. friend; his remarks seemed to be directed to this comer of the house. He started off by telling us that the government's difficulties are due largely to the condition of the Canadian railways. No one should realize more than the Minister of Finance that the policy of the present government has been largely instrumental in bringing about that condition.


Some hon. MEMBERS:: Oh, oh.


Some hon. MEMBERS:: Rot.


Alfred Edgar MacLean: Those who listened to Sir Arthur Salter's address to-day heard him say that one of the conditions that made for increasing revenue was the expansion of trade between different countries. The moment you put tariffs up to a prohibitive point you stop importations and lose revenue.


Mr. SPENCE:: That is the old line.


Alfred Edgar MacLean: I know our friends do not like that; they did not like to hear it in the parliamentary restaurant to-day and they do not like it now, because it is such a vital truth and they realize it. But that is one of the factors that brought about the situation that made it necessary to increase taxation. The hon. minister says that the estimate is that this year's new taxes will bring in $57,000,000 of new money. Add that to the $133,000,000 estimated for the two preceding years, and you have a total of $190,000,000 of new taxation that the people of this country have been forced to pay under the present administration.
My hon. friend says: Show me where we can reduce expenditures. I say to the minister, let him show us where the extra S56,-000,000 of expenditure went last year.


Armand Renaud La Vergne: Order. I think we
are on resolution No. 9.


Alfred Edgar MacLean: Yes, we are dealing with the sugar question. It involves the whole question of the revenue of this country. Taxation is what we are dealing with.


Armand Renaud La Vergne: No, a special article of taxation; otherwise we could discuss the whole budget.


Mr. CASGRAIN:: So we can.


Alfred Edgar MacLean: My hon. friend referred to old age pensions. He is an astute politician; he knows very well that the previous government had to carry those same burdens. They had the old age pensions; they had the railway situation; they had subsidies for the different provinces; they had the civil service situation to deal with. Let me say to my hon. friend that they are creating a situation in the civil service of Canada that is going to be very difficult for themselves or any other government to adjust. The matter of the yearly increases is going to be left in a dreadful position for some government to deal with when the time arrives. It will not be long before the civil service will demand some settlement of that question; either that they are not to get the increases, or that the increases are to be paid.

Special War Revenue Act
My hon. friend says that vacancies are not being filled. I will tell you what they are doing; I had personal contact with the matter in my own county. The commission told me that a position had been abolished, but the department proceeded to appoint a man temporarily to the position, without reference to the commission.


Armand Renaud La Vergne: I must call the hon.
member to order. He is not discussing the resolution before the committee.


Joseph Philippe Baby Casgrain: That seems to hurt hon. gentlemen opposite.
Mr. MaoLEAN:	Well, Mr. Chairman, all
I can say is that I feel that this sugar tax is striking at particular industries which are singled out for attack. In 1930 it was a case of "I will;" now my hon. friend says he hopes and hopes and hopes. We can call this a "we hope" government. They have been hoping and hoping that this and that is going to happen to pull them out of their difficulties for the last number of years. I hope their faith will continue, but they will go down in history as the "we hope" government.


Mr. ELLIOTT :: Just a word in answer to
the statement of my hon. friend the minister that this tax would impress upon the people of this country the fact that the burden of taxation rested upon them. I think on mature consideration he will realize that that statement was unnecessary. Coming from a section of the country in which the people have been accustomed to bear their fair share of the burden of taxation, I want to say that it was not necessary to impose any further taxes to impress upon them that they are bearing a great burden of taxation at the present time. In the last couple of years particularly it has become so great that many of the best people in various walks of life, people who were comparatively independent a few years ago, are now considering very seriously the question whether or not they will be able to continue.


Mr. SHORT:: That was caused not by
taxation but by speculation.


Joseph Philippe Baby Casgrain: Your government speculated on the good faith of the people.


John Campbell Elliott: My hon. friend chooses
to speak of something with which he is perhaps more familiar than are some other hon. members of this house. Speculation is something about which I know very little, and I would not attempt to set my opinion against that of my hon. friend in that respect. But in regard to the burden of taxation resting 53719-285
upon the people of this country I regret to say I know altogether too much. In the last three years I have had more people than ever before come to discuss with me the question how they are going to get money to pay their taxes, to pay perhaps a small judgment that has been obtained against them, people who never knew before what it was to be sued. To-day a large percentage of the people of this country are considering very seriously whether or not they shall go into bankruptcy, a much larger percentage than was ever before so situated. It is obvious, therefore, that the people need no additional taxation to impress upon them the fact that it is they who pay the taxes.
This tax on sugar should not have been made as heavy as it is. Two cents a pound on a commodity that has to be used in substantial quantities in every home in the country is an enormous burden upon the people, many of whom are now suffering under burdens greater than they can bear. Many of the best farmers in this country will have to go out of business within the next year because of their inability to pay the taxes that have been imposed upon them.


Mr. BOWMAN:: Not by this government.


John Campbell Elliott: I think, in common with
my hon. friend the member for Melville (Mr. Motherwell), that the government should still consider whether it is fair to the common people to impose this heavy tax upon them. The minister should seriously consider reducing it by half. I do not think the minister realizes how great a burden it is. I thought he realized it until he said what he did a short time ago about its being necessary to sdhool the people to the fact that they are having to bear heavy taxation. I would say to the minister that during the past two yeaTS the people have been sufficiently schooled and tried in the fire of affliction to need no further demonstration of that fact.


Edgar Nelson Rhodes: Just a word in reply to my hon. friend from West Middlesex (Mr. Elliott). He comes from a very beautiful district, populated by people who in normal times are prosperous. It is a highly developed portion of the country, and what he says with respect to his knowledge of the people in his district I accept without reserve. When I made the statement that this tax would bring home to the people at large the fact that they were the taxpayers I did not for a moment wish my hon. friend to assume that this was the only reason for the imposition of the tax. Not at all; I merely referred' to that in pass-

Special War Revenue Act

ing as an incidental benefit which ultimately might become a very great benefit not only to the people themselves but to the governments of Canada, provincial and municipal as well as federal. Let me say to my hon. friend that while I know he can speak for those whom he represents there are thousands and tens of thousands of people in Canada who have never properly come to the realization of the fact that government money is their money. Even to this day my correspondence discloses that fact, and it only supports what has been my experience in public affairs for the last twenty-five years. But when I made that statement I do not want the thought to prevail upon the committee that this was the reason for the imposition of the tax.
My hon. friend has suggested that the tax should -be reduced. If we reduce this tax we must make up an additional sum by some other form of taxation, so ultimately it comes back to the people themselves. If we realize the full yield of all the taxes we are imposing we will barely meet our expenditures upon current account alone. We cannot possibly do less and preserve our national credit. I realize just as well as my hon. friend does how hard conditions are to-day and how dire is the necessity with respect not only to families but also individuals, and I repeat what I have said on other occasions, that it is to be regretted that during a period in our history when people can least afford to pay taxes, because of the very conditions existing at the moment they are called upon to bear a heavier burden. That is a tragedy, but any government so weak as not to face the situation and maintain the national credit would bring about a condition which ultimately would result in a cost to the people themselves far greater than is involved even in this sugar tax.


John Campbell Elliott: I do not want to take up the time of the committee unnecessarily, but in answer to my hon. friend might I suggest that the class of people to whom he refers, who do not yet realize that all taxation bears upon the people themselves, are those to whom he should look for the additional revenue which he now requires. I have no doubt that in this country there are many people to whom that fact has not come home as intimately as it has come home to the great masses of the people upon whom this tax will bear. So I say to the minister that if this is the fact-and the minister knows it better perhaps than anyone else in this house-then I suggest that he should cut off half this tax on sugar and make up that amount by a further tax upon the people who have not yet 
realized that there is heavy taxation in this country. I believe there is a class of people who could stand the burden better, while the people upon whom this tax will bear cannot stand further taxation than they have been carrying during the last few years.
I hope the committee will not think for a moment that I do not realize the difficulties confronting the Minister of Finance; I do believe that we must endeavour to balance the budget as nearly as possible. I agree with the hon. member for Prince that every expenditure that can be avoided should be avoided at the present time, but I urge this suggestion upon the minister, particularly in view of what he has said because I believe he knows and has studied conditions very seriously. I believe there are many people in this country, the people to whom he has referred, upon whom the burden of taxation has not rested as heavily as this taxation will rest upon the great mass of the people, and I suggest that the minister Bee if he cannot impose additional taxation upon those people and so relieve those upon whom this tax on sugar will bear most heavily.


William Daum Euler: 
William Daum Euler: No, and I shall not attempt to do so, but I think I can suggest how this may be made a little less unpopular. The Minister of Finance gave as practically the only reason for imposing this heavy tax on sugar the fact that he needs money, and that is a very good reason. But I do not think the hon. gentleman was quite fair to himself or to the people when he rather made the suggestion that it was also a good thing in that it would impress upon people the fact that taxes must be paid. I particularly disliked the veiled reference-I think that is what it was-to the effect that this tax on sugar must be imposed because of the deficits on the national railways and the disadvantages of public ownership. If I am wrong in my understanding I am ready to accept the minister's denial, but it did seem to me that this suggestion ran through his remarks in that connection. While it is necessary for the minister to impose heavy taxes I think the principle must appeal to him and to everyone else that while they must be heavy they should be made as equitable and fair as possible, and that they should not rest too heavily upon any particular class in the community. This tax of two cents on sugar amounts to practically fifty per cent of the value of the article, a very heavy tax indeed; it strikes at everybody, and this is an article of food. I think it is very regrettable, though perhaps in some degree necessary, that we should have taxation on food. Perhaps the minister is right when he says that if we suggest that this tax should be cut out we should make some suggestion as to how that money should be made up, and the minister intimated that it would be necessary to impose some other tax. There is still another possibility, and perhaps when I make this suggestion I may incur the displeasure of some of my hon. friends on this side of the house. I would suggest to the minister that it would be fairer to cut this sugar tax in half and wipe out what is known as the stabilization fund, which I consider absolutely wrong in principle and discriminating in favour of only a few commodities and a few people. I think if we took off one cent of the tax on sugar, leaving it at one cent a pound, and did away with the stabilization fund it would be more popular and more just and equitable to the people of this country.
53719-285J
That is my criticism of the sugar tax, Mr. Chairman. Now I should like to say a word or two on behalf of some industries to which the hon. member for Prince referred. Let us take for instance confectioners, those who make candies and so on. These may be regarded as luxuries, and perhaps those who manufacture them will not therefore receive much sympathy with regard to the tax on sugar. But this represents a very heavy item of expense to them; I think they have made certain representations to the government and perhaps to the minister with regard to this tax. I have some sympathy with them. They have a pretty difficult situation to deal with just now because they are practically all in the red. But what concerns me particularly now is this. The minister originally placed a tax of two cents a pound on sugar and by his amendment he has put the tax on another raw material in the form of glucose. I wonder whether he is trying to punish people for having the temerity to come and plead for a reduction in the sugar tax. Is he going to punish them by placing a tax on glucose, adding another burden to an industry which is already overburdened?


Edgar Nelson Rhodes: Whatever my weaknesses
may be, and I am the first to admit that I have many, vindictiveness is not one of them


William Daum Euler: I don't believe it is either;
I do not seriously attribute vindictiveness to him.


Edgar Nelson Rhodes: Taking the confectionery
business by and large, two cents a pound on sugar will have a comparatively trifling effect on the cost of confectionery. The difficulty in which that industry finds itself to-day is the difficulty that faces many other industries. It is not a question of the amount of tax imposed on sugar or on some other commodity which the industry uses, but the fact that the purchasing power of the people has been very much reduced, and naturally the first commodity to be affected is what may be termed a luxury. It is true that confectionery is in a sense a food; nevertheless it is classed, and I think properly so, amongst the luxuries. We all know that in more prosperous times, when people have plenty of money, industries such as the manufacture of confectionery flourish. While it may be true that the confectionery industry is, as my hon. friend observes, operating in the red to-day, I can point to industry after industry not only in this but in other countries-essential, basic industries, not including agriculture but purely manufacturing industries-which	are also
operating in the red. But they, along with
Special War Revenue Act

everyone else, as a result of taxation imposed in various forms, [DOT]will be called upon to bear an additional burden. One would imagine that this tax was going to be paid by the individual householder. One of the advantages of the sugar tax, however, is this, that its cost of collection is nil. It is paid by sax refineries in Canada, and the amount of sugar which goes into household consumption is only a fraction of the total quantity of the commodity used. The bulk of the sugar used goes into industry and null be absorbed in the cost of commodities manufactured from sugar. It is true that in households where there are large numbers of mouths to be fed, the tax will be an appreciable one; but I submit that as conditions improve it will be found to be a tax which can be borne more easily by the mass of the people than any similar tax I know of. This type of tax is perhaps new in Canada, but not in other countries, where there have been comparable taxes for years. In the mother country for example they tax essentials highly. Tea, throughout the years, has paid enormous taxation, and it may be considered almost as essential a commodity as sugar. The tax is purely a revenue tax, and I know of no other tax that can be borne more equitably by the people as a whole than this one.
With regard to the remarks of my hon. friend opposite who referred to what I had said about bringing home to the people the fact that they are taxpayers, I am afraid he had in mind something entirely different from what I intended. I did not refer to that mythical individual who is supposed to be the rich man; I am prepared to discuss the question of taxation as applicable to him so far as income tax is concerned. That, however, was not the class of people to whom I referred, but the great bulk of the people who heretofore have paid no taxes at all so far as thy knew. Their taxes have been in the great majority of cases indirect, and this is the first time that direct taxation at the instance of the federal government has been brought home to the individual. The individual I had in mind was not the really wealthy man or the man of reputed wealth, but the common, everyday citizen of the country.


Miss MACPHAIL:: I felt like speaking on the budget if for no other reason than to protest against this tax on sugar, and as I did not say anything then I will discuss the matter now. Sugar, it seems to me, is one of the last things that should be taxed, and particularly so steeply. Two dollars on a hundredweight is a very high tax to poor people. It is not much to people in good 
circumstances, I admit, and I am not concerned about them; but it undoubtedly is a severe tax to people who are struggling to make ends meet. I am thinking now of the country woman-the woman who goes out with her children, assisted on rainy days by her husband, and with great labour gathers berries and fruit, either wild or growing in her own garden, and preserves them to carry the family through the winter. I fancy the Minister of Finance has little idea how hard this tax will hit such people.
From the point of view of general business, the tax will also be quite injurious in my opinion. I belive I am safe in saying that infifty per cent of the homes in Canada, and possibly a larger number than that, the two dollars that will go to pay this tax would have been spent on some article very much needed for the family. People of moderate means have only a certain amount of money to spend, and the money that will be withdrawn from other purchases in order to pay this tax will mean that the retailer will sell less, the manufacturer will not manufacture, and the labourer will not work to the extent represented by that two dollars. Multiply the two by the fifty or sixty per cent of the homes in Canada that will be affected, and I think it is fair to say that this tax will definitely aggravate the depression and result in increased unemployment.
Most of the sugar used in the country, the Minister of Finance said, is used in industry. Let me point out to him, however, that even if it is used in industry it means an added cost to the consumer; it increases the cost of every article in which sugar is used and the general public will pay the difference. There is little doubt about that. It therefore makes little difference whether the bulk of the sugar is used in the homes of the country or in industry; the result will be the same to the consumer: he will pay the tax.
There are two or three ways in which the amount which it is expected that this tax will bring into the treasury might be secured. One -method would be to continue the increase in the income tax, carrying the increase on into the higher income. I see no reason why people with very large incomes should be let off easily; I do not see why they should be treated better than those who have moderate incomes. Again, the agricultural stabilization fund will cost the government a good deal of money, although in my opinion it is one of the most needless things suggested. I say this because, had the government inflated Canadian currency sufficiently to bring the Canadian dollar on a parity with the pound sterling, the agricultural stabilization fund

Special War Revenue Act
would not have been found necessary and we could have thus avoided the tax on sugar.
In my opinion the whole business of taxing consumption more and more must cease, because the problem to-day is to increase consumption. The more goods that are consumed the better from every point of view. Obviously therefore this tax is in every sense unwise. It taxes one of the most essential articles in every household. It is a tax that will bear heavily on the mothers of this nation, who are trying to give their children nourishing food. I think it is more to be condemned than any tax which has been brought down, and I oppose it entirely.


James J. Donnelly: The Minister of Finance, in referring to this tax, said that it would have a salutary effect upon the people of the country in teaching them that the money which the government spends is their money and must be collected from them. He said that the people throughout the country had the idea that the government had an unknown source of revenue. If the people do think that, the government have no one to blame but themselves. Before the last elections the present Prime Minister went from coast to coast and told the people that if unemployment existed it was due to the Liberal government; that if they were getting small prices for their wheat, their butter, their bacon and a hundred and one other things, it was the fault of the Liberal government. He asked the people to put him in power and then there would be no more hard times. The people cannot be blamed if they think that this government have all sorts of money, and they cannot understand why it is necessary to tax them.
Let me say to the government that the people of this country know full well what it is to be taxed. The price of gasoline throughout the world is in the same position to-day as the price of sugar, the price of wheat and the price of other commodities-it is cheaper than it ever has been. In spite of this, the government has made the people of Canada pay from five to six cents per gallon more than they should have to pay. In 1931 the Standard Oil Company of New Jersey, along with all other gasoline companies, had a loss on their operations while the Imperial Oil Company, which handled about 300,000,000 gallons, made a profit of $18,000,000. The other oil companies in Canada must have handled about 300,000,000 more gallons of gasoline and must have made another $18,000,000. Thirty-six million dollars were taken out of the pockets of the people of Canada. Why does not the government take off the duty on gasoline and put on a sales tax of about three or four cents per gallon? They could make $20,000,000 and the people would not have to pay as much for their gasoline. The government will be making the money instead of the oil companies which send it down to the shareholders in the United States. The Imperial Oil Company sent $12,800,000 to the Standard Oil Company of New Jersey. That is not red-blooded Canadianism. The Canadian people were taxed in order that the American shareholders in Imperial Oil might be paid. Why not tax gasoline and collect the money instead of having it go to the shareholders of the Imperial Oil Company and other oil companies throughout the country?


Mr. RALSTON:: Mr. Chairman, I should like to refer to the point raised by the hon. member for Prince and referred to by the Minister of Finance. Apparently for the' moment the minister lost his usual suavity;, he seemed to be nettled by what had been said, particularly with regard to expenditures. The minister repeated the argument which he made in his reply a short time ago to the Canadian chambers of commerce when he-indicated that the government had practised' all possible economy. I shall not go into this to-night except to remind the minister and the committee that a very important and well recognized organ, a supporter of this government, took distinct issue with the minister on the very figures he mentioned to-night and on the argument he made. The Montreal Gazette of April 26 has an editorial headed, Finance Minister's Reply. After discussing what the minister had said, the editorial continued:
With all due respect to the minister, this conclusion is not justified by the facts which he presents. The substance of the case as presented in this circular letter had already been published in one or two newspapers. The Gazette discussed them at the time. It was stated then, and is no less true now, that no critic of the government desires to withhold credit for economies actually effected. The government has gone a considerable distance in this direction and the taxpayer has not been indifferent to the results achieved. Unfortunately, however, all this is very much beside the point. The representations made by the Canadian chamber of commerce, by hoards of trade, and others, have ito do, not with what the government has accomplished, but with what it has left undone. The fact that notwithstanding the reductions in expenditures already made the government has presented a bill to the people for another $70,000,000 has had the very natural effect of directing attention to the possibilities of further retrenchment and the opportunities in this respect have been indicated specifically.
Special War Revenue Act


Edgar Nelson Rhodes: Canadian National.


James Layton Ralston: The Canadian National was included-


Edgar Nelson Rhodes: Subsidies and pensions.


James Layton Ralston: -in 1930 as well as 1934. It seems to me that the minister can hardly say that he has practised all the economy ' 'he should have practised in these hard times. He now proposes to impose this tax. My hon. friend referred to controllable expenditure but I direct his attention to the fact that between 1930 and 1934 interest charges increased by $20,000,000 because of the deficits incurred by this government. Last year this government showed a deficit of $102,000,000 on accounts outside of Canadian National. During the past three years there has been a total deficit of over $400,000,000 and yet this government has had the temerity to write to the province of Manitoba to tell them that they had better balance their budget, or come within $1,000,000 of doing so, or they would get no assistance. With all due respect to the government, that seems to be to be like satan rebuking sin. I submit that there is yet much to be done in the way of economies.
My hon. friend may speak of economies, but I contend that there is nothing in the estimates which have been placed before us to indicate that the government are properly seized of the seriousness of the situation and of the necessity for retrenchment. The government apparently finds it much easier to impose a two cent tax on sugar, a tax upon people who are not here to speak for themselves and who have not asked this government

for anything. The people in the most humble and ordinary circumstances are having it brought home to them with a vengeance. It is on behalf of these people that hon. members are speaking to-night. They are not necessarily speaking on behalf of the well to do, who are getting some benefit from government and are able to bear the burden of taxation; they are speaking on behalf of the people who have not asked this government for anything but who are now being asked to contribute by means of this particular tax an average of something like $2 per head. I say to my hon. friend that he would be well advised to canvass the situation and to endeavour to see if it is not possible to produce further economies. If a tax of this kind is to be imposed on the poor people of this country I submit that the suggestion made by my hon. friend from West Middlesex is worth while considering, namely, that the tax should be cut in half.
While I am on my feet let me say that this is not the only tax that strikes at the masses of the people, because when we come to the sales tax the food of the people, which is now exempt from the sales tax, has to bear a six per cent tax which the masses of the people have never paid before.
One thing further. My hon. friend says that some people have never paid taxes before, but everybody has at least paid the one cent tax on postage. Everybody who posts a letter has done that, and it does not require any two cent tax on sugar to convince the people of this country that times are hard and that they are having to pay the piper.


Edgar Nelson Rhodes: If only for old times sake I must say a word in reply to my hon. friend from Shelbume-Yarmouth. If one thing more than another characterizes him it is his ability as a special pleader. He can spin a longer thread out of less material than any man I know of. If I were to pick a flaw in what he has just said, I would say that he must find himself sadly in need of material when he has to found his argument upon an editorial contained in the Montreal Gazette. I have heard of scrapbook oratory and scrapbook orators, but never did I think my 'hon. friend would resort to basing his argument upon an editorial in the Montreal Gazette. When he refers to the Montreal Gazette as a supporter of this government I can only say to him; God deliver us from our friends. I am willing to have the aocuracy and the value of that editorial judged by an analysis of the statements of facts which it contains, one of which was quoted by my hon. friend. Quoting the editorial he says that the government has pre-

Special War Revenue Act
sented t'he people with a bill of $70,000,000, and my hon. friend says yes to that. He is wrong to the extent of $14,000,000. We are taxing the people only $57,000,000. The other $14,000,000 deficit was bo be made up by a further reduction in the estimates already voted by this house.


James Layton Ralston: My hon. friend said that it was only an estimate.


Edgar Nelson Rhodes: My hon. friend is back now at his special pleading.


James Layton Ralston: No.


Edgar Nelson Rhodes: Oh yes, he is.


James Layton Ralston: Be fair.


Edgar Nelson Rhodes: The $14,000,000 is the amount we reduced the expenditures by as contained in the votes in the estimates. The tax bills are S57,000,000. So my hon. friend in quoting the editorial was wrong only by a matter of some $14,000,000.


Mr. SPOTTON:: That is not much 1


James Layton Ralston: Did I not understand my hon. friend to say that the $57,000,000 was purely an estimate and that he was not able to say just what the taxes would produce?


Edgar Nelson Rhodes: My hon. friend is quibbling again.


James Layton Ralston: Did my hon. friend say that?


Edgar Nelson Rhodes: I listened to my hon. friend without a single interruption and he will have an opportunity to reply to me if he so desires. I hope he will at least do me the courtesy to hear me for a few minutes. I was dealing with his citation of a bill for $70,000,000, and I said that $57,000,000 was the bill and $14,000,000 was the savings, and both were estimates, of course. They could not be anything else because there are twelve months in the fiscal year and we are only in the second month of the fiscal year, and so my hon. friend must be patient for ten months more.
My hon. friend ought to know me well enough to know that I did not show any petulance in replying to my hon. friend from Prince. If I speak sometimes with earnestness, possibly with vehemence, I hope that he will not for one moment think I was imparting any degree of acrimony to the discussion. That is furthest from my thoughts. I say that one of the features that caused me to speak with more earnestness than usual was this fact, that it does not help the taxpayer of this country who is called upon to pay taxes, sometimes under extreme difficulty, to be told that he is called upon to pay taxes
because the government has been extravagant. When my hon. friend speaks of satan rebuking sin, let me say to him that that citation comes home to him and his associates with singular appropriateness when I point out to him that the major expenditures which have been made by this government have been on account of obligations inherited from the government of which he was a member. At a later stage, if not at this session, at an early stage of the next, I shall give figures to the people of this country indicating that we inherited obligations incurred by our predecessors to no less a sum than upwards of $200,000,000, and we are now called upon as a government to meet these obligations lightly incurred by hon. gentlemen opposite. It is only a day or so ago that we had to meet an obligation in connection with the guarantee of the Montreal harbour bridge, which cost approximately $200,000, and in the last year and a half between one and two million dollars on that account alone this government has been obligated to expend. I could cite case after case, and when we do meet a bill on account of an obligation incurred by hon. gentlemen opposite themselves, they blame the extravagance of this government. I have used an illustration before but never in this house, but I cannot resist the temptation to do so now. When hon. gentlemen find fault with this administration for their expenditures they remind me of the young man who murdered his father and mother and who pleaded for the clemency of the court on the ground that he was an orphan. As a government we meet the obligations incurred by our predecessors, and then when we pay the bills we are accused of being spendthrifts. This is hardly the time or place to enter into a prolonged discussion of that character, but my hon. friend from Shelburne-Yarmouth certainly gave me cause to depart a little from the estimate before us, and I must apologize to you, Mr. Chairman, but I do think that .the committee will admit that I had at least some provocation.


James Layton Ralston: I just want to give the
committee and my hon. friend this one citation. He speaks of the $70,000,000. I know he does not intend to mislead the committee, notwithstanding that he is both vehement and a little petulant, if he will permit me to say so.


Edgar Nelson Rhodes: Not a bit.


James Layton Ralston: Well, not quite so suave as usual. My hon. friend says that the $70,000,000 was $14,000,000 out. I read from my hon. friend's budget speech to find out how much money he was going to raise by
Special War Revenue Act

taxation, 'how much the bill was which he was presenting to the people of Canada. This is what he says in his budget speech, at page 3223 of Hansard:
After making allowance for this estimated reduction of $14.000,000-
That is what he spoke of a moment ago:
-ordinary expenditures will he approximately $68,000,000 in excess of revenues estimated on present rates and yield. Accordingly it is proposed to recommend measures which will, it is anticipated, produce at least $70,000,000 on the basis of present business conditions, leaving a surplus of $2,000,000.
I leave it to the judgment of the house and the country which is correct, my hon. friend or the Montreal Gazette and myself in saying that my hon. friend is presenting a bill for $70,000,000.


Edgar Nelson Rhodes: And one of the measures proposed was a saving of $14,000,000. That is the answer.


James Layton Ralston: Oh, no. You say in your budget speech, "after making allowance" for that.


Mr. DENIS (Translation):: Mr. Chairman, as representative of the thickly populated riding of St. Denis, I wish, on behalf of my constituents, to protest against the two cents sugar tax. By levying this impost the government has once more given proof that it has greater consideration for the wealthy than for the poor. The time is ill chosen to levy such a tax when there are 1,300,000 unemployed in this country, who find it impossible to earn a livelihood or obtain sufficient fuel to keep themselves warm during the cold winter season.
The hon. Minister of Finance (Mr. Rhodes) replied to the hon. member for Shelbourne-Yarmouth (Mr. Ralston) that the government had levied this tax to meet the extravagant expenditure of the late regime. To illustrate his point, he mentioned the construction of the Montreal harbour bridge. It would have been more to the point had he alluded to the $2,000,000 that the government expended to complete the Welland canal, and this without authorization, unless it be that of the Minister of Railways and Canals.
I think that under the circumstances, the hon. minister should have sought eleswhere the funds necessary to balance the deficits of the present administration. The tax on numerous articles of luxury could have been increased without unnecessarily burdening the poorer classes of ratepayers. I therefore wish to strongly protest against such taxation be-

cause it affects the unemployed who cannot afford at present to pay 2 cents more on the sugar they need. Those who still possess wealth could well afford a tax increase on articles of luxury such, for instance, as diamonds, jewels of all kinds, pianos, expensive furniture and chocolates. The tax could have been increased on numerous manufactured products such as aeroplanes and automobiles without ever affecting the consumer or the unemployed. I thought that in view of the many protests coming from all parts of the country, especially from the humble, the small wage earners and unemployed, the government would have acquiesced in the view of these people and dropped this tax. Such an act would have gained for them new followers; and they need them, because the government have given proof to-day that their policy is to destroy rather than construct.


James Malcolm: I had not intended to
make any further observations concerning the two cent tax on sugar, but I cannot let the remarks of the Minister of Finance in * reply to 'the hon. member for Shelbume-Yarmouth go without a word in reply. Undoubtedly the minister deserves the sympathy of the people of Canada. He states he is a victim of a set of world conditions; he is also the victim of a mistaken policy. The minister said that we did not help the taxpayer by saying the government was extravagant. I say to the minister we are not telling the public that the government is extravagant; we are telling the government. By making such demands on the government to reduce their budget we are trying to help the taxpayer. Any references from this side of the house to the extravagance of the present administration are made for one definite purpose, namely to have the government realize that in this time of stress, whether it be due to world conditions or to mistaken policy, the government has exactly the same obligations as those which rest upon every business in Canada, namely to trim its sails according to the wind it is facing. The government cannot ride the gale with the amount of canvas they are carrying, they will flounder in the .trough in the sea and be lost.
I know the Minister of Finance would not dare to say, nor would any hon. member in the house, that the cost of the administration of any government in Canada, whether it be municipal, provincial or federal, has been reduced to one-quarter the extent that costs in private business have been reduced. There is nothing comparable in the history of this dominion to the reductions in overhead costs

Special War Revenue Act
which have been practised in private business in Canada. The reduction in the cost of administering the federal government has been so slight as to be almost unobservable.
Only a few evenings ago when the estimates for the Department of Trade and Commerce were before the committee I pointed out that on steamship services for the carriage of mail which in 1929 used to cost this dominion $530,000 a year, this government is deliberately paying on the Atlantic and Pacific services $1,200,000 a year, or an excess cost of $700,000, an increased expenditure which is absolutely unjustifiable and for which no excuse can be offered, with the exception that the Minister of Trade and Commerce has said that a very superior type of service was given and that the boats could not maintain the service without government help. I say to the Minister of Finance that if he will search his estimates he will find very little evidence of a sincere desire on the part of his colleagues substantially to reduce expenditures.
May I refer to another item which appeared in the estimates. The research council, which was started some years ago, was given a building in which to carry on and to coordinate all research activities of federal departments. The present Minister of Trade and Commerce supported the idea of consolidating research work. The Prime Minister took a similar attitude. Yet to-day in this city of Ottawa, with the research building completed and with every opportunity to consolidate research activities we have deputy ministers refusing to get together for the purposes of consolidation when by such action they could save millions of dollars. I defy any man in the house to tell me that there has been a sincere effort to coordinate the research of the various departments of government. There are thirty-four separate laboratories in the city of Ottawa which should all be consolidated, now that the premises are available. The Minister of Finance knows this, as does the Prime Minister. All along the line in departmental work the deputy ministers are controlling the situation, and are not allowing the government to reduce expenditures as is being done in private business. We have come to the point in Canada where we ought to listen to the remarks of the senior member of the house1, the hon. member for Bona-venture. We have come to the point where ministers of the crown do not control the situation. Between the Civil Service Commission and other organizations we are fast becoming the victims of a bureaucracy. Unless we give the ministers the right to control their
departments and to reduce expenditures as they think they should be reduced, the Minister of Finance will have a mighty sorry task trying to meet the fixed expenditures of the country.
We quite admit that $20,000,000 taken from the pockets of the people by a tax on sugar is a very unpopular tax. The minister says he knows it, but that it is done from necessity. I want to join with my hon. friend from North Waterloo in saying that a man who received five dollars from the Minister of Finance in 1926, 1927 or 1928 for interest on a $100 bond could buy with that five dollars about four bushels of wheat. He could not then buy 120 pounds of sugar or ten bushels of wheat as he can to-day. If the minister and the government present the argument that they are facing the worst economic condition the world has ever seen and that because of that widespread condition they are obliged to take this course, then I say that the very seriousness of the situation demands serious remedies. I do not think it is right to ask the common people of this country, whose earnings have been reduced, to pay a tax on sugar to the extent of $8 or $10 a family. I do not think it is right to ask industries, practically all of which are in the red and have lost their reserves, to pay higher corporation taxes which they cannot earn, while at the same time men who never at any time expected to get such enormous returns in purchasing power from interest on their bonds are permitted to get those returns at the expense of people who have no money. The time has come when I believe some very drastic step has to be taken to produce what my friend from Vancouver Centre calls equality of sacrifice. The biggest load we have to carry is our bond interest. Wages, pensions, interest on public debt-all these things if they have to be reduced should be reduced together. It is not good enough to cut pensions and cut wages and at the same time allow the holders of $2,500,000,000 in bonds to get a return on their money altogether out of proportion in value to that received in 1928.	'
I want to say another word to the Minister of Finance in connection with his claim that he has reduced expenditure. So long as this rate of expenditure is maintained, without the large revenues which we had in 1928-29 when times were good, so long will the minister have to face intense criticism on account of the fact that some of the wealthiest people in this country-not ordinary business men but men of great wealth-have gathered in tax free bonds which were not originally bought
Special War Revenue Act

with the idea of evading income taxes. When this nation was appealed to by Sir Thomas White, the then Minister of Finance, for money to carry on the war, it responded patriotically. These bonds were purchased and held widely by the people of Canada. They are not held widely to-day, as the Minister of Finance knows. They are held within very narrow limits, by banks, insurance companies, bond companies, trust companies, and by a few very wealthy individuals.


Jean-François Pouliot: Lord Bacon!


James Malcolm: The treasury is losing
by the tax free provision on these bonds a great deal more money per year in income tax than will be taken from the people by the tax on sugar. The Prime Minister has spoken of the sacredness of contracts. I do not know how sacred a contract is that exempts a man from paying his fair share of taxation in a time of national crisis-


Jean-François Pouliot: It is immoral.


James Malcolm: Personally it is not sacred to me at all.
I notice a big change in the attitude of the government, if the Ottawa Citizen is to be believed. A few days ago in this house I suggested to the Minister of Finance that so far as our internal currency is concerned, if properly controlled it would have no bearing whatever upon our exchange; that if by statutory enactment the government wished to issue on a redeemable plan a given quantity of currency for the construction of public buildings, it could do so, and in ten years' time pay for the building at just half the cost that would have to be paid if bonds were issued at five per cent. My friend from North Waterloo supported the idea. Then we listened to a long lecture from the Prime Minister to prove that it would destroy the stability of our money. I want to be helpful to the Minister of Finance, and if I may be pardoned for taking the time of the committee I would like to say this: there should be two kinds of currency. The rate of exchange on Canadian money is affected by every demand for Canadian dollars that comes from the outside and every demand for American dollars which comes from within. Our exchange is not affected one particle if we have an adverse balance of $200,000,000 a year with the United States provided we have against that a favourable balance with some other country which pays its debts through New York. In considering foreign exchange one has to take into consideration every item that is cleared through New York banks. We are debited with the interest we owe on our bonds

and with every thing we owe there. We are credited with the money we borrow, with the returns from our trade, whether it be from Japan, Peru, Bolivia or Spain; the sum total of our favourable trade balance clears through New York because New York is our banking centre and our exchange is governed, as a commodity would be, by the demand for Canadian dollars and the demand for American dollars. We have at the moment a favourable trade balance, but we are not borrowing money in New York. If we were our exchange would improve. Apart from that, however, I submit to the Minister of Finance that although bankers will tel him that any issue of currency within this dominion will adversely affect exchange, there is no logical reason why it should. When the Prime Minister inflated last year to the extent of $35,000,000 it did temporarily affect the rate of exchange. But when it becomes understood that this currency is issued on a solid basis of statutory enactment, with provision for the redemption and cancellation of that currency, just the same as if a sinking fund were created to retire bonds, there should be no influence whatever upon our exchange in the New York market. By such an issue of currency the Minister of Finance will take from the people of the country in taxes just half the amount of money that he would take if he issued bonds and paid five per cent on them for a period of twenty years. The thing that amazes me is that in the Citizen to-night I see a headline indicating that the suggestion which we made a few days ago and which the Prime Minister characterized as so impossible has actually been adopted. If that drastic step is being taken I say to the Minister of Finance and to the government that I admire them, for taking it. I admire them for accepting a broader policy, probably a little more liberal policy, in order to try to correct the situation from which the taxpayers suffer.
I appeal to the Finance minister to take a strong stand with regard to the enormous interest charges which we are paying on the tax free bonds; to take the strongest position possible in regard to reducing infernal expenditure. The ministers should have, authority to do with their departments what private business is doing with its overhead. Then it will not be called upon to bear the criticism to which it is now subject from the common people of the country of taxing the sugar of the children. I look on the taxation of sugar as a very inequitable tax. It falls heavily on those with large families to feed; it falls heavily on the people least able to bear it. It means nothing to the average man who

Special War Revenue Act
has a substantial income, but to the farmers, referred to by the hon. member for Southeast Grey (Miss Macp'hail), who buy 400 or 500 pounds of sugar in the fall to put up their own fruit, it is a substantial tax, a tax these people have never had to bear before. It probably will not affect the average member of parliament or the average business man or salaried man; they probably will not feel it. It will not hurt the families with only two mouths to feed, but it will bear very heavily on the man with a large family.
The minister referred to a tea tax. Very well; why not distribute this tax? Why put it all on sugar? It would be infinitely better, I suggest to the minister, to put a tax of 5 cents a pound on coffee or of 2 cents a pound on tea and make the tax on sugar one cent a pound, because after all tea and coffee are not so necessary to the everyday lives of the community as is sugar. It would be far better to put a direct sales tax of 20 cents per pound on candy, which to a large extent is a luxury, or 10 cents a pound or whatever the minister thinks fit, than to put all the tax on sugar, the basic commodity. If the minister says he has no way out other than to tax necessities I have no objection, provided he spreads the tax over a sufficient number of necessities so that it does not fall heavily on those least able to bear if, but I do object to picking out an item so vital to the average workingman and the average farmer, who are not on relief but who are just getting by. We may have eight hundred thousand people on relief at the present time, but certainly we have two or three million who are barely getting by, and those are the men for whom I plead.
As a man who has employed some labour; as a man who knows something about the grief through which industry is passing-and in this house there are dozens of men who know this situation as well as I do-I say to the minister that it is useless for us on this side of the house to argue that his pdlicy is wrong. I have not a particle of criticism to offer with regard to the Prime Minister, the Minister of Finance or any other member of the government. This has been the most consistent government Canada has ever known. As the hon. member for Willow Bunch said, the Prime Minister appealed for the suffrage of the people claiming that if there was unemployment it was the fault of the government and that the responsibility for good or bad times was squarely on the shoulders of the administration. Not only did he do that; he also prescribed the remedy by means of which the cure was to be effected. The Prime
Minister cannot be accused of inconsistency. He said that by a high tariff policy he would create industrial employment, increase our markets and bring about a return of prosperity. Well, we cannot blame the doctor because he has administered mighty large doses of the medicine he promised the patient, but what has been the result? Unemployment has increased; industrial production has decreased, and practically everything that was promised has failed to materialize. I am not going to say that world conditions have not been a great influence; I want to be fair, but I want to say to the minister that in being fair I want him to be fair also.
Just here, Mr. Chairman, I am going to bring up again one of the restrictive measures I mentioned to the minister in private and which I have discussed on the floor of the house on two occasions. Why should it be necessary for a silk manufacturer in the province of Ontario to buy his silk in New York? I am glad the Minister of National Revenue is in his seat; probably he will be able to reply. Why should it be necessary for our Canadian railways to lose all the silk tonnage coming from Tokyo to Canada? Why should it be necessary to have a commodity which is duty free in Canada and the United States driven through United States channels, causing the Canadian railway systems to lose that tonnage, simply because the Department of National Revenue insists on putting a dumping duty on the exchange? I have not had an answer to that question, though I have directed it to the Minister of National Revenue twice. That is the sort of restrictive measure that is being applied in this country, and I think it has gone past the point of sanity. It is little wonder that the Minister of Finance suffers from want of revenue. Let him maintain his policy of high tariffs; that is the policy of the government, and they have a perfect right to apply the policy which they advocated. But let the Minister of Finance see to it that his colleagues do not so completely defeat his purpose as to make it necessary for him to bring in this sort of taxation. Our import trade with the United States has dropped by
8600.000. 000.	I do not know whether we needed the cotton or the other commodities we bought from the United States, but with an average duty of 15 per cent that 8600,000,000 in trade would give the minister just
890.000.	000, and he would not be faced with the problem confronting him to-day.
Let me say, Mr. Chairman, that I have never advocated free trade; I have always been an advocate of a revenue tariff which gives incidental protection. I do not believe the Canadian people want a tariff so high or
Special War Revenue Act

so low that it produces no revenue, as a result of which they will have to submit to such taxation as the minister is suggesting to-night. The public must finance the government; the public must find the money. If they do not find it through indirect taxation, through the customs tariff and so on, they must find it through direct taxation on necessities. In this budget we have an illustration of what a high tariff which keeps out commodities and brings in no revenue may cost. Let me say to my low tariff friends that we would have exactly the same illustration if we had a free trade tariff; the revenue would have to be found by direct taxation.


Mr. DUFF:: But it would not cost the taxpayers so much.


James Malcolm: Probably not. I appeal to the minister on this point; he cannot possibly change the policy of the government, but there are some things he can do. Without any blare of trumpets he can trim the cost of administration here, perhaps not so much as would be done in private business but still to a substantial extent. Without any legislation he can clean up a lot of nuisance regulations in the Department of National Revenue, which will be a great help to the business community of this country and will increase his revenue. Without any abandonment of policy at all he can revise some of the items in his customs tariff which will bring in a very much more substantial revenue than he enjoys to-day. I say to the minister in all sincerity that I do not even want to retort to what he said about the load the government inherited from the previous administration. I came into this house in 1921, together with a number of hon. gentlemen I see about me this evening. Then the deficit on the national railways was $60,000,000 a year; then there seemed no possible chance of balancing the budget; then the clouds, while not quite so dark as they are today on the political horizon, were so dark as to cause hon. gentlemen then on this side of the house severely to criticize the government for everything they did. I sat in this house in 1929, when our trade had expanded to a proportion we had never dreamed of, and when we had a little unemployment. I heard hon. gentlemen opposite utter the most violent criticisms of the government then in power. I heard them criticize our whole tariff policy; I heard them say it was a complete failure and that ours was the worst government Canada had ever seen. I think the Minister of Finance can say truthfully that in comparison with the violent criticism to which the late government was subjected during the
TMr. Malcolm.]
session of 1930 anything we have said in criticism of this government might be termed soft words indeed. We have tried to be fair; personally I want to be fair. I realize the responsibility of government and I understand the difficulty of running departments, but I say to the Minister of Finance that nothing in the way of nibbling taxation is going to cure the situation. The Prime Minister used the expression that the surgery has to be deep, and it certainly has. These are unusual conditions, and unusual methods must be adopted. I believe that at the moment the people of Canada are ready for unusual happenings; I do not believe they are going to criticize the government of the day but will rather compliment them if drastic measures are taken to reduce the cost of administering this country. Many people talk about the cost of government in Great Britain. The taxes the British people pay are not, if at all, very much higher per capita than in this dominion. When we take our municipal, provincial and federal taxes and divide them by ten million we find that the Canadian taxpayer is to-day paying taxation equal to that paid in Great Britain, or at any rate nearly so, and it is a load which he cannot continue to pay out of his present revenue.
Now, where lies the future? It is always very easy for a member in opposition or on the government side to demand expenditures when money is coming into the treasury freely; we have all done it. Hon. members sitting opposite, when they were to the left of the Speaker, were just as anxious for estimates in connection with public works as were members behind the government. Well, if we failed to be cautious enough in those days, certainly we should be courageous to-day. The ordinary business man is courageous. We are not closing down our mills. We are cutting down expenses to the bone and reducing salaries to the vanishing point. Our men are taking low wages and buckling in, trying to saw the business ships of the dominion. That is going on to-day from the Atlantic to the Pacific. Then how do the people feel about the cost of government? There certainly is a realization on the part of the Canadian people, greater than ever existed before, that governments have only such money as they take from the people with which to administer their affairs. Any delusion that ever existed that the government has some way of obtaining money other than by taxation has been amply dispelled in the last two or three years. I venture to say that there never was a year in which a smaller percentage of the income tax was paid on the first day than

Special War Revenue Act
there has been in the last two or three days. More men are asking the government to carry a part of their taxes, for the simple reason that their interest charges have eaten up their incomes and they are not in a position to pay the taxes levied in cash. I do not hold with some people in this house who think that income taxes in Canada are not high; I think they are at the breaking point. I do not think they can be made any higher if business is to survive. When it comes to taking one dollar out of every two which a man earns, a man with undoubted obligations, a man who must face the necessity of keeping reserves for times of stress, I think it comes about as close to confiscation as it is advisable to go. I contend therefore-I know that I shall not be complimented by many hon. members on this side of the house for saying so- that the Minister of Finance was not wrong in lowering the brackets. There are young bachelors in this country earning eight hundred and a thousand dollars a year who are much better able to pay income tax than married men receiving three thousand and with four or five children to keep. The increase in income tax was very heavy in the middle brackets, but those are the brackets in which the minister can get revenue.
I do not think the minister intends to modify this sugar tax, but I do say to him that he should. If he would reduce it and place a tax on tea and coffee and other commodities he would get a far more equitable distribution of the burden. The tax would fall more evenly on the people of the country, and though he may not like to do so, I suggest to him that he should give the matter further consideration. Had he given it fuller consideration I do not think he would have brought in the tax as it is now.


Edgar Nelson Rhodes: I do not propose to take
the same attitude towards the remarks of my hon. friend from North Bruce as apparently my hon. friend from Shelburne-Yarmouth took with respect to my own observations. I think the remarks of my hon. friend were made in the tone in which we heard them because of the hon. gentleman's sincerity and because he felt what he was saying.


James Malcolm: I certainly did.


Edgar Nelson Rhodes: I am prepared to say that I am thoroughly convinced that this was the purpose that animated the vehemence with which he spoke. I know of no hon. gentleman in this house who speaks more temperately than does my hon. friend from North Bruce and who in the main approaches problems in a fairer or more constructive manner.


James Malcolm: Thank you.


Edgar Nelson Rhodes: With a great deal of what the hon. gentleman said I was in agreement, although I must take exception to some of liis remarks. He repeated, what so many hon. gentlemen opposite have repeated from time to time, the statement that this is a high tariff party. Hon. gentlemen opposite have said this so frequently that I know they thoroughly believe it, and I should find it difficult to dissuade them from that conviction. As a matter of fact, I have been a consistent follower of this party and I have never subscribed to the point of view that we were a high tariff party. We have been frank enough to admit that we believe in the policy of protection, in the policy of adequate protection, and this government has not hesitated, any more than preceding Conservative governments have hesitated on occasion, to reduce tariffs substantially and indeed, in many instances, to wipe them out altogether. In fact, in the very budget before the house there are numerous items which have been placed on the free list.
I do not agree with my hon. friend in his contention, which seems to be shared by many hon. gentlemen opposite, that if we revised the tariff we should not be obliged to resort to taxation. If there is anything in the statement made by hon. gentlemen it means that more goods would be brought into this country and that we should have more revenue from the tariff.


Edward James Young: Precisely.


James Malcolm: No doubt.


Edgar Nelson Rhodes: Well, who pays the tariff? The people in this country pay. Hon. gentlemen discuss that phase of the question as if they were going to relieve the people of the country of the burden of taxation.


James Malcolm: The tariff is paid by those who are able to pay.


Mr. BOTHWELL:: Don't we still pay the
same price to our own manufacturers?


Edgar Nelson Rhodes: My hon. friend will not
think me discourteous if I decline to be deflected by a question of that kind, because it has no bearing on the point raised by the hon. member for North Bruce, who was dealing with the question of tariff qua revenue. I am not dealing with the question of protection as such, in all its ramifications. The fact remains that the customs duty is paid by the people of the country, and there may be an argument as to whether, in the incidence of taxation, the burden by that method is more evenly distributed than it would be with respect, for example, to such a tax as the proposed tax on sugar, paid directly by the
Special War Revenue Act

people. The fact of the matter is, however, taking any form of taxation, that a given sum of money which goes into the treasury, it matters not whether it comes out of a sugar tax or a tariff or what not, must come out of the people of the country. That fact, I submit, should be borne in mind.


James Malcolm: Is my hon. friend going
to ignore the selling value of imports to this dominion?


Edgar Nelson Rhodes: I was dealing with the
question entirely from the point of view of revenue, which was the point under discussion, because otherwise the discussion is not germane to the question of the necessity for raising revenue by means of a tax on sugar.


James Layton Ralston: We pay for it in goods;
that is all.


James Malcolm: It has to be paid for.


Edgar Nelson Rhodes: I quite understand that
argument. If hon. gentlemen will take the trade of the country, both imports and exports, they will find that we are the fifth trading country of the world. They will find that, having regard to relative trade conditions in other parts of the world, our trade stands just as high in volume as that of any other country in the world and just as high relatively as it has ever stood in the history of Canada.
Coming back to my hon, friend, while I do not want him to think that I wish to answer his argument by the "you are another" method, I feel I must check him up in one or two respects. He referred to the fact that private business had reduced salaries to the vanishing point, and stated that while he recognized the government was not in a position to make the same drastic cuts as those made in private business, he felt nevertheless that there could be a still further reduction. May I point out to my hon. friend that when we asked the civil servants of Canada to make a modest contribution by way of a salary deduction of ten per cent, hon. gentlemen opposite occupied the time of this house for three solid weeks. That contribution amounts only to some 88,000,000, or less than one half what we hope to realize from the tax upon sugar.
I commend my hon. friend for the constructive character of his suggestions. I know he makes them not as criticisms but as patriotic suggestions in view of the seriousness of the condition of this country. I grant him that very freely, but when he suggests that we might take one cent off the sugar tax and put a four cent a pound tax upon tea and a five cent per pound upon coffee in substitution thereof, I must point out what we might

expect from such a substitution. Last year we imported into Canada 42,000,000 pounds of tea. With a tax of four cents per pound, which would be double the duty under the British preferential, we would obtain in revenue 81,680,000. Last year we imported into Canada 38,000,000 pounds of coffee. A five cent tax would bring in a revenue of $1,900,000. There would be a total revenue on these two taxes of $3,580,000.


John Thomas Hackett: The hon. member suggested two cents per pound on tea.


Edgar Nelson Rhodes: The hon. member for
Stanstead says that the hon. member for North Bruce suggested a tax on tea of only two cents per pound. That makes my argument just twice as strong. However, taking the tax at four cents per pound, the total revenue would be $3,580,000 or just one-third of what it is anticipated a one cent tax on sugar would bring in.


Edward James Young: It would help a little.


Edgar Nelson Rhodes: Yes, but it would not offer a substitute for a one cent tax upon sugar.


James Malcolm: The minister could
broaden the list to include other luxuries.


Edgar Nelson Rhodes: That is quite true. My hon. friend did something else for which I commend him. He had the courage to make succinct and substantial suggestions by way of economy. We get much of this, more particularly from the press. I do not object to criticism, in fact I welcome it especially when it is based upon fair motives and is not captious or small political criticism-I use the "p" in the small party sense. Let me say to my hon, friend that I think he was fair in his criticism in respect to the national research council. During an earlier stage of the committee I made reference to certain economies which had been made, and I pointed these out in the letters which were written to certain chambers of commerce. I did not then nor do I now suggest for one moment that the government has made as many economies as it should or as it could. I believe we will have to make still further economies, and the suggestions made by my hon. friend are sound. I may say to him that for some considerable time past the preliminary steps have been taken which will lead up to the very economy he has in mind. You cannot prune a tree with an axe; you must use a more delicate instrument if you wish it to survive. You cannot use rough instruments upon the delicate machinery of governmental service, and you cannot make the same drastic reductions as can be made in private enterprises. It is altogether different in the service. I

Special War Revenue Act
may say to my hon. friend that the object of the government will be to continue to effect economies wherever they may be possible without impairing unnecessarily the public service. The suggestion he made is practicable and sensible and is one which will be and should be followed by the government.
Even if I felt competent to do so, I would not propose to follow my bon. friend in his broad discussion of inflation. I do want to say to him that when he speaks of equal contribution, having in mind the fact that those who hold the bonds and securities of this country are because of living conditions to-day receiving a far higher yield than they did when they purchased them, he must not overlook the fact that Canada is a debtor country. Canada is a borrowing country and if we are to have lower rates of interest, a thing highly desirable, we must maintain the integrity of the credit of Canada. If we attempted to violate or repudiate our obligations to those who have purchased the securities of Canada, I believe that the amount saved at the moment would be lost manyfold through the increased sums we would have to pay by way of interest on future borrowings. We would narrow the field within which we could borrow to such an extent that we would have to pay very high terms for our money. There is no way, short of repudiation, in which you can effect a sacrifice with respect to securities which are out as a matter of contract and in the hands of the public.


James Malcolm: The minister knows perfectly well that England refinanced her largest loan at three and a half per cent. The British people took it up and there was no repudiation.


Edgar Nelson Rhodes: 
Mr. HEAPS:: What about Australia?


Edgar Nelson Rhodes: -available for conversion. That conversion was a voluntary one.


James Malcolm: Quite so, and so it would be in Canada.


Edgar Nelson Rhodes: Nearly two years ago we made a very substantial conversion in Canada as a result of which we improved the financial position of this country to a marked degree.


James Malcolm: And the bonds were sold-


Edgar Nelson Rhodes: And the bonds were sold.


James Malcolm: -in Canada.


Edgar Nelson Rhodes: In Canada, quite so. My hon. friend will realize that in respect of this conversion tax exemptions with respect to certain bonds had to be continued until the due date. The net result after November 1 of this year will be a very substantial saving in interest charges through the tax exempt feature being obliterated from the 1933 issue.
I have taken more time than I intended to take. I hope the example of the hon. member for North Bruce will be followed by other hon. gentlemen opposite should they care to discuss the subject of sugar. We welcome constructive suggestions and I hope that after certain economies along a certain line have been effected my hon. friend will have occasion to say "I told you so."


Edmond Baird Ryckman: I am very sorry to take up any of the time of the committee at this stage, but in view of the fact that the hon. member for North Bruce has made a reference to me I think it necessary that I should at least reply. I heard no two references from my hon. friend as to why silk could be bought in New York at an advantage as compared with purchasing it in Japan and bringing it overland through Canada to Toronto and Montreal. I did hear a reference to it once and I made no reply because I certainly thought that the hon. member knew enough about the trade to know exactly how it did happen, but seeing that I was mistaken as to his knowledge I will tell him in a word or two. It is caused by the difference in exchange and by our special excise tax, and we are not going to forego our special excise tax -we need it, and the hon. member ought to know it-simply because we can let in a carload of silk at a cheaper price. Let me tell the hon. gentleman that that is over now, and to-day you can buy silk that has its origin in Japan as cheap in Canada as you can buy it from New York.


James Malcolm: Good.


Edmond Baird Ryckman: In the next place my
hon. friend referred to the nuisance regulations of the National Revenue department. All I can say is that the government of which he was a member put them there. I do not know to what else he refers. I am sure that the action that has been taken by the National Revenue department, perhaps not under the heading of regulations, has resulted in benefit to the country. There was something that was done when my hon. friend's government was in power, and while I would not for one moment detract from the encomiums heaped upon his head this afternoon and evening, I must say that when I took charge of this department I found that the first time what is known os section 43 was used by the Liberal government as applied to other than
Special War Revenue Act

natural products, was in aid of an industry-in which my hon. friend was interested and still is interested. The Liberal government were pleased to confine their operation of what is known as section 43 to natural products, but then furniture crept in. A heavy duty was put on furniture, and my hon. friend got the benefit of that.


James Malcolm: No, sir.


Edmond Baird Ryckman: The records of the department show it; that is all I can say.
I want to say that I align myself with the Finance minister and those on this side of the house in seeing that this government, so far as its efforts can accomplish it, shall not default upon its obligations upon any specious excuse. The hon. member for North Bruce I think allowed us to measure him to-night when he said that it really hurt him that this country kept its obligations and paid the interest on these tax free bonds. The country has entered into that obligation. It is a hard thing to carry it out; it is done with grief and worry, but yet Canada has done it and will do it so long as this government is in power, and if the people of Canada determine that they want, some other treatment, they can get it by voting for it in the majority.


James Malcolm: They are liable to do
it.


William Daum Euler: Just a word with regard to
the remarks made by the Minister of National Revenue. He made reference to action that was taken by the former government, perhaps by myself, with regard to furniture. The statement to which I absolutely take exception is the one to the effect that we placed a much higher duty upon furniture.


Edmond Baird Ryckman: I did not say a much
higher duty; I said a high duty.


William Daum Euler: I will take the minister's
words. He says that we placed a high duty on furniture, intimating that we raised the tariff on furniture. We did nothing of the sort. The rate remained exactly as it was, and the department proceeded entirely on the old dumping regulation that goods should not be imported into this country valued at less than they were in the country of origin. We had reason to believe that furniture was being dumped into Canada. An investigation was made, and a higher valuation was placed upon furniture exactly in accordance with the law. I might say to the Minister of National Revenue that the late government did not apply that regulation to anything like the extent it has been applied in the years since he has been in office. I think it has been 
more or less of an outrage the extent to which the minister has imposed on the business people of this country, arbitrary regulations which have been much worse than the tariff itself. In fact, the minister and the government have taken power, and have exercised it, actually to place a valuation on goods for purposes of customs duties from two to four times the actual value, thereby multiplying the rate of duty two or three or four times, and not by reason of the fact that there was real dumping in the sense that goods were coming into this country and selling at less cost than in the country of origin. The minister's action was taken without reference to what the goods sold for in the country of origin.


Jean-François Pouliot: The treasury benches unfortunately disagree as to the merits of the speech of my hon. friend from North Bruce. The Minister of Finance was very complimentary to him, and rightly so, but the Minister of National Revenue did not feel that way about it. One of the most constructive suggestions, or if I might use the words of the Minister of Finance, one of the most patriotic suggestions made by the member for North Bruce, was to convert the tax free bonds. The hon. Minister of Finance did not indicate his views in that regard, but the hon. Minister of National Revenue said that Canada was not going to repudiate its obligations. The Minister of Finance did, however, say that the credit of this country should not be imperilled. Would it imperil the credit of this country for this government to show that it has a real business spirit?- and I do not say that, Mr. Chairman, in any mean or offensive way. I was thinking of the poor people of this country, of the feeling of relief it would give to the mind of the poor man who pays a $2 tax on one hundred pounds of sugar while at the same time he sees the millionaire who has twenty million dollars worth of tax free bonds not paying a cent of taxation to the government upon that immense amount of money. There is discrimination. The hon. Minister of National Revenue, who is an able lawyer, knows very well that contracts can be declared void when they are illegal and when they are immoral. Our expenditures during the war could have been divided under three heads; money usefully expended; money that was wasted; money that was stolen. A large proportion of these tax free bonds was purchased from the dominion exchequer by those thieves who stole the money of this country by profiteering, and that they are escaping taxation today I say is a national crime.

Special War Revenue Act
We hear complaints about unemployment. People have no money now. Even fanners with real property and assets have no money. You can go to any farmer and ask him if he has five or ten or fifteen dollars in his house, and he will answer:	"You know very
well I have not." Why? Because he may have mortgages on his neighbour's farm or may have his money invested elsewhere, and it is not bringing in a cent of revenue. I make this very simple suggestion to the government in all earnestness, and I want them to try to understand that there is no petty political motive in the suggestion:	I urge
them to tax at once those tax free bonds, to convert them in order that the rich may pay as well as the poor. Those who hold such bonds are better able to pay than the man who has not a cent. Is it fair, or is there not discrimination, when the millionaire with S20.000,000 worth of tax free bonds pays nothing, while on the other hand a poor fellow has to work five days in the year at $2 a day to pay the $10 tax on sugar. If he gets only a dollar a day he has to work ten days, and if he gets only fifty cents a day he has to work twenty days to pay this $10 tax for five hundred pounds of sugar for himself and his family. I cannot understand it.
The Minister of Finance and the Minister of National Revenue have my respect. They are both able men. I would ask them to concentrate for five minutes, and at the end of that time they will admit that the suggestion made by the hon. member for North Bruce is a kindly one and should at once be considered favourably by the government.


Abraham Albert Heaps: The Minister of Finance
referred to a conversion loan made by his own government, and also a conversion loan put through last year by the British government. He left the impression, at least on my mind, that one of the reasons why the present government could not put through a conversion loan at a considerably reduced Tate of interest while Great Britain could, was that Canada was a debtor country and Great Britain was a creditor country. That may be perfectly so. May I, however, cite to him the case of Australia, a country Which I believe is in a position somewhat similar to that occupied by Canada. Just about two years ago in Australia they put through an internal conversion loan at a considerably reduced rate of interest. As Australia is in much the same position as we are, and it was possible to put through an internal loan in that country reducing the rate of interest, can the minister tell the committee why it was 53719-286
not possible for Canada to follow her example?


Edgar Nelson Rhodes: Conditions in Australia are entirely different from those obtaining in Canada. They put through their conversion loan solely with respect to Australian holders of Australian securities. I may point out further that there were other conditions which I do not wish to discuss with any degree of frankness, but which, if they were present in Canada, might call for far different treatment from those warranted by conditions obtaining here. Short of compulsion there is only one way in which you can convert, and that is to have the holder of a security exchange it for one which he is disposed to accept. The government of Canada is, I submit, taking the logical course by lending every possible assistance it can towards the lowering of interest rates. We have not trumpeted from the housetops the circumstance that it took considerable time and effort to bring about concerted action in the lowering of interest rates upon savings banks deposits and the general interest rate on savings. That is being reflected, as of May 1, in a corresponding reduction in interest charges. It will have its effect, in turn, in improving general conditions preparatory to our approaching the people here, as we will before a great while, with a conversion loan. If our securities were held only in Canada, and the tax exemption feature was free from all our securities, we might put through a major operation with a certain amount of compulsion, accelerated by conditions which have obtained in other countries. But inasmuch as those conditions do not obtain in Canada we have to proceed in an orderly way, and the best contribution we can make towards clearing the ground for a conversion loan is to maintain our credit, maintain confidence in our securities and assist towards a general lowering of interest rates, hoping that these conditions will be reflected when the next conversion comes along.


Abraham Albert Heaps: I appreciate the position taken by the minister. May I say, however, that the percentage of federal 'bonds owned in Canada is fairly high; I believe it must be about seventy-five per cent. I do not believe the difficulties outlined by the minister would be as great in Canada as they were in Australia, because I understand that a far greater amount of the bonds of the federal government of Australia were held outside of Australia than were held within the country. Our percentage is much higher than obtained there. Our interest charges have become such a tremendous burden that I think a major operation 'will be necessary in the near future.

Special War Revenue Act

Not only is that so as far as the federal government is concerned, but it is increasingly so in regard to our provincial governments. The costs in the western provinces are such that they find it almost impossible to bear interest charges on their indebtedness. In Manitoba more than fifty per cent of the total revenue of the province goes to meet interest obligations. So far as federal obligations are concerned, I do not think I am far off when I say that approximately thirty-five per cent of the total revenue of the federal government is utilized in meeting interest obligations. Sooner or later I believe something will have to be done in the way of cutting down our interest charges in order that federal, provincial and municipal governments may be able to meet the obligations with which they are faced.


James Layton Ralston: I wonder if the minister
is prepared to answer two questions I asked. First he was going to ascertain the amount of raw sugar imported for manufacturers, and not for refiners.


Edgar Nelson Rhodes: I am glad the hon. member reminded me, because I have the figures, as accurately as we can get them. The best estimate the department can make is that importations of raw sugar by other than refiners for the fiscal year ended March 31, 1932, amounted to 129,312 hundredweight, valued at $234,000. For the fiscal year ended March 31, 1933, the figure is 128,785 hundredweight valued at $227,492. After comparing those figures the hon. member will realize they represent a very small fraction as compared with the total import.


James Layton Ralston: The total import is about a billion pounds?


Edgar Nelson Rhodes: About a thousand million pounds, yes. So that the figures I have given represent a comparatively small fraction of the sugar importations.


James Layton Ralston: Would the minister consider the representations I made as to the possibility of not imposing the excise tax on raw sugar used by canners, and people other than refiners?


Edgar Nelson Rhodes: No. To do that would be to deflect from the treasury a substantial amount of revenue. For the purpose of maintaining the balance the tax has been imposed in the manner in which it appears.


James Layton Ralston: I would say if they could use raw sugar, they would. The difference in the price would make it desirable to use raw 
sugar if possible, therefore I do not believe there would be any great incentive to use raw sugar on account of dropping the tax.


Edgar Nelson Rhodes: I am informed that the
tendency is to use the cheaper commodity purely from the economic point of view. That tendency would be accelerated by a difference of two cents a pound, and that is a very real danger, speaking solely from the viewpoint of revenue.


James Layton Ralston: Has the minister received any representations from beverage manufacturers?


Edgar Nelson Rhodes: Yes.


James Layton Ralston: I say that because I had a telegram from a 'manufacturer in my own constituency pointing out the very serious effect of this tax, and also tha/t it could not be passed on. I will read it to the minister; he may have had one too:
jWe are candidates for the poorhouse if sugar will keep on $2 extra on a bag. Conditions are so that it is impossible to advance prices on beverages. Please ask the finance minister to have mercy with the poor beverage men.


Edgar Nelson Rhodes: Yes, Mr. Chairman, I have had numerous representations of the kind. I met a deputation of the soft drink manufacturers. I put this question to one of them who was pleading for the remission of the tax on the ground that it would do great injury to his business: "What did you do when you paid 20 cents a pound for your sugar"? He did not come to for some minutes, because it was not in his little written statement, but he came back a second time and said: "We did not make any money that year." As a matter of fact, while I sympathize with any industry to-day I must say there are other industries which will be affected to an extent at least as great as, if not greater than, the soft drink manufacturers. My information is that it bears such a relatively small proportion to the cost of the finished commodity that they ought not to complain any more than any other industry which has to use sugar.


William Duff: They make the drinks too
sweet anyway.


Edgar Nelson Rhodes: I think my hon. friend is probably correct. And it is open to them to use other forms of sweetening if they desire.


Edward James Young: Substitutes!


Edgar Nelson Rhodes: As far as protests are concerned I may say to my hon. friend from Shelbume-Yarmouth that I doubt if there is

Special War Revenue Act
any industry that has failed to make representations not only against the sugar tax but against every tax that has been proposed, without exception.


James Layton Ralston: Did my hon. friend give an answer to the delegation?


Edgar Nelson Rhodes: Yes; the answer I gave was that I would take their representations into most careful consideration, which I did.


Mr. MacINNIS:: We have had references this evening to demands made upon the government for economy, and we have heard the reasons given by the Minister of Finance why, although he was quite willing, these demands could not be acceded to at the present time.	I am wondering where
economies are going to get us. From my reading I believe that the world is beginning to realize that we have had about as much economy during the last three years as we oan stand, and that now if we are going to get anywhere we must do it by spending. I would much rather see this government try to find ways and means of spending so as to make our natural resources available to the people. As we were told to-day, governments are having to meet changed conditions. They are faced with the necessity of doing what private enterprise was supposed to do in the past. Many of us, perhaps all of us, have received letters during the last few weeks from boards of trade and chambers of commerce asking us to use our influence to have the government effect further economies. To these letters I have replied pointing out that private enterprises, as represented by these boards of trade and chambers of commerce, have restricted activities, turned their employees out on the street, and asked the government to look after them; do they suppose that the government can look after them without any expenditure? I would like my friends on this side of the house to point out where funds are coming from if the government did not take steps to provide them. I was connected with municipal government for some years before coming here, and for years before 1930 we were raising money in order to keep the unemployed of the city working during the winter months. Many of the municipal and provincial expenditures that now burden the country were spent for the very purpose of providing employment. That is a condition that confronts us to-day, and if private enterprise will not deal with it then the responsibility for doing so will rest on this or some other government.


Vincent Dupuis: Mr. Chairman, may I add a few remarks to this debate, as
representative of two classes of society mostly affected by this unpopular sugar tax, namely, the farming and working classes. Our country comprises farmers-they play the most important part-workmen, industrialists and financiers, better known as capitalists. I wish to state, at the outset, that I do not wish to appeal to class prejudice. In order that the economic organization of a country be as perfect as possible, I really believe that a complete co-operation is necessary between workmen and capitalists, producers and consumers. It is, however, necessary to draw the line when >the administration, as in the present case, is so short sighted as to levy a tax which so heavily burdens the two most important classes of our country and which can the least afford it. Hon. members present will recall the attitude taken by our opponents, during the election of 1930, towards the farming and labour classes. Their arguments have been, a hundred times alluded to, in the house. They may seem time-worn, however, under the circumstances, it is necessary to again refer to them. The farming class was then told: the sale price of your products is not sufficiently high to permit you to save, rear a family and live comfortably. While the workmen were told: your wages are not high enough. Workmen, who are unemployed, return us and, within three weeks, we shall have found you work. Quite the contrary happened. Not only does the farmer receive less for his products than in 1930, but prices have dropped 100, 200 and even 300 per cent. Workmen as well as farmers find it impossible to meet their liabilities.
How did this all happen? In 1930, both the farmer and workman earned sufficient to permit them to save. After the advent to power of the present administration, the workman did not earn enough to meet his expenses, and the farmer, not receiving as high a price as previously, had to depend on his savings. When these were exhausted, he had to borrow and, to-day, unable to borrow any more, having exhausted his credit, he is on the point of starvation. And it is exactly at a time when the farmer and workman can no further borrow, when they are deprived of their savings, when their credit is exhausted, that this government takes advantage of this critical moment to levy on them such taxes as the one under discussion. It is our duty, we, representatives of these classes of society, to strongly protest against such imposts.
Some hon. MEMBERS (Translation): Hear, Hear.
Special War Revenue Act


Vincent Dupuis: How many other taxes could the government have resorted to, without encumbering the other classes of society? It is quite certain that capitalists and industrialists have still large incomes notwithstanding the fact that their income is less than in 1930, under the Liberal regime, or even under the Conservative rule, previous to 1921. A great number of them still receive dividends from the numerous companies in which they have invested their money. Without appealing to class prejudice, would it not be more equitable if these capitalists, whether they are liberals or tories, would frankly state: We are ready to sacrifice a large portion of our income and dividends to cover the deficits of the government.
Would it not be more equitable if these capitalists or companies agreed to hand over to the treasury the large profits they make out of the people? And should those capitalists, industrialists, and corporations refuse to do so, the government should force them to bear these taxes, because they are practically the only class which can afford to pay them. That is the rational attitude the government should take, and I repeat it, after so many members on this side of the house have done so.
In my opinion, we should, for instance, tax commercial companies dealing in public utilities.
They make enormous profits, distribute large dividends and, notwithstanding the fact that wages have been reduced to their minimum, notwithstanding the fact that raw material is bought at ridiculous low prices, they exact from the consumer the same prices as in the days which preceded the crisis. With all due deference to capitalists and notwithstanding the consequences which my statement might have for me, may I mention, for instance, the Bell Telephone Co. of Canada. According to the British North America Act, this company comes under the jurisdiction of the Dominion government, which, thereby, controls it. Notwithstanding the fact that the Bell Telephone Co. has reduced the salaries of its employees, that it has thrown on the street a great number of them, that it can purchase raw material at ridiculously low prices, has this company lowered its service prices, reduced the rent of its telephones? No, sir. Just recently, the government taxed long distance telephone calls. Do you, for a moment, think that the company pays this tax? No, it is the public that pays. The government taxed the company but the public pays. The government should, as it has the power, tax directly these public utility com-tMr. Dupuis.]
panies, when they do not lower their rates and it should prevent them from exacting this tax from the public. The government is aware that a large number of these companies, -I need not enumerate the whole list-exploit the public and are accumulating wealth at the expense of the two important classes of our society which can the least afford it.
I wish to draw the attention of the house, as representative of these two classes of society-the farmers and the workmen-on the unwise act committed by the government when it discreetly informed its political friends of this tax on sugar, a few days previously to its being announced, with the result that numerous followers of this government ordered not only thousands of bags but hundreds of thousands of bags of sugar.


John Thomas Hackett: Give us their names, that was alluded to twice this afternoon.


Vincent Dupuis: The hon.
member is fully aware that what I state is the truth and he knows a number of friends who purchased sugar a few days previously to the tax being announced-


John Thomas Hackett: That is
untrue.


Vincent Dupuis: -and who, at present, have it stored, without having paid the tax.


Raymond Ducharme Morand: Were there
no friends of the opposition included?


Mr. DUGUAY (Translation):: Name theml name them!


Vincent Dupuis: This interjection of my hon. friend opposite is an argument which does not hold in this house.


Joseph Léonard Duguay: Name them! name them!


Vincent Dupuis: It reminds
me of the old story of the speaker who stated he knew some Chinamen and to whom an interrupter called out: Name them! Name them! This old saw should not be used in this house composed of eminent men such as my hon. friends opposite are supposed to be. Name them! But your own conscience should prick jmu to rise and give their names, because you are better acquainted with them than we are: they are your friends. I am inclined to think that those who interrupt me to-day are exactly those who told their friends, the wholesale dealers, what were the taxes to be levied, and thus afforded them the opportunity of storing in advance hundreds of thousands of bags of sugar.

Special War Revenue Act


Joseph Léonard Duguay: Will my hon. iriend permit me a question?


Vincent Dupuis: My hon.
friend will have an opportunity of speaking in his turn; he should then take advantage of it because he has not long to sit in this house. When the day comes for the people to give their verdict, the constituents of Lake St. John will ask him to remain at home.


Joseph Léonard Duguay: I may fall but I shall fall on my feet.


Vincent Dupuis: It is an
anomaly, something like a square circle.
I state that this government-I do not charge it with deliberately betraying its secrets-showed a lack of wisdom in imparting to some of its friends-perhaps those who are interrupting at this moment-that a tax of two cents per pound would be levied on sugar. The burden of this tax falls upon the poor, the farmer, the workman of my constituency who can ill afford it. They have been suffering hardships for the last two years; they depend on public charity and live at the expense of the government. All farmers and workmen in this country will be called upon to pay two cents more per pound of sugar; they will purchase this commodity from the retail dealer, the latter having purchased it from a wholesale dealer who has not paid the tax, nevertheless the people, the workmen in distress, will have to pay it.


Joseph Philippe Baby Casgrain: Hear!
Hear! Carry on!


Vincent Dupuis: Mr. Chairman, this impost is most unpopular and the hon. Minister of Finance should reconsider his decision. I ask him in all earnestness to do so, together with numerous members who have already made the same request. If he wishes the Conservatives to remain in power, he should suppress this tax which burdens the people and will deprive them of a necessity of life, especially to infants. In order to prove my contention and assure hon. members opposite that I harbour no ill feelings towards the government, I state that the enforcement of this tax will prove the strongest argument against their party and will be the cause of their downfall. I repeat it: Representatives of the Conservative party, even if the people had no other grievances against your administration, if you enforce this sugar tax of two cents per pound which is directly levied on the people and paid by them, you will be defeated and, thereby, permit the Liberal party to assume power.
Mr. Chairman, I have fulfilled my duty by expressing my views on this question and,
contrary to what certain hon. members on this side have stated, I think that the hon. Minister of Finance will reconsider his decision. He is intelligent, broad-minded, whom I admire, he has proved by his budget statement that he was worthy of occupying the post of Minister of Finance. I am convinced that this very able man will have the good sense, the wisdom of suppressing this sugar tax of two cents per pound and levy on the classes which can afford to pay, sufficient taxes to balance the deficit and thus allow the government to carry on the administration of the country.


Mr. McKENZIE (Assiniboia):: Before this item carries I feel it my duty to lodge a complaint against the tax of two cents a pound on sugar. I am not one of those, Mr. Chairman, who can be accused of having been very critical of the government during their term of office, but I do feel that this tax is very unfair to the poor people of our country, those who are at this time struggling for an existence. The minister says this tax was applied because of the need for increased revenue. In reply to that I would say this is one of the last commodities that should be taxed under present conditions. People cannot even buy sugar at present prices let alone at the increased prices as a result of this tax. This matter was brought home to me last summer because of the fact that in the part of the country from which I come wild fruit was very plentiful. People travelled for miles over the hills and valleys to gather this wild fruit of all kinds, and they obtained enormous quantities. The complaint that many of these people made to me was that while they could get plenty of fruit the difficulty was to get sugar. What are they to do if fruit is plentiful again this summer? They will not be able to buy the sugar to preserve that fruit, as they wish to do.
The minister stated that since this government have been in power they have reduced the expenditures of the country by $81,000,000. I contend that even though they have made some decreases they have not grappled with 'the problem of the expenditures of the country to the extent they should be grappled with. Truth of that statement can be found in the budget speech delivered by the Minister of Finance in this house on March 21 of this year, and I particularly refer to pages 3211 and 3212 of Hansard, where the minister gave a summary of the revenues and expenditures by departments. I have analyzed those figures, and this is the result of my analysis In 1928-29, for every dollar that was collected we spent 76 cents. In 1929-30, for every dollar
Special War Revenue Act

that was collected we spent 80 cents. In 1930-31, for every dollar that was collected we spent $1.09, and in 1931-32, we spent $1.11. It is estimated that for every dollar we collect during the coming year we will spend $1.15. That is why I say the government have not really grappled with the financial situation existing in this country.
As I said before, Mr. Chairman, I contend that this tax is unfair and unnecessary, and my reason for making that statement is the very fact that we are spending far more than we are collecting. How much better it would have been for the average taxpayer and the average citizen of this country if this government, instead of placing a tax on sugar, had withheld the appointment of this useless tariff board. Everyone in the country is convinced that tariffs must come down, so why do they need a tariff board, which is only an added expense? Ask any radio user what good the radio commission is doing and see what you will be told. That is another useless commission. Why not reduce expenditures instead of increasing them, (thus making it necessary to tax a commodity such as sugar?
Then we have some increased salaries, one of which was referred to the other night by an hon. member on this side of the house. The salary of a gentleman in the National Defence department was increased from $8,000 to $10,000. According to my information he was not nearly earning the $8,000, and I do not understand why his salary is being increased when we have to tax sugar out of the mouths of the poor people of the country in order to make up that increase. The minister said he would welcome any suggestions that might be made which would remove the necessity for this tax. In response to that invitation I would urge the adoption of the suggestion made by the hon. member for Willow Bunch. Why not take up the question of gasoline, the price of
which is very high in this country? Why does not the government grapple with that question? We have plenty of evidence to show that we are paying altogether too much for gasoline, and the needed revenue could be obtained very easily if the suggestion of the hon. member for Willow Bunch were followed. Then the hon. member for North Bruce mentioned the maitter of bond interest. I remember that a year ago when I was speaking on the budget in this house I stated that if the interest on the $220,000,000 borrowed some time ago had been reduced by even one per cent we would have saved over $2,000,000 a year. Why, as the hon. member for North Bruce asked, should the people who are clipping coupons find it possible to escape the full effects of the depression as they are felt by other people throughout the country? I think that is another question with which the government should grapple.
I just wanted to bring these few points to the attention of the government, Mr. Chairman, and let me repeat that the question in the minds of people all over Canada is how long a government, any more than an individual, can continue to spend $1.15 for every dollar collected. The government must deal with the question of expenditures, and in spite of what the Minister of Finance has said I contend that they have not really done so. We are continually asked by hon. gentlemen opposite why we do not make suggestions. My suggestion to the government is that they cut down on expenditures. It must be done, if not this year then very soon; and in addition to that interest on bonded indebtedness must be reduced.
Item as amended agreed to.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put pursuant to standing order.

[Stage Direction]
li