1936-05-01

Mr. SPEAKER:: On Monday last the hon. member for Temiscouata (Mr. Pouliot) was asked by me, as Speaker of this house, to withdraw a statement which he made concerning the leader of the opposition (Mr. Bennett) and which the right hon. gentleman denied. The hon. member utterly refused to conform to my ruling and went as far as to defy the chair by saying:
If I am wrong, I will withdraw; if I am not wrong. I will not withdraw.... I will see the book before withdrawing.
He walked out of the house while repeating this statement. In doing so he offended not only against parliamentary practice but also against the proprieties of the House of Commons.
It is my duty as Speaker to keep intact the rutes of debate and to safeguard the dignity of the Chair. I have waited a few days before taking action because I felt the hon. member for Temiscouata would realize the gravity of his conduct and take the first opportunity to make the withdrawal asked by the chair.
I note in the official debates that he was willing to withdraw his statement in committee of the whole yesterday but was prevented from doing so by the chairman who rightly decided that, the offence having been committed in the house, retraction must be made when the Speaker is in the chair.
As a refusal to yield to the Speaker's authority is a serious matter which cannot be overlooked, I must insist on the hon. member for Temiscouata withdrawing the statement he made regarding the right hon. leader of the opposition, and I trust that in his desire to ensure the true observance of parliamentary practice he will do so in good grace. Unfortunately I do not see the hon. member in his seat, but I hope the next occasion he is in the house he will abide by my ruling and make a retraction accordingly.

The Budget-Mr. Dunning



THE BUDGET


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved:
That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, I rise to address you to-day, sir, not only with a due sense of the high privilege which is mine, but also with a deeper sense of grave responsibility than I have ever felt before. In times such as these through which we are passing, the responsibility of endeavouring to place before the house and the people of this country a clear and complete statement of the economic position of Canada, the facts regarding our governmental finances, and proposals for meeting the situation thus revealed for the present fiscal year, is unusually great. I know I shall not ask in vain for the sympathetic attention of all my fellow members, although the presentation of figures will inevitably be [DOT]ather trying to the patience of the house.
Before dealing with the government accounts I propose to survey briefly the recent trends of business and trade in Canada.
The most welcome feature in the fiscal year which has just closed has been what it indicates of a movement toward recovery. I do not wish to exaggerate the extent of that recovery, for to those who are charged with responsibilities of government in these hard days the distance yet to go and the problems still to be solved are the features of our economic record which are most impressive- and at the same time most distressing. Nevertheless, one cannot view the picture broadly without realizing that improvement-however gradual-is real and steady, and that the general undertone is one of definite strength. In spite of prevailing uncertainties in the international political outlook and the persistence of extreme nationalistic policies, the pressure of the economic forces making for recovery continues. These forces may be retarded but they appear now to be sufficiently powerful to *make continuing progress, unless war, the great destroyer, should again intervene.
Analysis of the Canadian figures indicates that our past gains are being consolidated and that the upward swing of the business cycle is currently establishing higher levels of activity generally throughout the industrial and commercial field. The index of the physical volume of business compiled by the Dominion Bureau of Statistics to indicate the broad movements of economic activity, stood at 103-3 in March of this year as compared
(Mr. Speaker.]
with 94-2 for March of last year. This is an improvement of approximately 10 per cent. However, to appreciate fully the significance of this improvement, one should compare the present level of 103-3 with the figure 67-0 which was the level recorded at the low point of the depression in February, 1933. In other words, the increase during this period has been over 54 per cent. The average level of this index in each of the past three calendar years was 79-7, 94-2 and 102-4. These increases are impressive, particularly when one recalls that this index measures the physical volume of output in nearly all our leading industries as well as freight traffic on our railways, building activity and domestic trade.
While I desire to avoid complicated statistics as far as possible, it is necessary to refer to the progress made by a few of the more important Canadian industrial groups.
For the first three months of this calendar year, 1936, manufacturing of all kinds showed an average expansion of 8-5 per cent over the first quarter of 1935. Within this broad field, the substantial improvement in the output of the primary iron and steel industry is particularly heartening. In the latter half of 1935, this industry showed striking advances, steel output increasing 23 per cent and pig iron 48 per cent over 1934, and the improvement was continued during the first quarter of 1936, notably in January. This, in itself, is important, but it is especially significant as indicating a broadening out of the recovery movement into the heavy or durable goods industries. The construction industry, while still operating on abnormally low levels, enjoyed substantial percentage gains in 1935 over 1934, and the present outlook for building appears to be the best in several years.
The forestry group of industries showed marked expansion in 1935. Lumber production on the Pacific coast was about 20 per cent greater than in 1934 and reached the highest point since 1929. Shingles found better markets abroad and exports increased 96 per cent. The newsprint industry, although still beset with abnormally low prices and financial difficulties, increased production to new record levels. Perhaps the most satisfactory evidence of improvement in this whole group of industries is found in the increase of employment afforded by the industry-8 per cent in lumbering and 4 per cent in pulp and paper plants.
The mineral industry continues to establish new records of output. Canada's mineral output, valued at over 308 million dollars in 1935, recorded a gain of 11 per cent over the previous year and was only 1 per cent below the record year 1929 when prices for most metals were higher. Production of gold,

The Budget-Mr. Dunning
copper, nickel, zinc and several of the minor metals made new high records. Total output of gold amounted to 3,283,000 fine ounces with a total value at current market prices of nearly $115,000,000. Increase in mineral output continued unabated during the first quarter of this year. In February, for instance. the export of copper was greater than in any other February, and exports of nickel exceeded any other month in history, the bureau's index standing at 490-2 as compared with 317-9 in February, 1935.
Unfortunately, our most important primary industry cannot boast such results. Agriculture has again suffered from climatic hazards, restricted markets and low prices. According to the bureau's estimates, total farm revenue in 1935 amounted to $943,081,000, an increase of less than one per cent as compared with the previous year. Most disappointing was an 8 per cent decline in the value of the principal field crops, chiefly as a result of the price factor. Wheat prices were generally higher than in 1934, but the low grading resulting from rust and frost reduced the value of the crop to about that of the previous year. Increases in yield of oats and barley were more than offset by reduced prices. On the other hand, the contribution of animal products to farm purchasing power more than made up for the loss in field crops. The live stock industry showed considerable improvement. Higher marketings of cattle and better prices increased the value of live stock sales in 1935 by 22 per cent. Milk prices improved somewhat and exports of hog products to Great Britain expanded. The prairie provinces shared in the better returns from cattle and milk and a more uniform distribution of farm income prevailed than in 1934. In this connection I may point out that the advantages of access to wider markets to the south are already being realized. Three months' operation of the recent trade treaty offers evidence of its value to the farmers of this country. Every step which helps to provide markets for agriculture brings nearer that day when the Canadian farmer, receiving more for his products than it costs to produce them, will once more provide, through the stimulus of his purchasing power, a sound basis for national prosperity.
My colleague, the Minister of Labour (Mr. Rogers), has recently placed on Hansard comprehensive statistics in regard to the numbers of unemployed in various classifications. One of the most disappointing features of the business improvement so far is that the numbers of those on relief do not decline at the same pace as business activity recovers. The causes of this are chiefly to be found in the continuing growth of population bringing annually a new supply of workers into the industrial field, the customary initial effects of invention of new machines and processes, the gradual decline in the number of those unemployed or dependent who are taken care of by charity or by relatives, and the surplus labour power employed by many corporations which preferred to retain redundant staff or to work short time rather than to dismiss employees during the years of depression.
While for these reasons, expanding employment makes only slow progress in reducing the numbers on the relief rolls, nevertheless the increase in employment appears to be real and substantial. The bureau of statistics tabulates monthly statements on employment from over 9,000 of the larger firms engaged in manufacturing, logging, mining, transportation, communications, construction and maintenance, services and trade, and employing some 45 per cent of the total persons at work in all industries. From 93-4 on April 1, 1935, the index for all industries rose to a peak of 107-7 on November 1, an increase of 15-3 per cent, and with the usual seasonal decline during the winter months the index stood at 97-4 on April 1 this year, an increase of 4-3 per cent over April 1 a year ago. The index for manufacturing industries rose 10-2 per cent from April to November and on April 1 this year was still about 8 per cent above the level of the same date in 1935.
Supplementing this information it is encouraging to note from data published by the Department of Labour that remuneration to wage earners in 1935 was greater than in 1934 as a result of increases in various industries and localities. Part time and short time work were less prevalent. In logging, wages advanced generally throughout the maritime provinces and Quebec, while in Ontario and British Columbia rates had risen considerably in 1934. In coal mining, wages increased appreciably in Nova Scotia and Alberta, and there were some increases in metal mining wages. Improvement was also witnessed in manufacturing, particularly in clothing and furniture factories. Rates were raised in the construction trades in Quebec and Ontario, and railway wage rates also increased. Longshoremen's wages rose in most of the ocean ports and in some of the lake ports. Common factory labour was up 2-4 per cent, miscellaneous factory trades 2-3 per cent, and logging and sawmilling 5 per cent.
One of the most important signs of a more healthy business condition is that industrial and commercial earnings are continuing to show improvement. An analysis of the record of earnings of 241 leading Canadian corporations discloses that net earnings are about 8 per cent greater for the latest fiscal year
The Budget-Mr. Dunning
[Stage Direction]
than for the previous fiscal period. When business is showing an increasing scale of earnings there are excellent grounds for anticipating further industrial and commercial improvement with increased volume of smployment.
A very interesting feature of our Canadian economy is the remarkable degree of stability in the price level during the last two years. For March the bureau's index was 72-4 as compared with 71-9 a year ago, and since February, 1935, the range of variation from the line of 72 per cent of the average level of prices during 1926 has been extremely small. Further progress, however, was made during the year in correcting some of the disparities between various types of prices created by the irastic fall in the price level during the iarly years of the depression. One important feature of this corrective process was that farm product prices, particularly the prices of animal products, improved more rapidly than the general level. It is of vital importance that this corrective process should continue.
One price whose falling tendency is watched with considerable enthusiasm in many quarters is the cost of money; in other words, the rate of interest. In this case, of course, the decline is a favourable factor. This factor is usually measured by the yield on long term bonds. The bureau computes an index of the yield on long term Dominion of Canada bonds, using the average monthly yield for 1926 as the base or 100. The course of this index during the past year provides an interesting record of the investor's reaction to enactments or threatened enactments by provincial legislatures, to administrative decisions, to official pronouncements by radio or in the press or on the public platform, and to the manifold other hazards that may affect the capital markets. It bears eloquent testimony to the oft-repeated saying that capital is timid. Beginning at 70-9 in January the index of interest rates rose to 73-2 in February, dropped to 7T4 in March, rose to 72-2 in April, declined to 71-4 in May, rose to 73-4 in June, declined to 71-6 in August, then rose sharply to 79-8 in September, and thereafter with a slight interruption in December dropped steadily to 69-9 in March, the latest month for which the index is available. The March index is the lowest rate of interest figure recorded since the bureau began compiling this series in 1919 and probably represents the lowest yield on long term funds in the history of our country. Considering also the steady decline in the yield on our three-months treasury bills-our latest issue of these bills was sold

on April 15th on a yield basis of approximately seven-eighths of one per cent

and I should interject here that another issue was sold yesterday at the slightly higher rate, if my memory serves me correctly, of just over nine-tenths of one per cent per annum- we have ample evidence of the progress which the dominion has made in securing that stimulus to economic recovery through low interest rates which has been so important a factor in the United Kingdom.
Unfortunately, these low rates are not available to all borrowers, particularly the most needy ones who are not usually considered the most credit-worthy. Nevertheless the low rates are beginning to permeate the interest rate structure as a whole. One evidence of this is the increasing volume of security flotations, not only by governments but also by private corporations, both for refunding and for new capital purposes. In 1935 the total volume of new issues offered has been estimated at 571 million dollars, an increase of 83 million dollars over 1934. Of this total, 325 million dollars were for refunding and the balance for new capital purposes. During the first quarter of this year, activity was greatly accelerated. In this period total new Canadian bond financing amounted to 241 million dollars, an increase of 180 million dollars over the first quarter of 1934. Of this total 70 million dollars were for refunding purposes. It is also significant that financing by corporations accounted for 105 million dollars or over 43 per cent of the financing of the first quarter of 1936 compared with 9 million dollars or less than 15 per cent for the first quarter of last year.
One faictor retarding the full revival of confidence and the healthy functioning of the capital markets has been the cloud of uncertainty which has been overhanging the financial position of several of the provinces. It is revealing no secret to say that the credit of the four western pi-ovinces has been maintained during the last few years only by the financial support of the dominion. Despite the efforts-in some cases, the heroic efforts- of these provinces to cut expenditures and increase revenues, the burden of unemployment relief added to heavy interest charges on outstanding debt has been so heavy and the taxpaying ability of the people reduced so drastically by the economic conditions which prevailed that it has been impossible to provide out of taxes for the cost of unemployment relief, and even in some cases for a portion of ordinary governmental expenditures. In view, in part, of their own financial position and in part of conditions in the investment market, particularly in the early

The Budget-Mr. Dunning
years of the depression, these provinces have not been able to borrow economically, in the public markets. Whether wisely or not, the dominion government of the day faced with what it regarded as an emergency problem, initiated the policy of making loans to these provinces in order to enable them to meet their share of relief costs, maturing obligations, and in some cases even ordinary governmental expenditures. As I shall show later, such loans now amount to $116,500,000.
It has long been clear to everyone, I believe, that this process can not go on indefinitely. We are rapidly reaching-if we have not already reached-the impossible position where the dominion government will be the largest single creditor of these provincial governments. Moreover, if we continue this process of handing out funds without security and without control of any sort, we shall be in danger of undermining dominion credit, which, in my opinion, must be protected at all costs.
Recognizing the importance of this problem, the government has for the past six months been devoting a great deal of time and attention to working out a solution with the cooperation of the provinces. It was one of the major questions placed on the agenda of the dominion-provincial conference in December last, and initial discussions at this conference led to the appointment of a continuing committee on financial questions which held sessions in January and again in March. During these discussions, agreement was reached on a general method of procedure. The dominion undertook to initiate an amendment to the British North America Act which would (1) validate certain taxes now imposed by one or more of the provinces and give the provinces power to levy a tax on retail sales, thus providing an enlarged and more elastic provincial tax structure; and (2) enable the dominion to guarantee existing or future debts of a province as well as enable a province to give the dominion adequate security for such guarantee by the pledge of dominion subsidies and, if necessary, other specific revenues. If and when these enabling powers should be secured, the dominion undertook to sponsor legislation providing for the setting of up (1) a national finance council, which would consist of the dominion Minister of Finance and the provincial treasurer of each province, with the governor of the Bank of Canada as technical adviser, and which would provide a permanent mechanism for mutual discussion of taxation, investment and other financial problems, with advisory powers only; and (2) individual loan councils which would consist in each case of the dominion Minister of Finance and the treasurer of the province desiring to participate, with the governor of
the Bank of Canada as technical adviser, and which would have power both to approve any program providing for refunding of the debt of a province under dominion guarantee and also to supervise future borrowing by such province. Dominion guarantee would be available to the province only when loan council approval to the proposed issue of securities had been obtained. Moreover, no compulsion was involved; the legislation contemplated would merely provide machinery which any province might take advantage of if it considered it to be in accordance with its own interests.
Since March 31 the government has not had any statutory authority to make loans or give guarantees to any province and even in the relief bill which is now before parliament such authority as is being asked for relates only to loans, advances or guarantees in connection with relief measures or undertakings. It is not proposed, except through loan council legislation, to ask parliament for authority to grant financial assistance to enable a province to meet a maturing obligation or to provide for other ordinary governmental expenditures.
Provincial obligations that have matured in recent weeks or are about to mature have led to extended discussion with the interested provinces. The correspondence exchanged with the province of Alberta has been tabled. That record speaks for itself. In brief, the federal government has taken the position that not only must it have adequate security for the financial assistance which it is called upon to give but also that the dominion government must be in a position to determine the extent to which and the conditions under which dominion credit is made use of now and in the future. It was a matter of great regret to us that the government of Alberta did not see its way clear to accept the conditions under which alone our assistance could have been made available. The province of Saskatchewan, which has an issue maturing to-day, May 1, has expressed a willingness to participate in the loan council arrangement and with the understanding that the dominion will proceed with its legislation, the province, I am advised, has made arrangements with the Bank of Canada to enable it to meet this maturity. I am also advised that the province of British Columbia will be able to redeem its obligation falling due on May 15 without recourse to outside assistance.
The government believes it essential to provide the necessary machinery for any province that may deem it desirable to take advantage of the facilities I have outlined. The government will therefore proceed with the resolution now on the order paper
The Budget-Mr. Dunning
[Stage Direction]
designed to initiate the proposed constitutional amendment, and thereafter with the legislation providing for the establishment of loan councils and a national finance council. I may add that after the most careful consideration we are prepared to recommend certain modifications to the loan council arrangement originally suggested. These modifications would make it possible for a province which had submitted a borrowing proposal to the loan council, and which had not obtained the council's approval, to make such offering on its own credit in the domestic market. Approval of the loan council, however, would be mandatory for all external issues and also for domestic issues in those cases where the outstanding debt of the province is refunded under dominion guarantee. These changes, it is believed, will make the arrangement more acceptable to some of the provinces and still make it possible to secure the primary objectives which the dominion has in mind.
I might advise the house that the modification to which I have just referred is being communicated to all the provinces, particularly those primarily concerned, and of course will have their consideration, and we shall hear from them with respect to it before very long.
I trust that the position which the government has taken in these matters and the action which it proposes to take will commend themselves generally to the good judgment of members of this house. The record of Canadian securities in the investment markets of the world has been a most enviable one. It would be unfortunate if that record were seriously marred at this late stage when the outlook appears to be for continuing recovery and a probable rise in the world price level which will ease the burdens of debtor classes and debtor communities. The arrangement which we contemplate should provide a method for reducing interest burdens in a way acceptable to creditors. It should provide a means whereby provinces, fully cooperating, may restore their credit and place themselves in a position gradually to secure necessary funds for justifiable capital purposes. It should provide a regular and permanent mechanism for the mutual study, with expert assistance, of the difficult, technical financial problems with which all governments are faced. It should make for an avoidance in future of some at least of the costly mistakes made by dominion and provincial governments alike in the past, the continuing burden of which has made it so difficult to assume the new burdens of the present prolonged depression.

It is our hope that the arrangement which is now offered will appeal to all provinces which find it impossible economically to finance their own requirements. We are convinced that it will remove a factor which is now retarding economic recovery. As long as we have an economy based on private enterprise-based on the willingness of thousands of individuals to make commitments for the future in the hope that profits will . accrue-so long will the factor of confidence play an important part. As long as fear of the safety of investments or uncertainty in any form persists, private enterprise will not go forward vigorously. We in Canada are powerless to remove the uncertainties in the world political outlook which unfortunately have been aggravated in recent months. We are in duty bound, however, to endeavour to remove all those factors in our domestic situation which tend to retard economic recovery.

[Stage Direction]
I turn now to a brief outline of the trends in our external trade. It is not putting it too strongly to say that foreign trade is the very life-blood of Canada. We have seen only too clearly in recent years the appalling effects on our internal economy' of the decline of international commerce to about two-thirds of its former physical volume. The fruits of economic nationalism in reduced business activity, shrinking governmental revenues and widespread unemployment are such as to justify in abundant measure the efforts which the present government has made, and will continue to make, to free the channels of international trade and expand the markets for our primary and other industries which must otherwise suffer stagnation and drastic readjustment.
A start in this direction has already been made with the negotiation of a trade agreement with the United States. The conclusion of this agreement is probably the most significant step taken by two leading trading nations to reverse the trend of economic nationalism. Not only does the agreement open up wider markets for the products of each country, but it is also hoped that it will serve as a lead to other countries and thereby promote progressive lowering of the barriers which have been damming up the trade of the world. Such a movement would be of the greatest value to Canada, the prosperity of the whole dominion being so largely dependent on export outlets for the disposal of our surplus production.

The Budget-Mr. Dunning
An adjustment was also made of the difficulties which had arisen in relation to our trade with Japan. Without foregoing the safeguards necessary to legitimate Canadian enterprise, we succeeded in securing the cancellation of the duty surtaxes on a number of important products for which Japan has been a valuable customer.
Other steps taken to promote our export trade have been the extension of the trade agreement with New Zealand, which was due to expire on November 24, 1935, for a further period until July 31, 1936; an exchange of notes with France providing for certain adjustments in duties and quotas to supplement the agreements which had been concluded with that country; and the extension of the modus vivendi with Haiti whereby Canada is guaranteed the minimum tariff of that country for a further period of one year from April 15, 1936, or until the entry into force of a trade agreement, proposals for which have been submitted to the Haitian government.
Canada has long enjoyed profitable and pleasant trading relations with Belgium, and is anxious to strengthen our traditional friendship with that country. Representations having been made by the Belgian government that the specific duties imposed in 1935 on dressed and dyed rabbit skins have had the effect of very seriously curtailing exports of these to Canada, the government has decided to remove the duties in question, and to revert to the ad valorem rate formerly effective. In consideration of this treatment, I may say to hon. gentlemen who are smiling, the Belgian government has agreed to remove the turnover tax which for some time has been imposed on Canadian goods imported into that country and, also, to classify as cheddar the cheese received from this dominion. These
concessions, the removal of the heavy turnover tax in particular, should stimulate our exports to Belgium in many lines of goods.
The government continues to give careful study to our trade relations with other countries having in view a steady increase in opportunities for the sale of Canadian exportable products. It may be expected that steps will be taken in the near future to enter into active negotiations for the conclusion of trade agreements with several important countries, in accordance with the policy of the government to bring about by the negotiation of bilateral agreements the progressive removal of the hindrances now hampering our international trade.
Serious attention is now being given to our trade relations with the most important of our customers, the United Kingdom. I am happy to be able to state that discussions will shortly take place between representatives of the two governments. I shall make more extended reference to this matter when discussing tariff changes.
I am pleased to be able to report, for the fiscal year just ended, an important gain in our total trade with other countries, amounting in round figures to 152 million dollars. This is an increase of 12-8 per cent over the previous year. It is true that world trade generally has improved during the past year, but it should be noted that while the average increase in trade of 24 leading countries in the calendar year 1935 was 4-1 per cent our own trade increase was 1T3 per cent. As a result of this marked expansion in our foreign commerce Canada has moved up from eighth to sixth place among the nations in total world trade.
A statement of total trade for the twelve months ended March 31, 1936, with comparative figures for 1935, follows:
Imports	
Exports:
Canadian produce Foreign produce..
Trade of Canada
(excluding gold coin and bullion)
Fiscal year ended
March 31,1935	March 31,1936
	 $ 522,416,844	$ 562,803,001
.. ..	659,899,994	765,615,563.. ..	7,658,963	13,441,659$1,189,975,801	$1,341,860,223
Increase $ 40,386,157
105,715,569
5,782,696
[Stage Direction]
Both imports and exports shared in the increase, but while imports rose by 40-4 million dollars, a gain of 7-7 ,per cent, exports were 111-5 million dollars higher, having increased by 16-7 per cent. This expansion of our exports gave us, for the year, a favourable balance of trade of 216 million dollars. This is the fifth successive yearly balance in our
favour and is the largest since 1927. The importance to be attached to a favourable balance of trade must, of course, be considered in relation to total trade.
The figure for the balance of trade just mentioned does not include our exports of gold-the usual practice among nations being to show this item separately because of its
[Stage Direction]
The Budget-Mr. Dunning
monetary use. With us, however, gold is a commodity and a very important part of our regular export trade. In the fiscal year just ended the adjusted estimate of our gold sold abroad was about 119 million dollars. By adding this to the merchandise balance of 216 million dollars already referred to it is seen that the total balance of commodity trade for the fiscal year just ended was 335 million dollars in our favour. Our tourist trade is also an extremely important credit item in Canada's international account. Preliminary estimates for 1935 show tourist expenditures in Canada of about 201 million dollars against Canadian expenditure in other countries of about 91 million dollars giving us a net credit balance in tourist traffic of about 110 million dollars.
The house will see, therefore, that, if to our credit balance of 335 million dollars on merchandise and gold we add the net figure of 110 million dollars from tourists, the total balance in our favour from these items is 445 million dollars without taking into account the movement of securities, Canada is thus in a strong position with respect to payments which must be made abroad on account of our foreign financial obligations. Obviously there is here a solid foundation supporting our dollar in the foreign exchange market.
Upon analyzing our export trade, it is found that the United Kingdom is still our largest
market having taken 293 million dollars or 41i per cent in value of our goods exported in the eleven months ended February 29, 1936, which is approximately the same proportion of the total as in the previous similar period. The British empire as a whole purchased 362 million dollars worth, which was 15i per cent more than for the same eleven months a year ago. Within the empire the increased purchases from us were distributed as follows; the United Kingdom 15-6 per cent, Australia 35-1 per cent, New Zealand 28-7 per cent, and South Africa 7-1 per cent. Exports to British India decreased by 17-2 per cent.
Not only do our increased exports bear witness to the steady growth of our trade with empire countries, but the same trend is also revealed in the figures of our purchases from these countries. While our exports to empire countries gained by 48-5 million dollars, our imports increased 19-4 million dollars or 13J per cent in the eleven months period. This increase in imports from British countries was shared as follows: the United Kingdom 5-4 per cent, Australia 16 per cent, British India 13-4 per cent, New Zealand 21-7 per cent, and South Africa 41-3 per cent.
Figures showing trade with the United Kingdom and with other empire countries in the eleven months ended February 29, 1936, and in the previous year are as follows:
Trade of Canada with Empire Countries (excluding gold coin and bullion)
-	Eleven months ended	
	Feb. 28,1935	Feb. 29, 1936
Imports from the United Kingdom	 Exports to the United Kingdom	 Imports from the British Empire	 Exports to the British Empire		$102,602,618 253,488,637 143,989,314 313,665,822	293,002,334 163,429,300 362,178,462 $108,177,173
Turning now to foreign countries, our trade with the United States is of particular interest following the recent agreement. Exports to the United States for the full year ended March 31, 1936, amounted to 291-3 million dollars as compared with 230-8 million dollars for the previous year. This is a gain of 60-5 million dollars or 26-2 per cent in our exports to the United States. Thus out of a total increase in exports for the year of 111-5 million dollars over 54 per cent of the gain was accounted for by additional sales to the United States. While it is too soon to expect to have realized the full expansion of trade which is expected to follow from the agreement, the latest monthly figures clearly indicate a growing volume of goods moving in both directions across the border.

Exports to the United States for the three months January, February and March of this year totalled $70,868,053 as compared with $57,061,713 for the same three months of 1935. This is a gain of 24-2 per cent for the period.
Imports from the United States for the full year just ended were $319,610,706 which is an increase of 16 million dollars over the preceding year. 7-2 million dollars of this increase were recorded in the first three months of this year under the operation of the trade agreement.
Over 56 per cent of our imports come from the United States. At the same time they take only 37 per cent of our exports. From empire countries we purchase about one-third of our imports and sell to them just over one-

The Budget-Mr. Dunning
half our goods exported. Approximately 89 per cent of our total trade is with the British empire and the United States.
There is in this brief survey of our foreign commerce much to cheer us, and I believe this steadily expanding trade with other countries testifies strongly to the fundamental soundness of the movement toward recovery in Canada.
Turning now to the government accounts, may I state that, while the fiscal year ended on March 31, the final accounting has not yet been completed. Consequently, minor changes, and minor changes only, may later be made in the figures now given.
I trust the house will allow for my difficulties in dealing with a fiscal year seven
months of which had elapsed before the present government came into office. We were faced with the commitments of our predecessors, which, in large measure, prevented important changes in financial policy during a year more than half of which had already passed.
In order to simplify the presentation of the accounts, I shall, with the permission of the house, now place on Hansard a number of tables showing the usual five-year comparisons of revenues and various classes of expenditure. This will enable me to present a clearer explanation of a technical and complicated series of accounting and statistical facts. The tables follow:
Statement of Revenues for the last Five Fiscal Years (000 omitted)
Tax Revenues	1931-32	1932-33	1933-34	1934-35	Estimated 1935-36$ 104,133	70,073	$ 66,305	$ 76,562	$ 74,00048,655	37,834	35,494	43,190	44,410War tax revenues-	1,390	1,328	1,336	1,368	1,30512	826	742	750	7603	61,255	62,067	61,399	66,808	82,70041,734	56,814	61,392	72,447	77,000Manufacturers' importation, stamp, transporta-	17,872	25,377	45,184	39,745	35,7003,573	1,413
275,054	254,319	271,852	304,443	317,288
					
Non-Tax Revenues	1,485	1,445	1,236	1,205	1,21974	74	56	47	49977	831	878	838	8833,758	3,192	3,613	4,337	4,37210	9	6	6	6485	459	419	516	455402	298	440	485	530234	212	178	90	19940	5	39	43	4181	84	76	96	91150	160	149	139	1479,330	11,221	11,148	10,963	10,600192	178	208	218	223184	180	188	181	18920	20	20	20	20163	166	165	174	17214	17	18	16	15525	539	429	426	450166	121	98	74	6032,235	30,928	30,893	31,248	32,507146	752	50281	213	250	254	241529	1,414	1,291	1,487	1,56215	12	12	9	9407	394	400	407	40251,757	52,318	52,210	54,031	54,492326,811	306,637	324,062	358,474	371,780
Special Receipts	7,028	4,493	418	3,397	320
					
Total revenues		333,839	311,130	324,480	361,871	372,100
The Budget-Mr. Dunning
[Stage Direction]
Statement of Expenditures by Departments for the last Five Fiscal Years
(000 omitted)
Ordinary Expenditures	1931-32	1932-33	1933-34	1934-35	Estimated 1935-36Agriculture	$ 10,212	8*066	0*996	7* 107	$ 9,703Auditor General's office	436	380	376	377	428Civil Service Commission	306	244	221	221	260External Affairs, including office of the Prime	Minister	994	863	974	1,427	1,324Finance-	Interest on public debt	121,151	134,999	139,725	138,533	134,550Cost of loan flotations	
Premium, discount and exchange (net)	1,350 728	1,639	2,550 167	2,890	3,575Subsidies to provinces	13,695	13,677	13,728	13,769	13,769Special grants to provinces	1,600	1,600	1,600	1,600	3,975Other grants and contributions	536	499	398	467	761Civil pensions and superannuations	1,172	1,098	1,032	943	868Government contribution to superannuation	fund	2,229	2,270	1,986	1,947	1,875Old age pensions	10,032	11,513	12,314	14,942	16,760General expenditure	1,845	2,046	3,148	3.925	3^724Fisheries	2,046	1,787	1,596	1,641	1,727Governor General's secretary's office	148	136	136	133	137Immigration and Colonization	2,200	1,689	1,369	1,269	1,334Indian Affairs	5,081	4,499	4,380	4,362	4,886Insurance	180	161	152	156	171Interior	4,647	3,454	2,833	2,744	2,952Justice	2,793	2,691	2,712	2,718	2,753Penitentiaries	2,737	2,870	2,677	2,007	2,477Labour	633	605	560	581	662Technical education	283	202	129	91	100Government annuities-Payment to maintain	reserve	262	289	184	146	272Legislation-	House of Commons	1,982	2,210	986	1,796	1,505Library of parliament	81	65	69	71	77Senate	650	747	286	491	491General	
Dominion Franchise office	79	81	62	95 1,545 146	60 503 1,093Chief Electoral office including elections	145	56	32	Marine	7,262	5,801 149 1,048	5,439 1,025 909	5,742 1,249 965	5,959 1,510 1,102Mines and Geological Survey	1,264	Movement of Coal and Domestic Fuel Act	721	1,220	2,772	2,124	2,055National Defence-	Militia service	9,700	8,719	8,774	8,853	10,197Naval service	3,043	2,167	2,171	2,222	2,379Air Service	4,040	1,731	1,685	2,258	3,805Sundry services	1,347	1,078	791	799	825National Revenue, including Income Tax	13,920	10,846	10,354	10,165	10,983Pensions and National Health-	Treatment and after-care of returned soldiers..	11,633	10,510	9,571	10,127	11,328Pensions, war and military	47,770	44,185	42,923	43,232	42,870Health Division	1,246	924	802	809	879Post Office	36,052	31,607	30,554	30,252	31,607Privy Council	53	47	49	46	47Public Archives	212	174	157	209	162Public Printing and Stationery	289	231	172	368	168Public Works	17,648	13,108	10,827	9,905	12,951Railways and Canals	3,997	3,667	3,315	4,581	4,305Maritime Freight Rates Act	2,555	1,921	1,989	2,529	2,352Railway grade crossing fund	959	318	310	275	128Royal Canadian Mounted Police	3,488	5,820	5,528	5,970	6,192Secretary of State	483	418	3.87	389	704Soldier Settlement	1,036	818	810	746	761Trade and Commerce-	Department	6,417	3,277	3,007	3,058	3,528Canada Grain Act	2,306	2,026	1,759	1,679	1,852Mail subsidies and steamship subventions	2,999	2,081	2,221	2,274	2,431Adjustment of war claims	91 1,331 50	55 188	56	48 6	71Sundry charges to consolidated fund	74	37	20	4Total ordinary expenditure	372,145	354,644	351,772	359,700	373,987
[Stage Direction]
The Budget-Mr. Dunning
Statement of Expenditures by Departments for the last Five Years-Continued
(000 omitted)
Capital Expenditures	1931-32	1932-33	1933-34	1934-35	Estimated 1935-30$ 3,299 6,242 7,439	$ 3,027 1,503 4,018	$ 1,975 737 3,778	$ 331 507 6,189	$ 460 305 5,811
16,980	8,548	6,490	7,027	6,576
Special Expenditures					
	13,190 25,106	.548 17,048 19,125	4 564 6,948 28,382	3 52 399 2,420 49,114	24 24 105 491 1,121 47,704
					
					
					
					
					
Total unemployment relief						
38,296	36,721	35,898	51,988 8,673	49,469 30,232Canadian Pacific Railway (Relief acts-advances	1,447	1,000 1,766	469	43910,908	1,811	6,600 15,856 174Loss on 1930 wheat pool and stabilization operations-Payment to Canadian Wheat Board of	Loss on 1930 oats pool under guarantee of bank advances to Canadian Cooperative Wheat Pro-	
49,204	39,979	38,664	61,130	102,770
Government Owned Enterprises Losses charged to consolidated fund- Canadian National Railways system ex eastern					
	(') 6,632	53,423 8,717	52,264 6,691	42,590 5,818	41,796 5,625 270 1,139
					
					
					
					
	6,632	62,140	58,955	48,408	48,830
Loans and advances non-active-^					
	1,199 1,913	1,383* 4,898 (*)62,938	14* 2,110	487 1,242 11	333* 2,461
					
Accounts carried as active assets, transferred to					
					
	3,112	66,453	2,096	1,740	2,128
					
	9,744	128,593	61,051	50,148	50,958
					
	448,073	531,764	457,977	478,005	534,291
					
* Cr.	. .
(*) $52,256,000 for fiscal years 1931-32 was financed by loans and /or guarantee of securities.
(*) Canadian National Railways-Loans for 1931-32-$41,121,000. Sundry harbour commissions- Advances prior to 1932-33-$21,817,000.
The Budget-Mr. Dunning
[Stage Direction]
Summary of Revenues and Expenditures
(000 omitted)
-	1931-32	1932-33	1933-34	1934-35	Estimated 1935-36$ 372,145 326,811	$ 354,644 306,637	$ 351,772 324,062	$ 359,700 358,474	$ 373,987 371,780
-45,334	-48,007	-27,710	-1,226	-2,207
					
	49,204 7,028	39,979 4,493	38,664 418	61,130 3,397	102,770 320
					
					
	42,176 16,980 9,744	35,486 8,548 128,593	38,246 6,490 61,051	57,733 7,027 50,148	102,450 6,576 50,958
					
					
					
	68,900 45,334	172,627 48,007	105,787 27,710	114,908 1,226	159,984 2,207
					
					
	114,234	220,634	133,497	116,134	162,191
					
It is also proposed to depart from what I have sometimes called the "bridge score" method of accounting-so much above the line and so much below the line-and to present clearly the over-all deficit in the government's accounts. In the past we have too frequently misled ourselves by the form in which our government accounts were presented. We have pointed with pride to a small surplus on ordinary account and we have tended somewhat to minimize the importance of large deficits resulting from capital and special expenditures. It is time to look the facts squarely in the face. If the people of Canada are fully aware of all the facts, I am confident they will support us in taking the steps necessary to achieve that balance of government revenues and expenditures which in my opinion cannot safely be postponed much longer.
revenues 1935-36
Our total revenue from taxation and other sources during the past year aggregated $372,-
100,000.	This total is $10,229,000 in excess of the total revenue for the preceding fiscal year.
The revenue from taxes alone amounted to $317,288,000, an increase of $12,845,000 over the preceding year.
The increase in tax revenue is more than fully accounted for by the income tax which yielded $82,700,000 as compared with $66,-
808,000	in 1934-35. This is the highest yield ever recorded from the income tax, the largest figure for any previous year being that of $78,684,000 in 1921-22. The increase during the past year arises in part from the improvement in individual and corporate incomes, but in part also from the surtax on investment income which was imposed for the first time last year.
The sales tax which was the second largest

contributor to government revenue last year was responsible for a total collection of $77,000,000, an increase of $4,553,000 over the previous year.
Excise duties, imposed chiefly on liquors and tobacco, yielded $44,410,000, exceeding the collections of 1934-35 by $1,220,000, notwithstanding the substantial reduction made last year in the duty on liquors.
The yields from our other major types of taxation were lower last year than in the preceding fiscal year. The total revenue from customs import duties amounted to $74,000,000 as compared with $76,562,000 collected in 1934-35. A substantial increase in customs revenue 'had been budgeted for by my predecessor, because of an expected increase in the volume of imports. While the anticipated rise in imports, materialized, the increase was almost wholly in the non-dutiable items. The volume of dutiable imports increased only three per cent and the duties collected actually decreased, largely because of a decline in raw sugar imports and a shift of such imports from foreign countries to countries enjoying the British preferential tariff rates, and because of the reductions made in the duties on liquor last year.
Special excise taxes produced a total revenue of $35,700,000. This represents a decrease of $4,045,000, which is accounted for chiefly by the changes made last year under which the excise tax on beer was reimposed in the form of an excise duty on malt and by the elimination last year of the remaining half of the special three per cent tax on imports entitled to entry under the British preferential tariff or under trade agreements between Canada and other British countries.

The Budget-Mr. Dunning
Non-tax revenues, that is, the revenues derived from various departmental services of government, aggregated $54,492,000, an increase of $461,000 over the previous year. The main items under this heading are interest on investments which amounted to $10,-
600,000,	and Post Office revenues which totalled $32,507,000, or nearly $1,260,000 in excess of the previous year. The so-called surplus on Post Office operations approximated $900,000. It must be remembered, of course, that the Post Office accounts do not include the rental value and other costs of premises occupied and equipment used, nor, on the other hand, do they include any credit to the Post Office for services rendered to other departments through the free use of the mails.
Special receipts during the last fiscal year amounted to only $320,000. This compares with $3,397,000 received in 1934-35 when the custodian of enemy property made a special transfer of $3,000,000 to the consolidated revenue fund.

[Stage Direction]
While, as already indicated, I wish to draw special attention to the aggregate expenditure for which the government is responsible both on its own and on railway account, it will facilitate comparison with previous years if comment is first made on the various classes of expenditures which have traditionally been shown in the public accounts.

[Stage Direction]
The ordinary expenditures for the year have aggregated $373,987,000. This is $14,287,000 in excess of the expenditures for 1934-35. Nevertheless it is $16,000,000 lower than the total of the amounts authorized by vote and statute. This substantial reduction below the appropriations is accounted for, in part .at least, by the measures taken by the present government when it came into office last October. One of its first acts was to initiate a careful examination of the trend of revenues and expenditures and an analysis of the financial commitments which had been made. The results of such examination were such as to lead to an immediate direction to all departments to effect every possible economy in ordinary and special expenditures and to defer any undertakings which could not be clearly justified on grounds of necessity or of substantial assistance in providing employment. Had such action not been taken, expenditures for the year would have been much higher than they actually were.
Some of the increase in ordinary expenditures last year was due to special causes, for
instance the expenses involved in holding a national election. I suppose some of us think that expense was justified. Others may quarrel with it. The cost of old age pensions increased $1,818,000 and there were additional special grants to provinces amounting to $2,375,000.
Of special interest was the decrease of $3,983,000 in interest on the public debt, reflecting the economies resulting from conversion of outstanding securities into obligations bearing a lower interest rate, and the lower cost of treasury bills. Our interest burden last year was $134,550,000, which was lower than in any years since 1931-32. Nevertheless, it used up 36-2 per cent of our total revenue.

[Stage Direction]
Total expenditures charged to capital account amounted to $6,576,000, a decrease of $451,000 from the previous year. The chief item was $5,361,000 for dredging the river St. Lawrence ship channel.

[Stage Direction]
We come now to that important group of items which are classified as special expenditures. Some of the items so classified in previous budgets cannot be regarded as special in any real sense of the term and they are now included in ordinary expenditures. These items include $3,575,000 cost of loan flotations, representing flotation costs of new loans and annual charges for amortisation of bond discount; $1,875,000 government contribution to superannuation fund; $272,000 payment to maintain reserve in government annuities fund; and $128,000 representing expenditure made under the Railway Grade Crossing Act. In the tables showing expenditures for the past five years the necessary adjustments have been made in order to place the group totals for the various years on a comparable basis.
The importance of this category of special expenditures is indicated by the total expenditure of $102,777,000 which is $41,640,000 in excess of the preceding year and much higher than in any previous year.
Of this total $49,469,000 represents payments for unemployment relief purposes. This includes not only the cost of direct relief and provincial grants in aid, but also the maintenance of the relief camps, the care of single homeless unemployed persons, land settlement relief, special assistance to the Saskatchewan drought area and public works and undertakings carried out under authority of relief legislation. The following table
The Budget-Mr. Dunning
[Stage Direction]
compares the expenditures made for these similar expenditures in the preceding fiscal various purposes during 1935-36 with the year:
Unemployment Relief Expenditures
Direct relief	
Grants in aid (from August 1, 1934)	
Public works and other projects	
Land settlement relief	
Relief camps-Department of National Defence	
Care of single homeless unemployed persons	
Department of the Interior, relief including works in national
parks	
Saskatchewan drought area relief	
Miscellaneous, including administration
[Stage Direction]
Estimated
$	262,388
26,274,875 9,831,375
176.000 8,212,006
219, OOC
180.000 4,000,000
313,362
[Stage Direction]
It will be noted that as in the previous year, special assistance was given to the province of Saskatchewan for relief in the drought area of the province. This form of relief was by way of accountable advances totalling $4,000,000. During the fiscal year 1934-35, the sum of $5,000,000 was advanced for the same purpose and the total of $9,000,000 was intended to cover the dominion's obligation for the provincial relief year extending from September 1, 1934, to August 31, 1935. It is estimated that when all the accounts are received from the province the total of $9,000,000 will not be sufficient to take care of the dominion's obligation. Any excess will be applied in reduction of a loan made to Saskatchewan for that specific purpose. This excess, not yet determined, has not been included in the statement of expenditures.
When the present government took office on October 23 last, we found that through agreements with provincial governments certain commitments had been made for the year ending March 31, 1936. These commitments have of course been met and, in addition, as an emergency measure, the monthly grants in aid to provinces for direct relief were increased by seventy-five per cent for the four winter months of December, January, February and March for the purpose of enabling the provinces to grant greater assistance to their municipalities.
Another item under special expenditures which might well have been included in the cost of unemployment relief relates to expenditures made pursuant to the Public Works Construction Act, 1934, and the Supplementary Public Works Construction Act, 1935. Expenditures under these two acts during the last fiscal year aggregated $30,232,000 as compared with $8,673,000 in 1934-35. As at March 31, 1936, there remained unexpended $18,726,000 of the amounts authorized by these acts. Uncompleted projects and other projects authorized by these enactments which the government believes it advisable to proceed with have been provided for in the new fiscal year by the special supplementary estimates recently brought down in this house.
Included in the special expenditure for last year are three items representing losses incurred as a result of the wheat policy in effect during the past five years. The payment of $6,600,000 to primary producers of wheat who delivered wheat during the crop year 1930 has been amply debated in this house. The item of $15,856,645 represents the debit balance in the bank account of Canadian Cooperative Wheat Producers Limited as of December 2, 1935, which was assumed by the Canadian Wheat Board as a result of the transfer to it as of that date of the wheat and wheat contracts held by Canadian Cooperative Wheat Producers Limited in connection with the 1930 wheat pool account and stabilization account. As advances by the chartered banks to Canadian Cooperative Wheat Producers Limited were guaranteed by the dominion government, further supplementary estimates for 1935-36 will authorize payment to the Canadian Wheat Board of the amount of this liability assumed by it. .
The operations of the Canadian Cooperative Wheat Producers Limited, in connection with oats of the 1930 crop resulted in a loss of $170,130 as at December 2, 1935, and under the terms of the government guarantee this amount with accrued interest to the date of payment will be paid to liquidate the bank liability.
Unfortunately, these three items totalling $22,630,000 may not represent the total cost of governmental wheat marketing operations. To them will have to be added any further losses that may result before the wheat and wheat contracts resulting from the 1930 pool and stabilization operations have been finally disposed of, and also any losses which the
[Stage Direction]
The Budget-Mr. Dunning
Canadian Wheat Board may incur in marketing wheat of the 1935 crop for which a minimum price to primary producers of eighty-seven and one-half cents per bushel, basis No. 1 northern, Fort William, was fixed last September. Whether such losses will accrue and what their magnitude will be will depend on the prospective harvests in wheat producing countries of the world, on the demand of importing countries, and on the trend of wheat prices. These factors it is of course impossible to forecast. It may be emphasized, however, that the government does not believe itself warranted in assuming responsibility for holding such colossal quantities of wheat as have been held during the last few years. Without resort to dumping, its policy will be to market surplus wheat in an orderly manner as rapidly as world conditions will permit, with due regard to the progress of the next Canadian crop, and at the same time endeavouring to restore and expand in every possible way the demand for Canadian wheat and wheat products in world markets.
The remaining items under the caption of Special Expenditures are of minor importance.
Another important class of expenditures for which the government is responsible may be considered under the caption, "Government-owned Enterprises." This new category appears to be a convenient one in which to group together any losses of, or non-active advances to, government-owned enterprises which are operated as separate corporations. It will include the net income deficit of the Canadian National Railways, and any operating deficits of the Canadian National Steamships or of any harbours previously operated by harbour commissions but in future to be administered by the National Harbours Board, as well as any non-active advances to such enterprises. Non-active advances do not earn interest and are treated in the government accounts as expenditures.

[Stage Direction]
Further improvement in operating revenues of the Canadian National Railway Company took place in 1935. The gain amounted to
88,200,000,	or 5 per cent. Operating expenses were higher than in 1934, one of the important factors being the increase in wages brought about by the removal of a part of the payroll deduction. After providing for operating expenses and other charges such as taxes, rentals, etc., the company's accounts showed a net amount of $6,800,000 available for interest on debt. This result was not as satisfactory as in the previous year, when the amount available for this purpose was
$7,400,000. After applying the sum of $6,800,000 available from earnings against interest charges of $54,200,000, there resulted a cash deficit of $4/ ,400,000. This amount has been paid by the dominion and charged in our accounts as an expenditure for the year and compares with S48,400,000 in 1934, the improvement of nearly one million dollars being entirely accounted for by savings made in interest charges through refunding of securities.
It should be borne in mind that there are certain charges in the accounts of the railways not involving cash which should be taken into account in reconciling the above-mentioned figure of cash deficit with the net loss for the year as shown by the annual report of the railway company.
In addition to the provision for deficits, the government advanced $7,574,000 to the Canadian National Railways in the fiscal year period for capital expenditures and retirement of debt. This amount is shown in the public accounts under Loans and Investments. The figure is made up as follows: capital expenditures under the 1935 budget, $687,000; purchase of and repairs to equipment under the Supplementary Public Works Construction Act, $5,068,000; retirement of debt (net), $1,819,000.
Important refunding operations in connection with the long-term funded debt of the railway company took place during the year. Four issues of bonds aggregating $108,519,000 were called for redemption prior to their maturity dates and were replaced by securities bearing lower rates of interest. These issues were:
$35,000,000 41% bonds due December 1, 196S;
$26,000,000 4i% bonds due September 15, 1954;
$23,740,000 7% bonds due October 1, 1940;
$23,779,000 7% bonds due December 1, 1940. In addition, temporary loans obtained in connection with the maturity of $17,000,000 4i per cent bonds on February 15, 1935, were funded. This made a total of securities included in the refunding operations of 8125,-
519,000.	Provision for this amount, together with premiums payable upon call of the bonds and discounts on the new issues, was made by the sale of railway company securities guaranteed by the dominion to the principal amount of $128,400,000 and a temporary loan of $2,043,000 from the dominion treasury. The details of the new issues and the interest cost to the company, are shown in the following statement:

[Stage Direction]
The Budget-Mr. Dunning
Canadian National Railway Company
Guaranteed Bonds issued for Refunding, 1935-36
Issue date	Maturity date	Interest rate	Cost to company	AmountMay 1, 1935	May 1, 1938	2%	2.35%	$13,400,000May 1, 1944	3%	3.29%	35,000,000February 15, 1936	February 15, 1943	2%	2.31%	55.000,000February 15, 1953	3%	3.25%	25,000,000
The annual saving to the company, after providing for the amortization of the premiums paid upon the called bonds, will be approximately $3,000,000 a year as a result of this refunding. All of the redeemed bonds were payable, either optionally or solely outside of Canada, and the new issues are payable in Canada only. In connection with the redemption of the three issues in September, October and December last, the necessary funds were first obtained by the sale in New York of direct obligations of the dominion and later the company recouped the dominion from the proceeds of the sale of its securities in Canada.
On March 31, 1936, the amount of the debt of the Canadian National railway system outstanding in the hands of the public was
81,217,000,000, having been reduced by $21,000,000 in the past year. Of the amount outstanding, $964,000,000 are obligations guaranteed by the dominion.

[Stage Direction]
Proceeding further to deal with the provision which it has been necessary to make for government-owned enterprises, it is satisfactory to report that the operations of the Canadian National Steamships showed a considerable improvement over the previous year. The cash loss on the West Indies service was $270,000, as compared with $567,000 in 1934. The Canadian Government Merchant Marine had operating earnings of $312,000, as compared with a deficit of $127,000 in 1934. An amount of $179,000 was advanced for capital expenditures on the West Indies fleet, but this expenditure was more than offset by the return to the government of a further $200,000 advanced in previous years to the merchant marine for working capital. Taking into consideration all these transactions, there was a credit of $63,000 on account of steamship services.

[Stage Direction]
Assistance to harbour commissions appearing in our expenditure accounts amounted to $3,600,000. This amount is made up of $1,139,000 paid to liquidate bank loans obtained for operating deficits in Quebec,

Chicoutimi and Halifax, and represents losses incurred not only in 1935 but also in previous years. The balance is comprised of advances (non-active) of $482,000 for deficit on the Jacques Cartier bridge, Montreal, and $1,979,000 for expenditures in the harbours of Saint John, Halifax, Three Rivers and Quebec.
To sum up, the total amount treated as expenditures in our accounts in connection with the operation of the railways and other government owned interprises, was $50,958,000, as compared with $50,148,000 in the previous year. This is exclusive of the amounts carried as investments to which reference will be made later.

[Stage Direction]
Adding together ordinary, capital and special expenditures, as well as losses of and non-active advances to government owned enterprises we find that the grand total of expenditures for which the government was responsible was $534,291,000. This is an increase of $56,286,000 during the last fiscal year as compared with 1934-35 and of $2,527,000 as compared with 1932-33, the worst year of the depression. The increase over the previous year, it will be remembered, is more than fully accounted for by the rise of $14,287,000 in ordinary expenditures, the $21,559,000 increase in expenditure under the Public Works Construction Acts and the $22,630,000 payments made and losses taken in respect of wheat and oats.
I direct attention to the fact that in the last fiscal year nearly 62 per cent of the dominion's revenues were required to meet fixed and uncontrollable expenditures, such as interest; war and old age pensions and superannuation; care of returned soldiers; subsidies to provinces and certain other outlay of this nature. In the year 1913-14, the last fiscal year prior to the war, only 19 per cent of the revenues were allotted to items generally regarded as uncontrollable, and even in 1929-36, when the effect of the war cost had been shown in our expenditures, the proportion was but 44 per cent, as compared with 62 per cent last year. Although it is not possible at this date, except by certain arbitrary assumptions, to make exact calcula-

The Budget-Mr. Dunning
tions, nevertheless it is obvious from an examination of the expenditure statements that the burden of the war cost, both direct and indirect, is even to-day a major factor in our budgetary situation.
A statement showing the proportion of the revenues required for fixed and uncontrollable expenditures in the yearn 1913-14, 1929-30 and 1935-36, follows:
Proportion of Dominion Revenues Required for Certain Uncontrollable Expenditures
Interest on debt	
European war pensions	
Old age pensions	
Other pensions and superannuation
Care of returned soldiers	
Subsidies to provinces	
Other items	
%
8.61
.51
i .53 2.07
18.72
27.54
8.80
.35
1.01
1.93
2.83
1.22
43.74
%
36.19
11.19 4.51 1.22 2.90 3.70 2.25
61.96
deficit 1935-36
Taking the total revenues for the year at
S372,100.000	and the total expenditures at $534,291,000, there is an over-all deficit for the last fiscal year of no less than $162,191,000.
This, of course, takes into account the railway deficit as well as all direct governmental expenditures and makes allowance for special receipts. It compares with a total deficit in the previous year of $116,134,000. It represents the gap between total income and total outgo which must be bridged. I shall have some comments to make on this deficit at a later stage.

[Stage Direction]
In addition to provision for the expenditures of the year as already outlined, loans
and investments to the amount of $60,400,000 were made.

[Stage Direction]
The most important of these were loans to the four western provinces aggregating $42,300,000, under authority of the relief acts. The net amount loaned was very much greater than in any previous year due chiefly to large loans to the provinces of Alberta and British Columbia to meet maturing obligations. For this purpose $5,400,000 was advanced to Alberta and $5,900,000 to British Columbia. Loans were also granted for the financing of relief expenditures including public works and agricultural relief and for seed grain and seeding operations. The amount of loans to each province, classified as to purpose, are shown on the following statement:
Loans to Provinces under Relief Acts, Fiscal Year 1935-36
Purpose
For provincial purposes including public , works, direct relief and agricultural relief
To meet maturing obligations	
For re-loan to municipalities	
For seed grain and seeding operations	
Less cash re-payments and credits applied.. Net loans during 1935-36	
Manitoba	Saskat- chewan	Alberta	British Columbia	Total$	$	$	$	$4,183,655'	8,146,044	7,232,0002	6,195,000	25,756,699 11,406,000 1,532,000 6,000,000537,000	145,000 6,000,000	450,000	400,000	4,720,655 2,324,429	14,291,044 45,565	13,117,000 13,000	12,566,000 7,555	44,694,699 2,390,5492,396,226	14,245,479	13,104,000	12,558,445	42,304,150-	: , v wwlkjm. uiuugnt died leuei including seen gram.
"Includes $1,050,000 for agricultural relief including seed grain.
The amount due by the provinces at the beginning of the fiscal year was $74,200,000. With the addition of the loans made during the year, the total of dominion assistance by way of loan to the four western provinces under the relief acts, now stands at 12739-152}
$116,500,000. The dominion holds one-year treasury bills of the provinces bearing interest at the rate of 4J per cent to July 1, 1935, and 4 per cent thereafter, in respect of these loans. The provinces of Manitoba,. Alberta and British Columbia have paid.
The Budget-Mr. Dunning
[Stage Direction]
the interest in cash as it became due, but the province of Saskatchewan, being unable to meet all of such payments, has covered the interest accruals on the major portion of its outstanding loans by tendering treasury
bills to the dominion. A statement of the loans to date by provinces, showing generally the purpose for which they were granted, follows:
Loans to Provinces under Relief Acts
Net Amount outstanding at March 31, 1936
-	Loans specifically to meet maturing obligations and interest	Loans specifically for agricultural relief including purchase of seed grain	Loans for provincial purposes generally including public works and direct relief	Totals 1,139,455 3,934,341 8,577,000 11,262,109	$ 244,400 13,892,633 3,322,000	$ 14.121.000 30,541,655 13.182.000 16,310,571	$ 15,504,855 48,368,629 25,081,000 27,572,680
British Columbia					
	24,912,905	17,459,033	74,155,226	116,527,164

[Stage Direction]
Loans to the Canadian National Railway Company for capital expenditures and retirement of debt, as already referred to, amounted to 87,574,000. Purchases of equipment for the Canadian Pacific Railway Company and loans to that company for equipment repairs -all as provided under the Supplementary Public Works Construction Act-amounted to 84,629,000. Agreements between the gov-jrnment and the company provide for the payment of interest and repayment of the principal by instalments over a period of years.
The government's investment in the Canadian Farm Loan Board was increased in the year by 87,933,000. Of this amount, $175,000 was for the purchase of capital stock of the board, $7,550,000 for purchase of bonds, and $208,000 for the purchase from various provinces of capital stock subscribed by them during the period in which the provinces participated in the farm loan scheme. The total investment of the government in the board now amounts to $16,790,000. While the board operated at a loss during the fiscal year, provision therefor will be made from the reserves set aside in previous years. Bonds of the board are now being purchased on a 3J per cent basis.
Under investments there are also included $1,439,000 advanced during the year to the harbour commissions at Montreal and Vancouver. These loans are carried as active assets as both these commissions have paid a substantial proportion of the interest charged on their indebtedness.
During the year, repayments totalling three and a half millions were received in reduction of soldier settlement loans and loans to provinces for housing.
The following statement shows the amount of loans and investments (active assets) during the last fiscal year, with comparisons for the four previous years:
Loans and Investments Active
(000 omitted)
-	1931-32	1932-33	1933-34	1934-35	Estimated 1935-36S 22,634	$ 15,565	$ 13,115	$ 22.909	S 42,3041,608	871	416	353	7,93341,121	14,677	2,628	16,579	7,5744,62912,138	650	1,677	393	1,439483 Cr.	92 Cr.	2,492 Cr.	571 Cr.	555 Cr.150 Cr.	139 Cr.	213 Cr.	397 Cr.	3,003 Cr.Other	115 Cr.	469	8276,753	32,001	15,131	39,266	60,403
[Stage Direction]
The Budget-Mr. Dunning

[Stage Direction]
New issues of dominion obligations during the year totalled $500,000,000, exclusive of temporary financing in connection with which repayment was made before the close of the fiscal period. These issues, to the extent of $297,000,000, were for the purpose of refunding maturing obligations. The balance of $203,000,000, representing the net increase in funded debt and treasury bills during the year, was issued for deficit and other current purposes. This large amount of financing was successfully carried out at lower rates of interest both for short and long term issues than ever before. At the close of the fiscal year the average rate of interest on the outstanding funded debt and treasury bills, was 3-9 per cent as compared with a corresponding figure of 4-15 per cent a year ago.
Three issues amounting in the aggregate to $164,000,000 were made in the United States for refunding purposes, including redemption of Canadian National Railway bonds already referred to. These were the first public flotations by the dominion government in that market for several years and necessitated registration under the United States Securities Act. The interest cost to the government was 2-09 per cent for three-year notes, 2-96
per cent for ten-year and 3-63 per cent for twenty-five year bonds.
The issues in Canada, exclusive of treasury bills, totalled $303,000,000. The sale of $135,000,000 of one-year and three-year notes was made to Canadian chartered banks in September last, mainly to meet maturing short term obligations held in large part by those institutions. Two public offerings were made, one dated June 1 for $60,000,000 and one dated November 15 for $75,000,000. The interest cost to the government ranged from 1-90 per cent for one-year notes to 3-10 per cent on twenty-year bonds.
The $33,293,000 of 5 per cent school lands debenture stock held by the prairie provinces were again renewed for one year at the same rate of interest.
The policy of selling three-months treasury bills in the Canadian market was continued during the year, and the amount of issues outstanding was increased by $33,300,000. The rate of discount on these bills dropped from 1-698 per cent on April 15, 1935, to -999 on March 16, 1936. Since that date, further issues have been made, the record low cost of -879 per cent being obtained on April 15.
I now place on Hansard a statement giving the essential details of the new issues made during the year:
Loan flotations 1935-1936
Issue date	Maturity date	Interest rate	Where payable	Price	Cost to Govt.	Amount Issued
		per cent			per cent	
193.5-						
		2i 3		99-50	2-57	20,000,0001 40,000,000/ 33,293,471
				98-50	3-10	
July 1	July 1/36	5	Canada (School Lands)	100-00	5-00	21 li 2	New York	96 00	2-96	76,000,00099-61	1-90	45,000,000\Oct 15 . .	Oct. 15/38	99-2175	2-275	90,000,000/Nov. 15/39	2	99-43	2-15	20,000,000'3	98-75	3-08	55,000,0001936-	Jan. 1/39	2	99-75	2-09	40,000,000Jan. 15	Jan. 15/61	31	New York	93-86	3-63	48,000.000 467.293,471Increase in short term treasury bills outstanding March 31,1936, over March 31,1935	33,300,000 $500,593,471
The Budget-Mr. Dunning
[Stage Direction]
The following is a statement of the unmatured funded debt and treasury bills of the dominion outstanding at March 31, 1936, showing also the annual interest charges thereon:
Unmatured Funded Debt and Treasury Bills, as at March 31, 1936, and Annual Interest Charges
Date of Maturity	Kate per cent	Where Payable	Amount of Loan	Annual Interest Charges
			$ cts.	$ cts
5	33,293,470 85	1,664,673 54H	45,000.000 00	675.000 002	63,336,000 00	1,266,720 005	79,535,200 00	3,976,760 001937 Mar. 1 (a)	5	Canada and	New York....	89,787,000 00	4,489,350 005|	236,299,800 00	12,996,489 001938 July 1,.	3	8,071,230 16	242,136 903	18,250,000 00	517,500 00July 1	3	10,950,000 00	328,500 003$	15,056,006 66	526.900 23Oct. 15	2	90,000,000 00	1,800.000 001939 Jan. 1	2	40,000.000 00	800.000 00Oct. 15	4	47,269,500 00	1,890,780 00Oct 15	2\	7,933,000 00	198,325 002	20.000 000 00	400.000 001940 Mar. 1	3	115,013,636 82	3,450.409 104*	75,000.000 00	3,375,000 005	141,663.000 00	7,083.150 001942 Oct. 15	3	40,409,000 00	1,212.270 002i	20,000,000 00	500.000 00Oct. 15	5	147,000,100 00	7,350.005 001944 Oct. 15	a	50.000.000 00	2,2.50.000 001945 Aug. 15	2}	76,000,000 00	1,900,000 004	88,337,500 00	3.533,500 001946 Feb. 1	w	45,000.000 00	2,025,000 001947 Oct. 1	21	4,888,185 64	122,204 641949 Oct. 15	3i	138,322.000 00	4,841.270 003i	137,058,841 00	4,797,059 431952 May 1	5	100,000.000 00	5,000,000 00Oct. 15	4	56,191,000 00	2,247,640 0031	48,666,666 67	1,581,666 673	40.000 000 00	1,200.000 003	55,000,000 00	1,650.000 0041	43,125,700 00	1,940,656 501957 Nov. 1	4J	37,523,200 00	1,088.544 001958 Sept. 1	4	73,000,000 00	2,920.000 00276,687,600 00	12,450,942 00n	289,693,300 00	13.036,198 501960 Oct. 1	4	93,926.666 66	3,757,066 674	100,000 000 00	4,000,000 001961 Jan. 15	31	48,000,000 00	1,560,000 00Treasury bills due April 1, 1936, 1-19 per cent	Canada..	25,000,000 00	297,500 00Treasury bills due April 15, 1936, 1-15 per cent. Canada..	25,000,000 00	287,500 00Treasury bills due May 1, 1936, 1 09 per cent, Canada...	30,000,000 00	327.000 00Treasury bills due May 15, 1936, 1-05 per cent, Canada...	20,000.000 00	210.000 00Treasury bills due June 15, 1936, 0-999 per cent, Canada..	20,000,000 00	199,800 003,265,287,604 46	128,597,577 18Payable in Canada	
Payable in Canada and New York
Payable in New York	
Payable in London	
Less bonds and stocks of the above loans held as sinking funds	
$2,401,633,007 67	73-55%
89,787,000 00	2-75%
364,000,000 00	11-15%
409,867,596 79	12-55%
$3,265,287,604 46	100-00%
58,168,944 35
[Stage Direction]
(a) Tax tree in Canada.
[Mr. Dunning.}

The Budget-Mr. Dunning
Now with regard to our old friend the national debt.

[Stage Direction]
At March 31, 1936, the unmatured funded debt and treasury bills of the dominion outstanding, less sinking funds, amounted to $3,-
207,000,000. To this amount are to be added other liabilities, mainly composed of insurance and superannuation funds, post office savings deposits and certain trust and contingent accounts, amounting to $225,000,000, to arrive at the gross liabilities of $3,432,000,000. Active
assets, including cash on hand and investments, amounted to $424,000,000. After deducting the latter figure from the gross liabilities, the net debt at the close of the fiscal year amounted to $3,008,000,000. When we left office in August, 1930, the net debt of the dominion stood at $2,141,000,000, the increase in the interval being $867,000,000. The total funded debt increased almost one billion dollars in the period.
I now place on Hansard a statement showing the assets and liabilities as at March 31, 1936:
Liabilities, March 31, 1936 (estimated)
Bank Circulation Redemption Fund	
Insurance and superannuation funds-
Government annuities	
Insurance fund, civil service	
Insurance fund, returned soldiers	
Retirement fund	
Superannuation funds	
Trusts funds-
Indian funds	
Common school funds	
Contractors' securities deposits	
Other trust funds	
Contingent and special funds	
Post Office money orders, postal notes, etc. outstanding..
Province accounts	
Post Office savings bank deposits	
Funded debt-
Unmatured	
Matured but not presented for payment	
Interest coupons matured but not presented for payment
$	6,858,000
66.835.000
9.990.000
14.777.000
8.361.000
51.140.000
151,103,000
13,929,000
2.676.000
1.551.000
2.870.000
21,026,000
5.877.000
2.736.000
9.624.000 22,050,000
3,207,119,000
4,228,000
[Stage Direction]
 3,211,347,000
2,050,000
[Stage Direction]
Assets, March 31, 1936 (estimated)
Active assets-
Cash, working capital advances and other current assets	
Gold bullion account	
Loans to provinces-
Housing	
Relief Acts	
Loans to foreign governments-
Greece	
Roumania	
Loans to harbour commissioners-
Montreal	
Vancouver	
New Westminster	
Loans under Dominion Housing Act	
Bond holding account	
Canadian National Railways	
Canadian Pacific Railway	
Canadian Farm Loan Board	
Soldier and general land settlement	
Seed grain and relief advances	
Canadian government railways open and stores accounts	
Deferred debits-
Unamortized discount and commission on loans	
[Stage Direction]
6,768,000
116,996,000
6,525,000
23,969,000
59.134.000
23.744.000 275,000
24,043,000
2,287,000
123,764,000
30,494,000
83.153.000 82,000
659,000
41.458.000
4.629.000
16.790.000
43.630.000
2.358.000
15.749.000
35.284.000
[Stage Direction]
Net debt March 31, 1936 (estimated)	 3,008,291.000
Represented by-
Non-active assets, March 31. 1936 (estimated)
The Budget-Mr. Dunning
[Stage Direction]
Assets, March 31, 1936 (estimated) Concluded
Capital expenditures-
Public Works-
Canals	$ 242,871,000
Railways	 443,190,000
Public buildings, harbour	and river improvements	 264,929,000
Military property and stores	 12,035,000
Territorial accounts	 9,896,000
Loans non-active-
Canadian National Railways	
Railway accounts (old)	
Canadian National Steamships	
Harbour commissioners-
Quebec	 26,293,000
Chicoutimi	 3,539,000
Halifax	 9,515,000
Saint John	 14,046,000
Three Rivers	 3,144,000
Montreal (Jacques Cartier bridge)	 2,504,000
Seed grain and relief advances	
Soldier and general land settlement	
Miscellaneous advances	
Consolidated fund-
Balance, consolidated fund, brought forward from March 31, 1935.. 1,042,806,000 Excess of expenditure over revenue, fiscal year ended March 31,
1936 (estimated)	 153,514,000
972.921.000
655.527.000
88.399.000
15.508.000
59.041.000 536,000
16.514.000 3,525,000
1,196,320,000

[Stage Direction]
Bonds and debenture stocks bearing the guarantee of the dominion outstanding in the hands of the public at the close of the fiscal year amounted to $994,600,000. The increase during the year was $7,300,000, accounted for by changes in Canadian National Railway issues, including the funding of a temporary loan from the government outstanding a year ago.
Other contingent liabilities are those arising out of guarantees given pursuant to the relief and other acts. During the year the government gave guarantees under authority of the Canadian Wheat Board Act. The amount of these guarantees at Maroh 31, 1936, was about $58,000,000.
The guarantee of bank loans to the Canadian Pacific Railway Company, the original amount of which was $60,000,000, was further reduced during the fiscal year by $12,000,000, the indebtedness at March 31 being $36,000,000. The government is advised that the company has made arrangements to liquidate the balance of the loans on May 1 and the dominion will be relieved of its liability without loss.
The guarantee arising out of the assumption by the chartered banks of the liability of the Province of Manitoba Savings Office was further reduced during the year by $1,500,000.
The amounts of the bonds and debenture stocks and other indebtedness guaranteed by the dominion are shown in the following statement:
fMr. Dunning.]

The Budget-Mr. Dunning
Bonds and Debenture Stocks Guaranteed by Dominion Government As at March 31, 1936
Date of maturity
Issue
Interest
rate
Amount
outstanding
per cent
cts.
Sept. 1, 1936	
May 1, 1938	
Feb. 15, 1943	
May 1, 1944	
July 1, 1946	
April 1, 1948	
Dec. 15, 1950	
Sept. 1, 1951	
Aug. 1, 1952	
Feb. 15, 1953	
July 10, 1953	
Feb. 1, 1954	
Mar. 1, 1955	
June 15, 1955	
Feb. 1, 1956	
July 1, 1957	
July 20, 1958	
May 4, 1960	
May 19, 1961	
Jan. 1, 1962	
Jan. 1, 1962	
July 1, 1969	
Oct. 1, 1969	
Nov. 1, 1969	
Feb. 1, 1970	
By tenders or drawings, Various dates, 1936-54..
Serial, Feb. 1 and Aug. 1, 1936-1938 Perpetual	
Grand Trunk	
Canadian National	
Canadian National	
Canadian National	
Canadian Northern	
New Westminster Harbour Commission	
Canadian National	
Canadian National	
Saint John Harbour Commission___
Canadian National	
Canadian Northern	
Canadian National	
Canadian National (West Indies)
Steamships	
Canadian National	
Canadian National	
Canadian National	
Canadian Northern	
Canadian Northern Alberta	
Canadian Northern Ontario	
Grand Trunk Pacific	
Grand Trunk Pacific	
Canadian National	
Canadian National	
Harbour Commissioners of Montreal
Canadian National	
Canadian National	
City of Saint John debentures, assumed by Saint John Harbour
Commission	
Canadian National eqpt. "G"	
Grand Trunk guaranteed stock....
Grand Trunk debenture stock	
Great Western debenture stock...
Grand Trunk debenture stock	
Northern Railway of Canada debenture stock	
2
3
6$
24.220.000	00
13.400.000	00
55.000.	000 00
35.000.	000 00
24.238.000	00
4| 700,000 00 3 20,500,000 00 44 50,000,000 00 5 667,953 04 3 25,000,000 00 3 9,359,996 72 5 50,000,000 00
4!
44
34
3
5 5 5 5 2
9,400,000 00
50.000.	000 00
70.000.	000 00
65.000.	000 00 7,896,-548 57 3,149,998 66
34,229,996 87 34,992,000 00 8,440,848 00
60.000.	000 00 60,000,000 00
19.000.	000 00
18.000.	000 00 25,189,243 73
Various
4
5 5 4
1,208,527 74 3,750,000 00 60,833,333 33 20,782,491 67 13,252,322 67 119,839,014 33
4	1,499,979 67
[Stage Direction]
Other Indebtedness Guaranteed
Estimated principal amount outstanding March 31,1936
Bank advances, re Province of Manitoba Savings Office	 $ 7,305,541
Bank advances, re government of Newfoundland	 025.000
Bank advances, re Canadian Pacific Railway Company	 36,000)000
Bank advances, re Dominion Steel and Coal Corporation (order for rails)..	217.134
Province of British Columbia treasury bills	 626,533
Province of Manitoba treasury bills	 5,894,127
Bank advances, re Canadian Cooperative Wheat Producers Ltd	 370,000
Bank advances and other liabilities, Canadian Wheat Board	 58.260,000
Reserve of chartered banks on deposit in Bank of Canada	 188,202,917

[Stage Direction]
I have already announced that the overall deficit for the last fiscal year is estimated at 8162,191,000. The size of that deficit cannot fail to have impressed1 the house. Its seriousness is enhanced by the fact that it is but the latest in a series of deficits which have averaged over $138,000,000 per year during the past six depression years. The magnitude of these deficits, and particularly of the latest one, is such that in my opinion few honourable members will be disposed to question the declared purpose of the government to end in the shortest practicable time the era of recurring deficits. That purpose the government intends to pursue steadily as an
The Budget-Mr. Dunning
[Stage Direction]
sssential condition of the restoration of business confidence and the free functioning of private enterprise. This, it is believed, will contribute more effectively to the solution of the problems of unemployment and depression than any other single thing which governments can do.
I am not an alarmist. On the contrary, I im confident that common sense and sound 3eonomic policies can solve our immediate problems. Moreover I am convinced that this country can bear all the burdens which the war and the depression and past mistakes have saddled upon it, great as they have been. Nevertheless I believe that no country can go on indefinitely with heavily unbalanced budgets and continue to maintain either the confidence of investors or the basis upon which her economy can function healthily and vigorously. We have now reached the stage where delay should no longer be tolerated. We must make an immediate approach to a balanced budget and we must be able to show that complete equilibrium can be [DOT]eached within a reasonable time.
I am well aware that this will be called a doctrine of deflation. Indeed, I have heard it said recently that Canada has been following a policy of "heroic deflation" and that she should take a leaf out of the book of the mother country. It is not easy for me to understand how departure from the gold standard, recurring deficits, financing by borrowing, of the magnitude of those which I have outlined, and a monetary policy which has allowed the Canadian dollar to fluctuate approximately at par with the managed sterling standard and with the devalued United States dollar and which has made possible an expansion of the country's cash base just as rapidly as that of Great Britain, can be described as deflation. More careful analysis would rather appear to indicate that in these financial matters about the only point in the British program which we have not already adopted is her policy of keeping the budget balanced. That, as everyone knows, was regarded by Great Britain as the very cornerstone of the recovery program. So much so that the latest British budget imposes substantial increases in a tax structure of already harassing proportions in order to provide funds for increased expenditures considered necessary for purposes of national defence.
In my opinion it is not feasible for us to achieve a complete balancing of our budget immediately. That I am bound to admit would involve deflation and to a degree that would probably prove intolerable. What we can and must do is to make an immediate,
fMr. Dunninc.l
appreciable approach to a balanced budget as the first step in a definite, positive program which will assure the attaining of our final objective within a limited period. I shall now outline the measures which we propose to take and indicate the considerations which have influenced us in each case.
On the expenditure side our first step has been to put an end to the era of "blank cheques" and to reestablish the control of parliament over both the character and the amount of government expenditures. Before the house rises a complete presentation will have been made of the amounts which the executive branch of government believes it will be necessary to spend during the year and these amounts will have been duly authorized by parliament. The main estimates for 1936-37 which were brought down some time ago were designed to cover the ordinary operations of government. Unquestionably they should be, and they will be, more than amply provided for by ordinary revenues. The special supplementary estimates, recently tabled, were intended to make provision for those special or emergency needs, chiefly the costs of unemployment relief and the deficits of government owned enterprises, which arise out of the abnormal conditions now prevailing. Later, the usual provision may be necessary by way of further supplementary estimates for a moderate amount of additional expenditures not taken care of in the main estimates. With this procedure the public will be assured that the aggregate of those authorizations will represent at least the maximum to be expended during the present fiscal year. I am convinced that this traditional procedure will make far sounder and more economical administration.
Such savings as can be made in ordinary expenditures by more effective control on the part of spending departments and by a painstaking search for economies, elimination of waste and duplication of effort, will be effected to the maximum possible extent. It is apparent, however, that the opportunity for reductions, except by elimination of essential services is limited.
The two major obstacles to a balanced budget are the cost of unemployment relief including relief undertakings and the Canadian National Railways deficit. Canada's success in reducing these two classes of expenditure will be the measure of her progress both in achieving a balanced budget and also in furthering the march of recovery.
In so far as the Canadian National is concerned, the house is now familiar with the progress already made. As shown by the special supplementary estimates, the railway

The Budget-Mr. Dunning
is asking us this year for $39,900,000 on account of its net income deficit for the present calendar year. This compares with
S47.400.000	in 1935 and with the depression peak of 862,100,000 in 1932. In view of the railway measures now before the house,, this is not the appropriate time at which to discuss the government's railway policy. I may say, however, that we are confident that this cash deficit can be further substantially reduced as a result of the measures which will be taken to place the management of the road on a more responsible basis.
In regard to the other major cause of our deficits, the outlines of a well-knit and comprehensive program designed to meet the unemployment problem have already been presented to the house. For the first time since the depression began, a serious effort has been made to compile the statistics necessary to give us the essential factual basis for analyzing the range and specific character of the problem with which we are faced. If diagnosis should precede remedy, that step should commend itself. In the second place, we have provided for the appointment of a
representative national commission which will be charged with the functions of investigating relief methods and policies now in effect of enlisting the cooperation of the provinces, the municipalities, employers and employees' organizations and other public and private agencies throughout the dominion, and of making recommendations as to the best methods of handling relief and providing remunerative employment. In other words, we are seeking to mobilize all our resources in a nation wide cooperative attack on this, the most urgent of our immediate national problems. Finally, we are providing in the special supplementary estimates'for the money necessary to meet direct relief costs and to carry on a program to provide employment through constructive undertakings on a scale commensurate with our financial resources.
Knowing what our total expenditures are likely to be, we are now in a position to consider what taxation and other revenues we should budget for. On the basis of the tax and tariff rates now in effect, it is estimated that the revenues for the present fiscal year will aggregate $387,850,000 derived from the usual sources as follows:
Taxation revenue:
Customs duties	 $ 75,000,000
Excise duties	 46,000,000
Income tax	 87,000,000
Sales tax	 80,000,000
Manufacturers', stamp, importation and other special taxes	 42,000,000
Total taxation revenue	 $330,000,000
Non-tax revenue:
Post Office	 $ 33.500,000
Interest on investments	 11,350,000
Other sources	 13,000,000
Total non-tax revenue	 $ 57,850,000
Grand total revenue	 $387,850,000
As the main estimates and the special supplementary estimates call for expenditures of over $509,000,000 to which will have to be added any further supplementary estimates, it is apparent that the deficit for the year would probably total over $125,000,000 without taking into account possible losses on wheat, unless provision is made for additional [DOT] revenue by way of new or increased taxes. For the reasons already given, vitally affecting, as I believe, our national welfare, I feel it necessary to budget for a deficit this fiscal year of less than $100,000,000, not taking into account any further losses resulting from wheat marketing operations which of course are unpredictable. If this can be accomplished, it will represent a definite improvement compared with the deficit of $162,000,000 for the last fiscal year.
It therefore becomes necessary to provide for additional taxation revenue in the amount of approximately twenty-eight to thirty million dollars. In imposing new tax levies, one must bear in mind the desirability of avoiding any undue retarding effect on business recovery. The information which I have given in the early part of this address indicates that the national income is surely and steadily rising. I am confident, therefore, that the amount of new taxation which we feel it necessary to impose will not have a deterrent effect on the business trend which is now definitely upward. Rather do I believe that business men and the public generally will gain new confidence from our endeavour to grapple vigorously with our problems of national finance and will be willing to cooper-
The Budget-Mr. Dunning
[Stage Direction]
ate wholeheartedly in sharing the new burdens which are believed necessary.
It is now my task to outline the changes in our taxation and tariff structure which are oroposed.

[Stage Direction]
The most important change to be made under the Income Tax Act and the first proposal for raising additional revenue is an increase in the ordinary rate of tax on corporations from 13^ per cent to 15 per cent. At the same time, where returns are consolidated, the rate will be raised from 15 per cent to 17 per cent. In view of the extent to which provincial governments are now levying personal income taxes, and in view also of the surtax on investment income imposed by the dominion last year, it is not oroposed to alter the existing schedule of rates on individual incomes.
My next proposal relates to the metal mining industry. The contribution which this industry has made to the economic well-being and indeed to the financial integrity of the dominion during the depression years is well known. Great as its development has already been, a much greater future appears to lie in store. In the opinion of many, we have little more than begun to tap the varied mineral wealth of this country. Moreover, the most important branch of the industry, namely, gold mining, is in the fortunate position of producing a commodity for which the demand appears to be unlimited. In other industries production cannot be speeded up without creating oversupply and breaking the market. In the case of gold, however, overproduction seems under present conditions to be impossible and the price remains fixed at least for long periods of time. On the other hand, the industry is one in which the risks are great, especially in the initial stages. Exploration and development require expenditure of large amounts of capital over a considerable period of time. Private enterprise, therefore, can only be induced to enter the field if the prizes to be gained for the relatively few successes are attractive.
Because of these special characteristics, the industry appears to offer a unique opportunity for a constructive governmental policy designed to stimulate an expansion of mining activity with its resultant effects on employment and purchases of supplies and materials. The government therefore proposes to grant exemption from corporate income tax to any metalliferous mine coming into production between May 1, 1936, and January 1, 1940, such exemption to apply to its income for

the first three years following the commencement of production. This definite step to encourage the development of the mining industry combined with the additional provision for geological surveys and investigations and for transportation facilities into new mining areas made in the main and special supplementary estimates should do much to accelerate new exploration and development work during the present year and the following two or three years. I desire to add that as uncertainty of taxation is a definite deterrent to the making of new commitments in a hazardous industry, the mining industry may rely upon it that this government will not impose discriminatory taxation with respect to mines. While the present government is in power, mining enterprises can depend upon treatment at least as favourable as that accorded to other industries under the corporation income tax.
In view of the decline in interest rates, it is intended to reduce the rate of interest on unpaid instalments of income tax from 6 per cent to 5 per cent, and to lower the penalty rate of interest with respect to overdue tax from 4 per cent to 3 per cent.
The gift tax is to be altered by requiring that payment of the tax shall be made annually rather than at the time each gift is made. Furthermore, gifts up to SI.000 annually to any one person will be exempt from the provisions of the gift tax in future.
Finally, important changes are being made in the treatment of companies which have technically come to be known as "4 (k) companies"-in other words, incorporated companies "whose business is not only carried on but whose assets, also, are situate entirely outside of Canada." This category will be reserved exclusively for the type of industrial or commercial operating company for which it was originally created. A new category will be provided for investment holding companies wholly owned by non-residents, which will be required to pay a tax on their income at a rate equal to half the ordinary rate on corporate incomes. Credit on this tax will be given in respect of the 5 per cent tax paid on last year's income distributed to non-resident shareholders, but such companies will be required to pay the 5 peT cent non-resident tax on income accumulated but not distributed during the period after the 5 per cent tax first went into effect and up to the coming into effect of this new tax. In future these companies will, of course, not have to pay the 5 per cent tax on dividends paid to their non-

The Budget-Mr. Dunning
resident shareholders but will be taxed at the higher rate on their income.
These changes in income tax, it is anticipated, will provide for an increase in revenue of approximately $5,000,000.

[Stage Direction]
As a means of raising a substantial amount of the additional revenue which must be obtained in the ensuing year it is proposed to increase the rate of sales tax from 6 per cent to 8 per cent. It was our view that a moderate increase in the existing sales tax which covers the broad field of merchandise transactions and for which efficient and economical machinery for collection is already in operation would be clearly preferable to singling out a few particular items to bear an unjustly heavy burden. I do not intend to impose "nuisance" taxes in an effort to raise more revenue but rather to utilize our existing taxation structure.
A few changes are to be made in the schedule of exemptions from the sales tax. With a view to simplifying administration and eliminating double taxation certain materials consumed in the process of manufacture commonly known as "consumable materials" but not including lubricating or fuel oils or plant equipment will be placed on the exempt list. Paper and ink used in magazines and periodicals will also be given exemption. The only other items to be granted relief from sales tax are crushed stone and crushed gravel used in the building or maintenance of provincial, county and township roads; liver extract for use in the treatment of anaemia; educational films; and handmade drawings, or designs for use in a number of manufacturing industries.
It is estimated that as a result of the above changes in the sales tax the revenue therefrom will be increased by approximately $23,000,000.

[Stage Direction]
The most important changes in excise taxes arise through the recent report of the Tariff Board regarding the automobile industry. At present there is a 5 per cent and 10 per cent tax on automobiles imported or produced in Canada with exemptions given in terms of price and extent of cost of production, incurred in Canada or in British countries. Following the recommendations of the Tariff Board in connection with this item, it is proposed to replace the existing rates with a flat rate tax of 5 per cent on all automobiles, regardless of Canadian or empire content, on the value in excess of $650. At the same time, it is provided that in no case shall the tax per automobile exceed $250.
A further recommendation which is being accepted is that tires and tubes shall not be subject to excise tax when purchased by
manufacturers producing less than 10,000 automobiles or chassis each year if at least 50 per cent of factory cost is incurred in the British empire. However, a manufacturer producing more than 10,000 automobiles must have incurred at least 60 per cent of factory cost in the British empire in order to qualify for this exemption.
Other changes in excise taxes levied under the Special War Revenue Act are of minor importance. It is proposed to reduce the tax on cigarette paper tubes from three cents to two cents per hundred in order to equalize -the rates on flat papers and tubes. With regard to the 3 per cent special excise tax on imports, the changes contemplated are confined to a few additions to the schedule of exemptions, including materials used in the manufacture of binder twine and fishing rope, paintings under tariff item 695a; educational films; and handmade drawings or designs for use in a number of manufacturing industries.

[Stage Direction]
Proposed changes in the Excise Act are limited to a few relatively unimportant adjustments. The first of these equalizes the excise duty on Canadian brandy with the customs duty on brandy imported from South Africa and Australia by lowering the excise duty rate from four dollars per gallon to three dollars. The second proposed adjustment is a reduction of one dollar per gallon in the rate of excise duty on spirits used in medicines, extracts and pharmaceutical preparations in order to bring it into line with the rate applying to spirits used in the manufacture of perfumes. Finally the excise duties on imports of leaf tobacco are to be removed from the Excise Act and transferred at the same rates to the customs tariff.

[Stage Direction]
To-day's customs tariff proposals relate to both the Tariff Act and the various schedules thereto. Having in mind that they follow closely upon the tariff revision effected by the Canada-United States trade agreement and immediately precede negotiations with the United Kingdom, it will, I think, be generally admitted that they are extensive and important. For purposes of record, the proposed amendments may be classified as follows:
Reductions under all tariffs	 37
Reductions under British preferential
tariff only	 30
Reductions under British preferential
and intermediate only	 20
Reductions under intermediate only..	11
Reductions under intermediate and general only	 6
2388
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[Stage Direction]
Increases under intermediate and general only	 7
Increase under	intermediate	only..	3Increases under	general tariff	only..	2
Changes in the act itself include provisions for a clearer definition of the heretofore indefinite phrase "of a class or kind made in Canada" and for a more just and equitable administration of the so-called "dumping clauses."
Amendments proposed in the tariff schedules, while not unusually great in number, affect many commodities of extreme importance in our national economy. Obviously it is impossible for me to touch upon all of these in the course of my remarks: I trust that hon. members will read the resolutions of which I shall give notice at the conclusion of this address, and which will form part of it in Hansard in the morning, for details with respect to many items. I shall, however, make brief reference to some items, or groups of items, in respect of which changes in duties are contemplated.
By direction of my immediate predecessor in office, the Tariff Board has been reviewing duties applying to motor vehicles, cotton products, gasoline, and yarns and fabrics of artificial silk; and, at my request, has conducted an investigation into the present state of the furniture industry. I am to-day able to lay on the table-in fact I have presumed upon the goodness of the house to have them placed on the table in advance of my address, because of their bulk-reports from the board relating to these subjects. After careful consideration, the government has decided to accept in each instance the rates of duty recommended by the board.
Broadly speaking, the policy proposed in respect of automobiles is, I believe, one that will maintain the industry in Canada and, at the same time, guarantee fair prices to consumers. The relation-a vitally inter-dependent one-of the so-called "parts" industry to that of the huge manufacturing and assembling plants has been closely studied, and a feature of the new schedule is the manner in which the attainment of a high degree of Canadian content in the completed vehicle is encouraged. It will be remembered that under the Canada-United States agreement recently approved by parliament, the duties on automobiles were reduced from 20, 30 and 40 per cent, respectively, on the three price ranges, to 174, 224, and 30 per cent, respectively. It has been decided to make the existing intermediate tariff of 174 Per cent

apply to all automobiles and trucks-all of which, (including parts for original equipment, replacement or repair) will be free of duty under the British preferential tariff.
The reference to the Tariff Board on yarns and fabrics of cotton arose from a request by His Majesty's Government in the United Kingdom, under the provisions of the agreements of 1932, for a review of the duties on these goods under the British preferential tariff. The board was obliged, therefore, in. its appraisal of the situation-domestic and British-to use the yardstick stipulated by those agreements, namely: the equation of the relative costs of production in the two countries. The board has kept within the terms of its reference and within the letter and spirit of the agreement; and the government, in tabling its report and accepting its recommendations, desires to do the same. It is proposed, therefore, to remove entirely the specific duties on yarns and fabrics of cotton, under the British preferential tariff. It is proposed, further, as properly following the reduction on yarns and fabrics, to revise the specific duties applying to cotton clothing, wearing apparel and manufactured articles-of cotton, by removing these duties entirely on imports under the British preferential' tariff and by reducing them by one-half on imports under the intermediate tariff.
The vital feature of the changes in the petroleum schedule is the reduction of the intermediate rate on gasoline to one cent per gallon as compared with a rate, until recently effective, of 24 cents. This reduction should be of great importance to users of gasoline throughout Canada and it is confidently believed that it can be effected without injury to the Canadian refining industry.
In accordance with the results of the board's inquiry into the tariff situation surrounding artificial silk, it is proposed, under the British preferential tariff, to remove entirely the specific duties on both yams and fabrics, to reduce also the ad valorem rate on acetate yams, and to adjust the ad valorem rate on the fabrics. As a -corollary to this reduction, the government proposes to reduce both the British preferential and intermediate duties on clothing, wearing apparel and manufactured articles of artificial silk, this reduction on the completely-finished articles being designed to pass on to the consumer the advantage in reduction of raw material duties given to those who cut up the materials and manu- [DOT] facture the garments.
The report on furniture is an interim one and recommends no change in the existing intermediate tariff rate of 30 per cent.

The Budget-Mr. Dunning
In the case of many commodities covered by to-day's resolutions, downward revision of duty has been confined to the British preferential tariff. These-additional to cotton and artificial silk products already dealt with -include many of outstanding importance to United Kingdom producers and Canadian consumers. I may illustrate by stating that scheduled reductions which are confined to the British preferential tariff-and entailing in several instances the removal of all duty- include such goods as chemical earthenware, steel machinery of a class or kind not made in Canada, tea waste, malt extracts and powders, dental forgings, fire engines, iron and steel machinery not separately enumerated, desiccated cocoanut, and all non-enumerated articles of iron or steel. Closely related to these are those items on which reductions, while operative under both British preferential and intermediate tariffs, will, in most instances, give the United Kingdom producer a better trading position in this market; in this connection I might refer to glass articles for mounting, heat-resisting glassware, nickelled and other plated ware and polished steel tubing.
May I at this point say a few words regarding changes at this time in the British preferential tariff. In negotiating recently with the United States, this government took scrupulous care to respect in letter and spirit every syllable of the agreements effected in 1932 with various countries of the British empire. Although the Liberal opposition of that day had registered disapproval of the conference agreements on the ground that in too many instances they established preferences by raising duties against other countries, nevertheless that opposition, now become the government of the day, has seen to it that every commitment was respected. No guaranteed British margin was impaired. Indeed, many preferences that might with warrant have been deemed not to be in that class were deliberately set aside as not open to negotiation, sometimes at considerable cost to Canada in the matter of bargaining.
And yet it is obvious that, although the agreements have been respected, the trading advantage here of British countries-notably, of course, the United Kingdom-is not so great as it was prior to the Canada-United States agreement. The very fact of admitting the United States to the benefits of our intermediate tariff produced that result. In the near future Canada must again sit at a table with the United Kingdom to consider a new agreement. It is obvious that, in such negotiations, Great Britain will seek such concessions as will, in her opinion, enable her to increase her trade with Canada. In such negotiations, needless to say, the Canadian government will take equally scrupulous care to observe the letter and the spirit of the Canada-United States trade agreement.
Canada cannot give everything to-day and bargain to-morrow, but Canada can, and this government does, give to-day to empire-countries such concessions as will, I am sure,, be accepted in the spirit in which the British preference was conceived. In this spirit this government, since coming into office, has seen to it that unnecessary impediments to interempire trade have been removed, that vexation's restrictions have been lessened and that arbitrary regulations have been altered or abolished. It has interested itself in the increase of inter-empire trade both by imports from the empire as well as exports to the empire; and under to-day's resolutions it proposes easier access to this country for certain empire commodities. The proposed reductions in the British preferential tariff are in no sense elements in a bargain. Concessions they are, both to Canadian consumers and to British producers, but concessions made in the firm belief that only from mutually advantageous exchange of commodities can come that common benefit in which should lie both the origin and the objective of intra-empire trade arrangements. Canada knows full well that Great Britain, when the day of conference comes, will not be unmindful or forgetful of Canada's past record in the matter of preferential treatment in this market for British	products-a	record
crystallized to-day in the fact that close upon seven hundred items in Canada's tariff schedules, practically half the items in the entire list, have against them the word "free" in .the British preferential column.
Reductions under all tariffs are proposed on a wide range of varied commodities, including biologicals for the diagnosis or treatment of diseases, materials used in the production of periodical publications, numerous petroleum products other than gasoline, ditchers and tractors of all kinds, safety equipment of all kinds, printing and press-room equipment, precision tools, draughtsmen's and surveyors' instruments, various articles for use in hospitals, certain soya bean products, all articles used by the blind, rolling mill and paper mill rolls and feeds for fur-bearing animals.
The effective tariff on agricultural implements, now the intermediate, is reduced to 7i per cent, being further to the reduction from 25 per cent to 12i per cent effected under the Canada-United States agreements
The Budget-Mr. Dunning
[Stage Direction]
As a gesture of good will and an earnest of intention to widen Canadian trade with the Irish Free State, reductions in duty, to be applicable under the British preferential tariff only, are proposed on certain products peculiarly identified with the Irish Free State and requested by that country, namely: stout, prune wine and Irish poplin.
Preferential treatment for empire-grown tobaccos is provided, in the belief that Southern Rhodesia may be able thereby to cater effectively to Canada's requirements in tobaccos of the oriental type, hitherto imported entirely from non-empire countries.
The preference in favour of Australia on raisins and dried currants, which lapsed on March 31, last, is renewed, at four cents per pound.
An interesting and much anticipated item is that giving statutory recognition to the undertaking in connection with the United States under the recent agreement, relative to the privilege to be accorded to Canadians returning from abroad of bringing into Canada, free of duty, personal purchases to a value of $100.
Solely on the grounds of public health, the importation of textile waste derived from used mattresses is prohibited, unless such mattress waste be certificated as to proper fumigation, cleaning, etcetera.
In introducing the budget of May 1, 1930, I made the following statement regarding countervailing duties:
There are certain commodities which are or will become of double significance in Canada's trade with the world, both as imports and exports. On such commodities our policy has been, and is, to avoid extreme rates of duty, and we propose, regarding these products, to maintain in general the existing rates of duty.
It has been decided, however, to embody within the wording of a limited number of items of this class provision for a "countervailing duty" whereby Canada, while not generally raising its schedule rates, imposes upon such products from another country rates equivalent to those imposed by that country upon the identical Canadian product, where these are higher than the rates enumerated in the Canadian tariff schedule. This means that other countries who both buy from and sell to us these commodities, have it in their own power, by reciprocal action on their part, to enable us to reduce duties to the level of the rates stated in our tariff.
I have quoted my remarks of that date for the reason that they still serve perfectly to express my opinions regarding countervailing provisions which to-day's resolutions apply to three natural products: cut flowers, potatoes and eggs.
Mr. ROWE (Dufferin):: What about cast iron pipe?


Mr. DUNNING:: These three commodities were included in the list of May 1. 1930, and that they are again singled out for such treatment is due to the fact that the late administration in wiping out in September, 1930, the countervailing provisions of the May budget, did not provide, under the intermediate tariff, a duty more in line with the general tariff on eggs and, what is more important, failed to provide any duty whatsoever on potatoes or cut flowers. The weakness of Canada's bargaining position in respect of these commodities became speedily apparent in the Washington negotiations, so much so that this government declined to bind these items at the existing intermediate rate, thus giving clear indication that it might, at the first opportunity, see fit to recommend to parliament a revision of these ratings. In so recommending to-day, may I make clear that our attitude continues to be that of 1930; we do not desire or intend to raise tariffs; we do by the countervailing duties invite other countries to bring their tariffs down to the level of ours.
In 1935 there was inserted in the tariff item relating to steel plate a proviso to the effect that, regardless of any other law to the contrary, the anti-dumping provisions should not apply to plate more than 66 inches in width. Thus to select a solitary commodity for such treatment was, to say the least, to make an invidious distinction and it is proposed to allow the anti-dumping provision to apply to all products to which the law says it should, under given conditions, apply. In the interests of justice and equity, therefore, and without any regard whatsoever to the effect upon the quantum of tariff protection afforded, it is proposed to delete from this item the proviso in question.
There will be tabled to-day, in addition to those to which I have made specific reference, reports by the tariff board resulting from inquiries regarding the following commodities: Thrown yarns of artificial silk, buttons and button moulds, forged steel rolls, rice for processing, rhinestones and metal beads, containers of paperboard or fibreboard and photographic apparatus. Not all of these suggest or recommend tariff changes but, in accordance with the provisions of the Tariff Board Act, they will be made available to this house.
Regarding to-day's tariff proposals, may I say that these are formulated on the principle that the most enduring kind of progress is orderly progress-and that applies equally whether one's intended direction in the im-

The Budget-Mr. Dunning
position of taxes be downward or upward. Extremes defeat their own purpose; violent fluctuations one way or the other are mere leaps in the dark. Intelligent and unprejudiced appraisal of to-day's tariff situation in Canada will reveal sound reasons, apart altogether from the general principles 1 have just enunciated, why the best results are to be secured by deliberate, considered and related stages. There is, for example, our position with respect to British countries, to which I have referred. And, in the purely domestic sphere, there is the fact so readily overlooked: that this government, in extending to the United States the benefits of the intermediate tariff, effected at one stroke the most thorough-going downward revision of the customs tariff of Canada since the inception of that tariff-as a consequence of which act, together with the changes now proposed, commodities imported from the United States under at least 200 of the most important items in the tariff will pay lower rates of duty than they would have paid had they been so imported after the adoption of the May 1st budget of 1930.
In concluding this address, it is natural that my thoughts should go back to the last occasion on which I had the honour of presenting the budget six years ago to-day. The great change both in world conditions and conditions in Canada during that interval constitutes a challenge without precedent to the ability, the judgment and the broad patriotism of those charged with public responsibilities.
The government of Canada is making earnest and sustained efforts to meet this challenge and to grapple with the manifold problems of the country. I would ask the house and the country to accept the proposals I have made to-day as part of a conscientious effort to promote the best interests of the people of Canada.
Resolutions
Mr. Speaker, I beg to give notice that when we are in committee of ways and means I shall move the following resolutions:



INCOME WAR TAX ACT

[Stage Direction]
Resolved, That it is expedient to amend the Income War Tax Act and to provide:
1.	That the corporation rate of tax shall be increased from thirteen and one-half per centum to fifteen per centum;
2.	That where a consolidation is permitted the corporation rate of tax shall be increased from fifteen per centum to seventeen per centum;
3.	That payment of the gift tax be made annually;
i.	That gifts to any one person which in the aggregate do not exceed one thousand dollars in the calendar year be exempt from the provisions of the gift tax;
5. That the rate of interest on unpaid instalments of tax be reduced from six per centum to five per centum;
6. That the penalty rate of interest in addition to the interest provided for in the foregoing resolution in respect of unpaid overdue tax be reduced from four per centum to three per centum;
7.	That a tax of five per centum be imposed at the source on payments by Canadian debtors
to non-residents in respect of films whether copyrighted or not;
8.	That any metalliferous mine that comes into production after the first day of May nineteen hundred and thirty-six and prior to the first day of January nineteen hundred and forty shall be exempt from income tax for the first three fiscal periods following the commencement of production;
The minister, under appropriate regulations, shall determine the date of commencement of production and the properties, new or old, that shall be determined as having come into production, having regard to the production of ore in reasonable commercial quantities, and shall issue a certificate accordingly.
9.	That (a) an Investment Holding Company all of whose shares (qualifying shares excepted) are held by non-resident persons shall not be afforded the exemption provided by pararaph (k) of section four of the act, but shall e subject to a tax equal to one-half of the prevailing corporate rate of tax imposed upon Canadian companies;
(b)	the five per cent tax on dividends paid to such non-resident shareholders by such Investment Holding Company shall not apply, except as hereinafter provided;
(c)	in determining the taxable income of such Investment Holding Company a deduction shall not be allowed in respect of any interest payments or of taxes paid abroad;
(d)	any five per cent tax paid by such companies in nineteen hundred and thirty-five shall be allowed as a deduction from the tax otherwise payable in respect of the said year;
(e)	to the extent that five per cent tax has not been incurred in respect of the earnings of nineteen hundred and thirty-three, nineteen hundred and thirty-four and nineteen hundred and thirty-five, the five per cent tax shall continue to be imposed until the undistributed accumulated earnings of the said years have been made subject to the said tax;
(f) paragraph (k) of section four of the act shall be amended to apply to industrial and commercial operating companies only;
10.	That any enactment founded on the provisions of these resolutions shall be deemed to have come into force at the commencement of the calendar year nineteen hundred and thirty-five and to be applicable thereto and to fiscal periods ending therein and to all subsequent periods, except as otherwise provided.

[Stage Direction]
Resolved, That it is expedient to introduce a measure to amend the Special War Revenue Act, chapter one hundred and seventy-nine of the Revised Statutes of Canada, 1927, and amendments thereto and to provide:
1.	That part VII of the said act be amended to provide for the taxation of every change
[Stage Direction]
The Budget-Mr. Dunning
[Stage Direction]
of ownership of any participating interest in the operations or profits of any association, company, corporation, fund or trust not divided into shares at the rate of one-tenth of one per cent of the value of every such participating interest so transferred or assigned;
2.	That subsection two of section seventy-seven A of the said act, as enacted by section twelve of chapter fifty of the statutes of 1932-33 and amended by section two of chapter forty-two of the statutes of 1934, be further amended by providing that the excise tax on packages of cigarette paper tubes be reduced from three cents to two cents for each one hundred cigarette paper tubes or fraction thereof;
3.	That the rate of consumption or sales tax imposed by subsection one of section eighty-six of the said act, as enacted by section eleven of chapter fifty-four of the statutes of 1932, be increased from six per cent to eight per cent;
4.	That Schedule I to the said act, as amended by section twenty-six of chapter fifty of the statutes of 1932-33, and by section six of chapter thirty-three of the statutes of 1935, be further amended by repealing section one thereof and substituting the following:
1.	Automobiles adapted or adaptable for passenger use:
(a)	valued at not more than six
hundred and fifty dollars.. ..	free
(b)	valued at more than six hundred and fifty dollars, on the amount in excess of six hundred
and fifty dollars	 5 per cent
Provided that the tax collected under paragraph (b) above shall in no case exceed two hundred and fifty dollars per automobile.
Provided further that the tax shall not apply to automobiles imported:
(a)	under Customs Tariff items 702, 706, 707 and 708;
(b)	by a bona fide settler on a first arrival;
(c)	by a beneficiary resident in Canada, under the terms of a will of a person dying in a foreign country.
5.	That schedule II to the said act, as enacted by section seventeen of chapter forty-two of the statutes of 1934, be amended by adding to paragraph (iii) thereof the following:
Provided, also, that the tax imposed under paragraph (iii) shall not apply to the goods mentioned therein, when sold to or imported by manufacturers of automobiles or chassis under the following conditions:
(a)	If less than ten thousand automobiles or chassis are manufactured or produced per annum and at least fifty per centum of the factory cost of manufacturing or producing them, exclusive of duties and other taxes, is incurred in the British empire;
(b)	If ten thousand automobiles or chassis or more are manufactured or produced per annum and at least sixty per centum of the factory cost of manufacturing or producing them, exclusive of duties and other taxes, is incurred in the British empire:
Provided, however, that effective April 1. 1938, the words "sixty-five" shall be substituted for the word "sixty" in this paragraph.
6.	That schedule III to the said act, being the list of articles exempted from the consumption or sales tax, as enacted by section eighteen of chapter forty-two of the statutes of 1934, and amended by section seven of chapter thirty-three of the statutes of 1935, be further amended by adding to the said schedule the following:
Materials, not to include lubricating or fuel oils or plant equipment, consumed in the process

of the manufacture or production of taxable goods;
Crushed stone or crushed gravel to be used exclusively in the building or maintenance of provincial, county or township roads;
Printing paper and printing ink for use exclusively in producing quarterly, bi-monthly, monthly and semi-monthly magazines and weekly literary papers unbound;
Liver extract for use exclusively in the treatment of anaemia;
Goods enumerated in Customs Tariff items 695b and 696a.
7.	That schedule V to the said act, as enacted by section nineteen of chapter forty-two of the statutes of 1934 and amended by section nine of chapter thirty-three of the statutes of 1935, be further amended as follows:
i.	By inserting therein after the words "not to include" in the second line thereof the words "automobiles adapted or adaptable to passenger use";
ii.	By adding thereto the following:
Goods enumerated in customs tariff items 695a, 695b and 696a;
Materials for use in the manufacture of binder twine and fishing rope.
8.	That any enactment founded on paragraphs one to seven inclusive of this resolution shall be deemed to have come into force on the second day of May, one thousand nine hundred and thirty-six, and to have applied to all goods imported or taken out of warehouse for consumption on and after that day and to have applied to goods previouly imported for which no entry for consumption was made before that date.

[Stage Direction]
Besolved, That it is expedient to introduce a measure to amend the schedule to The Excise Act. 1934, as amended by chapter twenty-nine of the statutes of 1935 and to provide:
1.	That	the	duty	of	excise	on Canadian
brandy be reduced from four dollars to three dollars per proof gallon;
2.	That	the	duty	of	excise	imposed uponspirits used in	the manufacture	of patent and
proprietary medicines, extracts, essences and pharmaceutical preparations be reduced from two dollars and fifty cents to one dollar and fifty cents per proof gallon;
3.	That	the	duty	of	excise	imposed upon
spirits, sold to licensed druggists and used exclusively in the preparation of prescriptions for medicines and pharmaceutical preparations be reduced from two dollars and fifty cents to one dollar and fifty cents per proof gallon;
4.	That paragraphs (d) and (e) of section six of the said schedule, being the duties imposed upon imported leaf tobacco unstemmed and imported leaf tobacco stemmed be repealed;
5.	That any enactment founded on paragraphs one, two, three and four of this resolution shall be deemed to have come into force on the second day of May, one thousand nine hundred and thirty-six.

[Stage Direction]
1. Resolved, That the Customs Tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as amended by chapter thirty-nine of the acts of 1929, chapter thirteen of the acts of 1930 (first session), chapter three of the acts of 1930 (second session), chapter thirty of the acts of 1931, chapter six and thirty-seven of the acts of 1932-33, chapters thirty-two and forty-nine of the acts of 1934

The Budget-Mr. Dunning
and chapter twenty-eight of the acts of 1935, be further amended by striking thereout subsection one of section six thereof and substituting therefor the following:
(1) In the case of articles exported to Canada of a class or kind made or produced in Canada, if the export or actual selling price to an importer in Canada is less than the fair market value of the same article when sold for home consumption in the usual and ordinary course in the country whence exported to Canada at the time of its exportation to Canada, or is less than the fair market value or value for duty thereof as determined under the provisions of section thirty-six of the Customs Act, or is less than the value for duty thereof as determined by the minister under the provisions of paragraphs (a) and (e) of section forty-one of tbe Customs Act, or is less than the fair market value thereof as fixed under the provisions of section forty-three of the Customs Act, there shall, in addition to the duties otherwise established, be levied, collected and paid on such article, on its importation into Canada, a special or dumping duty, equal to the difference between the said selling price of the article for export and the said fair market value thereof or value for duty thereof; and such special or dumping duty shall be levied, collected and paid on such article although it is not otherwise dutiable.
Provided that when it is established that any articles though of a class or kind made or produced in Canada are not offered for sale to the ordinary agencies of wholesale or retail distribution or are not offered to all purchasers on equal terms under like conditions, having regard to the custom and usage of trade, such articles may be exempted from special or dumping duty.
Provided that the said special duty shall not exceed fifty per centum ad valorem in any case, and the following goods shall be exempt from such special duty, viz.:-
Goods of a class subject to duty under the Excise Act.
Provided, notwithstanding, that on importations from Australia under the Australian Trade Agreement Act, 1925, the said special duty shall not exceed fifteen per centum ad valorem in any case.
2.	Resolved, That the aforesaid section six of the Customs Tariff be further amended by striking thereout subsection eight thereof and substituting in lieu thereof the following:
(8) The minister may make such regulations as are deemed necessary for carrying out the provisions of this section and for its enforcement, and such regulations may also provide for the exemption from special or dumping
duty of any imported article when the minister is satisfied that the article or class of articles is not available at fair competitive prices in any consuming market in Canada owing to the remoteness of such market from the Canadian source of supply.
3.	Resolved, that the aforesaid section six of the Customs Tariff be further amended by adding thereto the following subsection:
(10) For the purposes of this act articles shall not be deemed to be of a class or kind made or produced in Canada unless so made or produced in substantial quantities; and the governor-in-council may by order-in-council provide that such quantities, to be substantial, shall be sufficient to supply a certain percentage of the normal Canadian consumption and may in such order fix such percentage.
4.	Resolved, That the French version of
tariff item 691 of schedule A to the Customs Tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as enacted by section five of chapter twenty-eight of the statutes of 1935, be amended by	striking	out	the	word"eroix" in the second	line of	the	said	item
and substituting therefor the word "crosses."
5.	Resolved, That schedule A to the Customs Tariff being chapter forty-four of the Revised Statutes of Canada, 1927, as amended by chapter seventeen	of the	acts	of	1928,
chapter thirty-nine of the acts of 1929, chapter thirteen of the acts of 1930 (first session), chapter three of the	acts of 1930 (second
session), chapter thirty of the acts of 1931, chapter forty-one of the acts of 1932, chapters six and thirty-seven of the acts of 1932-33, chapters thirty-two and forty-nine of the acts of 1934, and chapter twenty-eight of the acts of 1935, be further amended by striking thereout tariff items 16, 28, 28a. 35, 79b, 83(a), 99c, 113, 142, 147, 168, 173, 178, 180a, 183, 199b, 200a, 206, 206a, 208h, 208i. 219d. 219e, 224, 259, 267, 267a, 267b, 268, 269, 270, 271, 272, 273, 274, 275, 284, 286, 288, 312a, 323, 326a, 362, proviso to 380(b), 404b, 409b to 409k inclusive, 4091, 409m, 409n, 409q, 410d, 411b, 412, 412a, 422a, 424, 427, 427a, 428a, 428b, 429(a), 429(g), 430, 430a, 431b, 431c, 435, 438a, 438b, 438c, 438d, 438e, 438f, 438h, 438i, 445a, 445f, 445g, 445k, 445m, 446a, 455, 462, 463, 473, 476a, 494b, 505, 513, 522, 522c, 523, 523a, 523b, 529, 529a, 532, 558b, 558d, 561, 564b, 567a, 569c, 569e. 584a. 584b, 587a, 603, 607 (PaTt 2), 657a, 663c, 672a, 695. 895b, 698, 698a, 703, 718, 783, 802, 811, 813, 818, 821, the several enumerations of goods respectively and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:
fMr. Dunning.]
Tariff	British Preferential Tariff	Inter- mediate Tariff	General Tariff	Present Rates	Item	B.P. Tariff	Intermediate Tariff	General Tariff9c	Horse meat, tripe and other animal offal, unfit for human consumption, and cereal meal, when for use exclusively in the feeding of fur-bearing animals...	Free	Free	Free	15 p.c. 2 cts. 15 p.c.	25 p.o. 2} cts. 17* p.c.	25 p.c. 5 cts. 20 p.c.9d	Baby chicks, n.o.p	each	Free	4 cts.	5 cts.	12* p.c.	17* p.c.	20 p.c.16	Eggs in the shell	per dozen Provided that, if any foreign country imposes on such goods the produce of the Dominion of Canada duties or charges more onerous than are prescribed by this item, duties equivalent thereto shall be imposed on the like goods imported into Canada from such country.	2 cts.	5 cts.	10 cts.	2 cts. (No counterva	5 cts. iling provision)	10 cts.28	Coffee, green, imported direct from the country of growth and production, or purchased in bond in the United Kingdom	per pound Provided, that coffee, green, shall be entitled to entry under the British Preferential Tariff upon evidence satisfactory to the Minister that such coffee has been produced wholly in the British dominions, colonies or possessions, and not otherwise.	Free	3 cts.	5 cts.	Free	3 cts.	3 cts.28a	Tea, imported direct from the country of growth and production, or purchased in bond in the United Kingdom or in any British possession	per pound When in packages weighing five pounds, each, or less, the weight of such packages to be included in the weight for duty. Provided, that tea shall be entitled to entry under the British Preferential Tariff upon evidence satisfactory to the Minister that such tea has been produced wholly in the British dominions, colonies or possessions, and not otherwise.	4 cts.	8 cts.	8 cts.	4 cts.	8 cts.	8 cts.28b	Tea dust, sweepings or waste, when imported by manufacturers of caffein, crude or refined, for use exclusively in the manufacture of caffein, crude or refined, in their own factories	Free	4 cts.	(per pound)	
The Budget-Mr. Dunning
Provided, that tea dust, sweepings or waste shat be entitled to entry under this item upon evidence satisfactory to the Minister that such tea dust sweepings or waste has been produced wholly in the British dominions, colonies or possessions, and nol otherwise. Hops	per pound	6 cts.Flowers and foliage, natural, cut, whether in designs or bouquets or not, n.o.p	
Provided that, if any foreign country imposes on such goods the produce of the Dominion of Canada duties or charges more onerous than are prescribed by this item, duties equivalent thereto shall be imposed on the like goods imported into Canada from such country.	FreePotatoes, as hereunder defined:- (a) In their natural state, .per one hundred pounds Provided that, if any foreign country imposes on such goods the produce of the Dominion of Canada duties or charges more onerous than are prescribed by this item, duties equivalent thereto shall be imposed on the iike goods imported into Canada from such country.	FreeRaisins and dried currants	per pound When in packages weighing two pounds each, or less, the weight of such packages to be included in the weight for duty.	FreeCocoanut, desiccated, sweetened or not	per pound	3 cts.Tobacco, unmanufactured, for excise purposes under conditions of the Excise A.ct, subject to such regulations as may be prescribed by the Minister:- (a)	Of the type commonly known as Turkish:- (i)	Unstemmed	per pound (ii)	Stemmed	per pound (b)	N.O.P.:- (i) Unstemmed	per pound (ii) Stemmed	per pound Provided that the duty under this item shall be levied on the basis of "Standard leaf tobacco" consisting of ten per centum of water and ninety per centum of solid matter.	20 cts. 30 cts. 40 cts. 60 cts.(a)	Ale and beer, when imported in bottles. per gallon (b)	Porter and stout, when imported in bottles per gallon Provided, that six quart bottles or twelve pint bottles shall be held to contain one gallon.	30 cts. 15 cts.
16 cts.
8 cts.
16 cts.
16 cts.
40 p.c.
Free
(No count
Free rvailing provis
40 p.c. ion)
75 cts.
Free
(No count
Free
ervailing provisi
75 cts.
on)
4 cts.
Free
3 cts.
3 cts.
g
>
k!
6 cts.
5 cts.
6 cts.
6 cts.
g
40 cts. 60 cts.
40 cts. 60 cts.
40 cts. 60 cts.
40 cts. 60 cts.
40 cts.. 60 cts.
40 cts. 60 cts.
40 cts. 60 cts.
40 cts. 60 cts.
50 cts. 50 cts.
30 cts. 30 cts.
50 cts. 50 cts.
50 cts. 50 cts.
The Budget-Mr. Dunning
Tariff
Item
British
Preferential
Tariff
Intermediate
Tariff
General
Tariff
[Stage Direction]
Tariff
Present Rates
Intermediate
Tariff
General
Tariff
163a
Prune wine, not sparkling, when containing not more than thirty-eight per centum of proof spirit
per gallon
Provided, that six quart bottles or twelve pint bottles be held to contain a gallon for duty purposes under this item.
25 cts.
55 cts. and...
55 cts.
55 cts. 30 p.e.
Malt flour containing less than fifty per centum in weight of malt; malt syrup or malt syrup powder; extracts of malt, fluid or not; grain molasses-all articles in this item upon valuation without British or foreign excise duties, under regulations prescribed by the Minister	per pound
and
25 p.c.
5 cts. 30 p.c.
10 cts. 35 p.c.
3 cts. 20 p.c.
5 cts.	10 cts.
30 p.c.	35 p.c.
Books for the instruction of the deaf or dumb
Free
Free
Free
Free
Free
Free
Advertising and printed matter, viz.:-Advertising pamphlets, advertising show cards, illustrated advertising periodicals; price books, catalogues and price lists; advertising almanacs and calendars; patent medicine or other advertising circulars, fly sheets or pamphlets; advertising chromos, chromotypes, oleographs or like work produced by any process other than hand painting or drawing, and having any advertisement or advertising matter printed, lithographed or stamped thereon, or attached thereto, including advertising bills, folders and posters, or other similar artistic work, lithographed, printed or stamped on paper or cardboard
for business or advertisement purposes, n.o.p.
per pound
Provided, that on importations under the Intermediate or the General Tariff, the rate of duty shall be not less than	
5 cts.
12| cts. 27! P-c.
15 cts. 35 p.c.
5 cts.	12J ots.
but not less th an	
15 cts.
35 p.c.
under the General Tariff.
180a
Photographs for use only as news illustrations, under regulations by the Minister	
Free
180d
Photographs, paintings, pastels, drawings and other art work and illustrations of all kinds, whether originals, copies or proofs, for reproduction in periodical publications enjoying second-class mailing privileges, (other than daily newspapers)	
Free
Free
Free
Free 15 p.c.
10 p.c.
25 p.c.
Free I 15 p.c. 1 15 p.c.
Free	Free
22! P-c.	22! P-c.
Free 22! P-c-22! P-c-
Free 22! P-c-25 p.c.
s
o
o
g
g
o
[Stage Direction]
w
The Budget-Mr. Dunning
183	Newspapers, or supplemental editions or parts thereof, partly printed and intended to be completed and published in Canada; comic and pictorial sections, non-advertising, to be inserted in or folded with periodical publications entered for mailing purposes	
197d	Tissue paper made from mulberry pulp, not coated nor impregnated, when imported by manufacturers of stencils for duplicating machines for use exclusively in the manufacture of such stencils in their own	
199b	Containers wholly or partially manufactured from fibreboard or paperboard	per pound Provided, that in no case shall the rate of duty under the Intermediate or the General Tariff be	1 ct.200a	Regenerated cellulose, and cellulose acetate, transparent, in sheets, not printed, and manufactures oi regenerated cellulose or of cellulose acetate, n.o.p...	20 p.c.206	Dragon's blood; fuller's earth, in bulk only, not prepared for toilet or other purposes; litmus and all lichens, prepared or not prepared; musk, in pods or in grain; quassia juice; saffron, saffron cake, safflower, and extracts of; quinine, salts of; cochineal; ferment cultures to be used in butter-making	Free206a	Biological products, animal or vegetable, n.o.p., for parental administration in the diagnosis or treatment of diseases of man, when manufactured under licence of the Department of Pensions and National Health under regulations prescribed by the Food	208h	Ethylene glycol, when imported by manufacturers of anti-freezing compounds, to be used exclusively in the manufacture of anti-freezing compounds in their ow'n factories	until September 1, 1936 Thereafter	Free Free208i	Animal glands and animal glandular organs, and extracts thereof, wet or dry, (whether alcoholic or not), when imported by manufacturers of pharmaceutical or medicinal preparations for use exclusively in the manufacture of such preparations in their own factories	Free
Free
10	p.c.
11	cts. 30 p.c. 30 p.c.
Free
Free
Free 15 p.c.
			
Free	Free	22* p.c.	25 p.c.15 p.c.	22* p.c.	22* p.c.25 p.c.	15 pc.c	22* p.c.	25 p.c.1* cts.	1 ct.	1* cts.	1* cts. but not less than 35 p.c.35 p.c.	35 p.c.	20 p.c.	30 p.c.	35 p.c.Free	Free	Free	FreeFree	Free	Free	Free15p,c.	25 p.c.	25 p.c.20 p.c.	25 p.c.	25 p.c.25 p.c.	40 p.c.	40 p.c.Free 15 p.c.	Free	15 p.c.	15 p.c.Free	Free	Free	Free60 p.c.	60 p.c.	60 p.c.
£
Kj
Free
The Budget-Mr. Dunning
Tariff Item	British Preferential Tariff	Inter- mediate Tariff	General Tariff	Present Rates	B.P. Tariff	Intermediate Tariff	General Tariff219d	Sulphuric ether; chloroform, n.o.p.; preparations of	vinyl ether for anaesthetic purposes	Free	25 p.c.	25 p.c.	Free	25 p.c.	25 p.c.60 p.c.	60 p.c.	60 p.c.219e	Chloropicrin, cyanides, or mixtures containing either	ehloropicrin or cyanide, for use in combating des-	tractive insects and pests	Free	Free	Free	Free	Free	FreeFree	15 p.c.	15 p.c.224	Sealing wax	15 p.c.	221 p.c.	25 p.c.	15 p.c.	221 P-o.	25 p.c.259	Lard oil and neat's foot oil	15 p.c.	221 P-c.	25 p.c.	15 p.c.	221 P-c.	25 p.c.259a	Sesame seed oil	Free	221 P-C.	25 p.c.	15 p.c.	221 P-c.	25 p.c.259b	Rapeseed oil, crude or refined	Free	Free	Free	15 p.c.	25 p.c.	25 p.c.7	Crude petroleum not subjected to any other process	than natural weathering and removal of foreign	matter and water, when imported by oil refiners	to be refined in their own factories:-	(i) -8155 specific gravity (42 0 A.P.I.) or heavier	at 60 degrees Fahrenheit	Free	Free	Free	Free	Free	Free(ii) Lighter than -8155 specific gravity (42-0	A.P.I.) at 60 degrees Fahrenheit	per gallon	i ct.	1 ct.	1 ct.	Free	Free	Free(-7900 specific	gravity or heav	ier)(	Tariff Item 267a	)1 ct.	li cts.	11 cts.([DOT]7900 to	[DOT]775 specific gra	vity)(	Tariff Item 27C	)15 p.c.	25 p.c.	25 p.c.(less than	*775 specific gra	vity)(	Tariff Item 711	)267a	Crude petroleum, n.o.p	per gallon	i ct.	1 ct.	I ct.	1 ct.	1 ct.	1 ct.([DOT]8235 specific	gravity or heav	ier)(	Tariff Item 267	)1 ct.	li cts.	11 cts.(Lighter than	[DOT]8235 but not li	ghter than -775specific gravity)	Tariff Item 27C	)15 p.c.	25 p.c.	25 p.c.| (Lighter than	*775 specific gra	vity)Tariff Item 711	)
o
2
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[Stage Direction]
The Budget-Mr. Dunning
267b
Petroleum tops; blends of petroleum tops or petroleum products with crude petroleum; all the foregoing -7249 specific gravity (63-7 A.P.I.) or heavier, at 60 degrees Fahrenheit, when imported by oil refiners to be refined in their own factories	per gallon
Natural casinghead, compression or absorption gasoline, lighter than -6690 specific gravity (80-0 A.P.I.) at 60 degrees Fahrenheit, when imported by refiners of crude petroleum for blending with gasoline wholly produced in Canada	
Free
Free
Products of petroleum, n.o.p.-
(i) Lighter than -8236 specific gravity (40-3 A. P.I.) at 60 degrees Fahrenheit	per gallon
$ ct.
(ii) -8236 specific gravity (40-3 A.P.I.) or heavier at 60 degrees Fahrenheit	per gallon
i ct.
269a
Petroleum oil known as engine distillate -8017 specific gravity (45 0 A.P.I.) or heavier at 60 degrees Fahrenheit	per gallon
} ct.
1 ct.
Free
1 ct.
) ct.
) ct.
Oil when imported by miners or mining companies or concerns to be used in the concentration of ores of metal in their own concentrating establishments, under regulations prescribed by the Minister	
Free
Lubricating oils composed wholly or in part of petroleum:-
(a) valued at less than 25 cents per
gallon	per gallon
(5) n.o.p	
1) cts. 12) p.c.
Refined petroleum jellies and oils, for toilet, medicinal, edible, or similar purposes	
15 p.c.
Free
2} cts. 17) p.c
22) p.c
272a
272b
Petroleum greases and lubricating greases, n.o.p. Paraffin wax	
12) p.c. 15 p.c.
17) p.c 22) p.c
2 cts.
Free
2 cts.
1 ct.
1 ct.
Free
2$ cts. 20 p.c.
25 p.c.
20 p.c.
25 p.c.
Free	15 cts.	15 cts.Free	Free	Free(	Tariff Item 272	)2 cts.	2} cts.	25 cts.(	Tariff Item 271	)i ct.	5 ct.	5 ct.(	Tariff Item 267	)2 cts.	2} cts.	25 cts.(*8017 to	*8235 specific gr	avity)(	Tariff Item 271	)1 cts.	5 ct.	5 ct.(*8235 specific	gravity or heav	ier)(	Tariff Item 267	)Free	Free	Free(	Tariff Item 275	)1} cts.	2} cts.	25 cts.12$ p.c.	175 P-o.	20 p.c.15 p.c.	225 pc.	25 p.c.(	Tariff Item 274	)125 P-c.	175 P-c.	20 p.c.(	Tariff Item 273	)15 p.c.	225 P-c.	25 p.c.(	Tariff Item 224	)
>
8
The Budget-Mr. Dunning

Tariff
Item
273a
275
286
288a
288b
311a
312a
-	British Preferential Tariff
Asphalt or asphaltum, solid or not		Free
Asphaltum oil for use only for paving purposes		Free
Petroleum coke		Free 10 p.c. 25 p.c.
Liquefied petroleum gases for heating, cooking or illuminating purposes, when imported in containers		
Drain pipes, sewer pipes and earthenware fittings therefor, chimney linings or vents, chimney tops and inverted blocks glazed or unglazed, n.o.p.; earthenware tiles, n.o.p		
Earthenware and stoneware, viz.:-demijohns, churns or crocks, n.o.p		25 p.c.
Earthenware and stoneware, brown or coloured and Rockingham ware, n.o.p.; "C.C." or cream-coloured ware, decorated, printed or sponged, n.o.p.: and all earthenware, n.o.p 		25 p.c.
Chemical stoneware composed of a non-absorbent vitrified body specially compounded to resist acids or other corrosive reagent s 		Free
Hand forms of porcelain, when imported by manufacturers for use exclusively in the manufacture of rubber gloves in their own factories		Free
Blackboards, solid, of slate or of paper composition .	Free
Asbestos in any form other than crude, and all manufactures thereof, when made from crude asbestos of Empire origin, n.o.p		Free
Intermediate
Tariff
General
Tariff
Present Rates
[Stage Direction]
Tariff
Intermediate
Tariff
General
Tariff
10 p.c.
Free
Free
15 p.c.
325 p.c.
30 p.c.
10 p.c.
Free Free 25 p.c.
35 p.c. 35 p.c.
Free Free Free Free 15 p.c.
25 p.c. 25 p.c.
175 p.c. Asphalt, not soli Tariff Item 584a
10 p.c.
(Asphalt, solid) T ariff Item 584b
Free
Tariff Item 718
Free Tariff Item 587a
25 p.c.
325 p.c. 30 p.c.
175 p.c.
[Stage Direction]
10 p.c. Free Free 25 p.c.
35 p.c. 35 p.c.
[Stage Direction]


o
co
35 p.c.
35 p.c.
35 p.c. 10 p.c.
22j p.c.
35 p.c.
35 p.c.
35 p.c. 25 p.c.
25 p.c.
25 p.c. 25 p.c.
25 p.c.
Free 225 p.c.
Free
35 p.c. 35 p.c.
35 p.c.
225 P-c. 325 P-o.
225 P.c.
35 p.c. 35 p.c.
35 p.c.
25 p.c. 35 p.c.
25 p.c.
The Budget-Mr. Dunning
326a
326e
326f
Silvered glass, bevelled or not and framed or not, n.o.p
Manufactures of glass, n.o.p	
Articles of glass, not plate or sheet, designed to be cut or mounted; articles of glassware, when imported by manufacturers of silverware to be used in receptacles made of or electro-plated with precious metals, in their own factories	
Hollow shapes of glass, moulded, when imported by manufacturers of electric light fixtures to be used in such fixtures manufactured in their own factories
22J p.c. IS p.c.
Free
Free
326g
High thermal shock resisting glassware
Free
326h
Fresnel or dioptric lenses, sections and globes
Free
346a
Zinc slugs or discs, when imported by manufacturers of electric storage batteries, for use exclusively in the manufacture of seamless cups or shells for such batteries, in their own factories	
Free
Articles consisting wholly or in part of sterling or other silverware, n.o.p.; manufactures of gold or silver, n.o.p	
30 p.c.
362c
Nickel-plated ware, gilt or electro-plated ware, n.o.p.
17i p.c.
392b
Forgings of steel, rough machined and fitted or not, and handles of steel or of metal alloy in the rough, when imported by manufacturers of surgical and dental instruments for use in the manufacture of such instruments in their own factories	
Free
398a
Pipes and tubes of iron or steel, seamless, cold drawn, plain ends, polished, valued at not less than five cents per pound	
Free
(b) For the running gear of other vehicles, n.o.p	
22$ P-c.
409b
Cultivators, harrows, seed-drills, horse-rakes, horse-hoes, scufflers, manure spreaders, garden seeders, weeders, and complete parts of all the foregoing...
Free
409c
Ploughs; farm, field, lawn or garden rollers; soil packers; complete parts of all the foregoing	
Free
30 p.c.	35 p.c.	224 p.c.	30 p.c.	35 p.c.20 p.c.	22J P-c.	15 p.c.	20 p.c.	224 p.c.10 p.c.	22| P-c.	15 p.c.	20 p.c.	224 p.c.15 p.c.	324 p.c.	15 p.c.	30 p.c.	324 p c.25 p.c.	324 P-c-	15 p.c. 15 p.c.	20 p.c. 30 p.c.	224 p.c. 324 p.c.Free	30 p.c.	15 p.c. 20 p.c.	30 p.c. 30 p.c.	324 p.c. 30 p.c.10 p.c.	25 p.c.	15 p.c.	224 p.c.	25 p.c.374 p.c.	45 p.c.	30 p.c.	374 p c.	45 p.c.334 p.c.	45 p.c.	30 p.c.	374 p.c.	45 p.c.274 p.c.	30 p.c.	20 p.c.	274 p.c.	30 p.c.20 p.c.	30 p.c.	15 p.c.	274 p.c.	30 p.c.30 p.c.	35 p.c.	224 p.c.	30 p.c.	35 p.c.7i p.c.	25 p.c.	Free	15 p.c.	25 p.c.74 P-c-	25 p.c.	Free	15 p.c.	25 p.c.
The Budget-Mr. Dunning

Tariff	British Preferential	Inter-	General Tariff	Present Rates	Item	Tariff	Tariff	B.P. Tariff	Intermediate Tariff	General Tariff409d	Mowing machines, harvesters, either self-binding or without binders, binding attachments, reapers, harvesters in combination with threshing machine separators including the motive power incorporated therein, and complete parts of all the foregoing	Free	71 p.e.	25 p.c.	Free	15 p.c.	25 p.c.409e	(i)	Spraying and dusting machines and attachments therefor, including hand sprayers; apparatus specially designed for sterilizing bulbs; pressure testing apparatus for determining maturity of fruit; pruning hooks; pruning shears; animal dehorning instruments; and complete parts of all the foregoing . (ii)	Fruit and vegetable grading, washing and wiping machines and combination bagging and weighing machines, and complete parts thereof; machines for topping vegetables, and machines for bunching and/or tying cut flowers, vegetables and nursery stock, and complete parts thereof; egg-graders and complete parts thereof, not including aluminum parts	Free Free	7} p.c.	25 p.c.	Free	15 p.o. 10 p.c. 30 p.o. 271 P-c.	25 p.c.Free 10 p.c. 15 p.c.	10 p.c. 35 p.c. 35 p.c.(iii) Complete parts of aluminum for egg-graders....	Free	15 p.c.	30 p.c.	15 p.c.	30 p.c.	30 p.c.409(	Hay loaders, hay tedders, potato planters, potato diggers, fodder or feed cutters, ensilage cutters, grain crushers and grain or hay grinders for farm purposes only, post hole diggers, snaths, stumping machines and all other agricultural implements or agricultural machinery, n.o.p., and complete parts of all the foregoing	Free	71 p.c.	15 p.c.	25 p.c.409g	Incubators for hatching eggs, brooders for rearing young fowl, and complete parts of all the foregoing.	Free	71 p.c.	25 p.c.	Free	15 p.c.	25 p.c.409h	Hay presses and complete parts thereof	Free	71 p.c.	25 p.c.	Free	15 p.c.	25 p.c.409i	Scythes, sickles or reaping hooks, hay or straw knives, edging knives, hoes, pronged forks, rakes, n.o.p	Free	71 p.c.	25 p.c.	Free	15 p.c.	25 p.c.409j	Fanning mills; peaviners; corn husking machines; threshing machine separators, including wind stackers, baggers and self-feeders therefor; complete parts of all the foregoing	Free	7} p.c.	25 p.c.	Free	15 p.c.	25 d.c.
The Budget-Mr. Dunning
409k
409m
409n
410d
410i
411b
Windmills and complete parts thereof, not including shafting	
Traction ditching machines (not being ploughs) and complete parts thereof	
Internal combustion traction engines; traction attachments designed to be combined with automobiles in Canada for use as traction engines; complete parts of all the foregoing	
Portable engines with boilers, in combination, for farm purposes; horse powers; complete parts of all the foregoing	
Well-drilling machinery and apparatus, and complete parts thereof, of a class or kind not made in Canada, and seamless iron or steel tubing over eight inches in diameter, for use exclusively in drilling for water, natural gas and oil, and in prospecting for minerals, but not to include motive power; well packers and complete parts thereof, for oil and gas wells	
(ii) Combustible gas indicators, for detecting explosive gases or vapors; methane detectors; carbon monoxide detectors and continuous indicators and recorders; carbon monoxide alarms; pyrotannic detectors for determining the presence and quantity of carbon monoxide in the blood; inhalators for use in reviving victims of carbon monoxide poisoning; pocket gas respirators, dust respirators, paint and lacquer spray respirators, fume and smoke masks, and hose mask outfits complete with face piece, harness, air line and air pump or blower, designed for the protection of firemen and industrial workers; special safety goggles, designed for eye protection of miners, welders, foundrymen and other industrial workers employed in hazardous work; complete parts of all the foregoing	
Cylinder stave saws, wheel type stave jointers, crozing and champhering machinery, and complete parts thereof	
Machinery, being presses for use in the printing of newspapers, of not less value by retail than fifteen hundred dollars each, of a class or kind not made in Canada, and complete parts thereof, not to include saws, knives and motive power; mechanical deliveries or conveyors for use with newspaper printing presses	
Free
Free
Free
Free
Free
Free 10 p.c.
Free
7i p.c.	25 p.c.	Free	15 p.c.	25 p.c.Free	Free	Free	Free	Free15 p.c.	27} p.c.	35 p.c.Free	Free	Free	Free	FreeFree	15 p.c.	25 p.c.15 p.c.	27} p.c.	35 p.c.15 p.c.	25 p.c.	Free	15 p.c.	25 p.c.Free	Free	Free	Free	FreeFree	Free	15 p.c.	27} p.c.	35 p.c.20 p.c.	27} p.c.	30 p.c.15 p.c.	17} p.c.	20 p.c.(and	other ratin	gs)15 p.c.	20 p.c.	10 p.c.	15 p.c.	20 p.c.Free	Free	Free	Free	Free15 p.c.	27} p.c.	35 p.c.
g
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The Budget-Mr. Dunning

Tariff
Item
British
Preferential
Tariff
Intermediate
Tariff
General 
[Stage Direction]
Tariff	B.P.
Tariff
Present Rates
Intermediate	General
Tariff	Tariff
412a
Machinery and apparatus, n.o.p., viz.:-Gun and mould apparatus for making press rollers; machines and apparatus for making electrotypes and stereotypes; engraving machines and apparatus, including photo-engraving apparatus, and other plate-making apparatus, used in the manufacture of printing plates of all kinds; machines and apparatus for graining metal plates; machines and apparatus for sensitizing, grinding or polishing metal plates; machines and apparatus including cameras and camera equipment, lens, prisms, camera and printing lamps, screens, and vacuum frames for transferring by photographic processes, or direct, to plates or rolls for use in lithography, rotogravure and printing; shading apparatus; machines and apparatus for addressing and/or wrapping newspapers, magazines, periodicals, pamphlets and catalogues; machines and apparatus for embossing or stamping or producing embossed or engraved effects, book-binding, looping, stitching, sewing, gathering, inserting, bronzing, dusting, creasing, scoring, cutting, perforating, drilling, punching, slitting, re-winding, glueing, pasting, gumming, waxing, varnishing, carbon coating, patching, numbering, ruling, jogging, sheet piling, tying, bundling, tube-making, metal mounting, eyeletting, staying or stripping, reinforcing and boxcovering; complete parts, not to include saws, knives and motive power; all the foregoing when for use exclusively by, and in their capacities as, printers, lithographers, book-binders, manufacturers of stereotypes, electrotypes and printing plates or rolls, paper converters, or by manufacturers of articles made from paper or cardboard	
Free
Free
10 p.c.
Free 15 p.c.
5 pc. 27-2- P-c.
10 p.c. 35 p.c.
422a
Concrete road-paving machines, self-propelling, end loading type, with a capacity of 21 cubic feet of *wet concrete or more; concrete and asphalt road finishing machines; form graders; sub-graders: combination cable-controlled excavating and transporting scraper units; back-filling machines and equipment, mounted on self-propelling wheels or
[Stage Direction]

s
o
iz|
The Budget-Mr. Dunning
427
crawling traction, semi- or full-revolving boom and scraper type; steam or air driven pile hammers or extractors; well-points; truck turntables; all the foregoing of a class or kind not made in Canada, and complete parts thereof	
Fire engines and other fire extinguishing machines and chassis for same; complete parts other than chassis parts	
All machinery composed wholly or in part of iron or steel, n.o.p., and complete parts thereof	
Free
Free 10 p.c.
427a
All machinery composed wholly or in part of iron or steel, n.o.p., of a class or kind not made in Canada; complete parts of the foregoing	
Free
427e
Automatic machines for making and packaging cigarettes, not to include tobacco-preparing machines	
Free
427f
Machines for the manufacture of veneers and plywoods, viz.:-veneer clippers, veneer clipper knife jointers, veneer glue spreaders, veneer jointers, veneer lathes and veneer taping machines	
Free
427g
Power-driven centrifugal oil purifiers or extractors, bowl or tube type, not to include motive power, when for use in the extracting and refining of fish oils	
Free
(a) Knife blades or blanks, and table forks, of iron or steel, in the rough, not handled, ground nor otherwise manufactured; and spoon blanks of iron or steel, in the flat, not further manufactured than stamped to shape	
Free
(g) Razor blades; razors and complete parts thereof.
Free
Nuts and bolts with or without threads, washers, rivets, of iron or steel, coated or not, n.o.p.; nut
and bolt blanks, of iron or steel	
	per one hundred pounds
and
50 cts. 10 p.c.
10 p.c.
30 p.c. 27| p.c.
275 p.c.
27J P-c.
10 p.c.
10 p.c.
75 p.c. 30 p.c.
50 cts. 20 p.c.
125 p.c.	Free 15 p.c.	10 p.c. 275 P-c.	125 P-c 35 p.c.35 p.c.	10 p.c.	30 p.c	35 p.c.35 p.c.	15 p.c.	275 P-c.	35 p.c.35 p.c.	15 p.c.	275 P-c.	35 p.c.35 p.c.	15 p.c.	275 P-c.	35 p.c.35 p.c.	15 p.c.	275 P-c.	35 p.c.35 p.c.	15 p.c.	275 P-c.	35 p.c.10 p.c.	Free 15 p.c.	75 P-c. 275 P-c.	10 p.c. 35 p.c.30 p.c.	Free	30 p.c.	30 p.c.75 cts.	50 cts.	50 cts.	75 cts.25 p.c.	10 p.c.	20 p.c.	25 p.c.
The Budget-Mr. Dunning

Tariff	British Preferential Tariff	Inter- mediate Tariff	General Tariff	Present Rates	Item	B.P. Tariff	Intermediate Tariff	General Tariff430a	Hinges and butts, of iron or steel, coated or not, n.o.p.; hinge and butt blanks, of iron or steel	75 cts.	75 cts.	75 cts.	75 cts.	75 cts.	75 cts.and	10 p.c.	27J p.c.	30 p.c.	10 p.c.	274 P-c.	30 p.o.431b	Adzes; anvils; augers; bevels, n.o.p.; bits; braces; cantdogs; chisels; cleavers; crowbars; hand drills; files; hammers; hatchets; mallets, mattocks and eyes or polls therefor; nail sets; picks and eyes or polls therefor; planes; pliers; plumb bobs, n.o.p.; punches, n.o.p.; rasps; measuring rules and tapes of all kinds; saws, saw blades and hand saw frames; screw drivers; sledges; spirit levels; spokeshaves; squares, n.o.p.; threadcutting taps, dies and stocks; track tools; vises, n.o.p.; metal wedges; wrenches; socket wrench handles and adapters and sockets therefor	10 p.c.	35 p.c.	35 p.c.	10 p.c.	35 p.c.	35 p.o.431c	Machinists' or metal workers' precision tools and measuring instruments, viz.:-Calipers, micrometers, metal protractors and squares, bevels, verniers, gauges, gauge blocks, parallels, buttons, mercury plumb bobs, dividers, trammels, scribers, centre punches, pocket speed indicators, straight edges, key seat clamps and other clamps and vises used by toolmakers for precision work, precision tools and measuring instruments, n.o.p	Free	10 p.c.	15 p.c.	15 p.o. 30 p.o. 15 p.o. 10 p.o.	25 p.c. 37£ p.c. 27j p.c. 35 p.c.	30 p.c. 45 p.c. 35 p.c. 35 p.c.431d	Engineers', surveyors' and draughtsmen's precision instruments and apparatus, viz.:-alidades; altazimuth surveying instruments; aneroid barometers, engineering, military and surveying; angle prisms; boards, military sketching; box sextants; clinometers; compasses; cross staff heads; curves, adjustable, irregular, railroad and ship; curvimeters; drafting instruments of all kinds, including fitted cases containing the same; dipping needles; drafting machines; heliographs; integrators; levels, tripod and hand or pocket types; levelling rods; liners, section; meters, portable, for hydraulic engineering; pantographs; planimeters; protractors; parallel	15 p.c. 30 p.o. 15 p.o.	25 p.o. 37^ p.o. 27$ p.o.	30 p.c. 45 p.o. 35 p.o.
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[Stage Direction]
The Budget-Mr. Dunning
[Stage Direction]
r
rulers; parallel ruling attachments; poles, ranging; pedometers and paceometers; plane tables, military and topographic; scales, flat and triangular; slide rules; splines; straight edges, steel and wooden; tacheometers; tallying machines, pocket; tee squares, steel and wooden; telemeters; theodolites; transits, tripod and hand or pocket types; triangles of all types; tripods for use with any of the foregoing instruments	
Free
Locomotives and motor cars for railways, of a class or kind not made in Canada, and complete parts thereof, for use exclusively in mining or metallurgical operations	
Free
438a
Automobiles and motor vehicles of all kinds, n.o.p.; chassis for the foregoing; chassis for electric trackless trolley buses	
Provided that machines or other articles mounted on the foregoing or attached thereto for purposes other than for loading or unloading the vehicle shall be valued separately and duty assessed under the tariff items regularly applicable thereto.
Free
438b
Bearings, clutch release; bearings, graphite; bearings, steel backed babbit; bushings, graphited or oil impregnated; ceramic insulator spark plug cores, not further manufactured than burned and glazed, not printed or decorated and without fittings; commutator copper segments; commutator insulating end rings; discs of hot rolled steel, spun or forged, with or without center hole, for disc wheels; distributor rotors, cam assemblies and vacuum control assemblies; door bumper shoes; electric wiring terminals, sockets, fittings and connectors; gaskets of metal and asbestos, composite; ignition contact points; keys for shafting; lenses for head, tail, dome, signal and cowl or parking lamps; lock washers; piston ring castings in the rough, with or without gates and fins removed; steel bolts capped with stainless steel; switches for lamps, and parts thereof; vulcanized fibre in sheets, rods, strips and tubing; all the foregoing being of a class or kind not made in Canada, when for use in the manufacture of the automobiles, motor vehicles or chassis enumerated in tariff items 438a and 424, or for use in the manufacture of parts thereof, or for the replace-
15 p.c.
20 p.c. 27* p.c.
15 p.c. 15 p.c. 15 p.c. 17* p.c.
25 p.c. 25 p.c. 27* p.c. 20 p.c.
30 p.c. 27* p.c. 35 p.c. 25 p.c.
Free
15 p.c.
20 p.c.
Free
Free
Free
Free
22*p.c. 17* p.c. 30 p.c. 30 p.c.
30p.c. (438a) 20 p.c. (438b) 40 p.c. (438c) 40 p.c. (438f)
>
«!
The Budget-Mr. Dunning

Tariff
Item

British
Preferential
Tariff
ment or repair of automobiles, motor vehicles or chassis enumerated in tariff items 438a and 424-,
Free
438c
Ammeters; arm rest and wheel housing lining of indurated fibre, pressed to shape; annual ball bearings and parts thereof; axle housings, one piece welded, machined or not; carburetors and parts thereof; chassis frames, without forgings, castings or stamped brackets attached; cigar and cigarette lighters, including base and parts thereof; control ventilator gear box; cylinder lock barrels, with or without sleeves and keys thereof; dash heat indicators; fuel pumps and parts thereof; gasoline gauges and parts thereof; hinges, finished or not, for bodies; horns, and parts thereof; instrument bezel assemblies and parts thereof; instrument board lamps; locks, electric ignition, steering gear, transmission, or combinations of such locks, and parts thereof; mouldings of metal, with nails set in position, lead filled or not; oil filters and parts thereof; oil gauges and parts thereof; pipe lines, bent to shape and equipped with fittings or not, and tubing therefor, for fuel, air or liquid, for actuating hydraulic brakes; purifiers for air and parts thereof; purifiers for oil and parts thereof; radiator grills, assembled or not, but not polished or plated, and not to include finish or decorative moulding; radiator ornaments, unplated; radiator shutter assemblies, automatic; radiator water gauges; radiator shells, not plated, nor metal finished in any degree; shackles, bearing spring and parts thereof; speedo-
Intermediate
Tariff
Free
General
Tariff
30 p.c.
[Stage Direction]
Tariff
20 p.c. 20 p.c. 20 p.c. 15 p.c. 15 p.c.
5 p.c.
25 p.c. 25 p.c. Free 15 p.c. 15 p.c. 15 p.c. 15 p.c.
50 cts. and 10 p.c. 17J P-c.
Present Rates
Intermediate
Tariff
27J P-c-271 p.c. 271 p.c. 271 P-c. 221 P-c-10 p.c. 331 P.°. 331 P-C. 10 p.c. 25 p.c. 25 p.c. 20 p.c. 25 p.c. 50 cts. 20 p.c. 221 p.c.
General
Tariff
30 p.c. (352)
30 p.c. (339)
30 p.c. (432d) 35 p.c. (446a) 25 p.c. (314)
15 p.c. (811) 371 p.c (445f) 371 p.c. (445g) 10 p.c. (813) 271 p.c. (428a) 30 p.c. (445k) 221 p.c. (326a) 271 P-c- (390a) 75 cts.
25 p.c. (430)
25 p.c. (509)

to
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o
3
o
[Stage Direction]
The Budget-Mr. Dunning
fwi-68ZZI
meters, and parts thereof; spring covers of metal and closing strips or shapes therefor; stampings, body, cowl, hood, fender and instrument board, of metal, in the rough, trimmed or not, but not metal finished in any degree, nor welded, rivetted, or otherwise further manufactured; starter switch assembly and parts thereof; steering wheels, and rims therefor; sun visor blanks of gypsum weatherboard; thermostats and parts thereof; throttle and spark buttons assemblies; vacuum tanks; windshield wipers and parts thereof; all the foregoing being of a class or kind not made in Canada, when imported by manufacturers of the automobiles, motor vehicles or chassis enumerated in tariff items 438a and 424, for use as original equipment in the manufacture of such automobiles, motor vehicles or chassis	
(1)	Provided, that if the above articles are imported by a manufacturer of automobiles, motor vehicles or chassis enumerated in tariff items 438a and 424 whose total factory output during the year in which importation is sought does not exceed ten thousand complete automobiles, motor vehicles or chassis, and provided that not less than fifty per-centum of the factory cost of production of such automobiles, motor vehicles or chassis, not to include duties and taxes, is incurred in the British Empire, the rates of duty under this item shall be
(2)	Provided, that if the above articles are imported by a manufacturer of automobiles, motor vehicles or chassis enumerated in tariff items 438a and 424 whose total factory output during the year in which importation is sought exceeds ten thousand automobiles, motor vehicles, or chassis, and provided that not less than sixty per centum of the factory cost of production of such automobiles,motor vehicles or chassis, not to include duties and taxes, is incurred in the British Empire, the rates of duty under this item shall be	
Free
Free
Free
Free	Free
15 p.c.	271 p.c.
30 p.c.	37J p.c.
15 p.c.	25 p.c.
75 cts.	75 cts.
and 10 p.c.	271 p.c.
15 p.c.	221 p.c.
25 p.c.	35 p.c.
20 p.c.	27J P-c.
15 p.c.	25 p.c.
15 p.c.	271 P-c.
Free (438h) 35 p.c. (446a) 45 p.c. (362) 30 p.c. (445k) 75 cts.
30 p.c. (430a) 25 p.c. (346) 40 p.c. (357) 30 p.c. (352) 30 p.c. (462) 35 p.c. (427)
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«!
The present rates shown immediately above apply against all subsections of the proposed new item 438c.
The Budget-Mr. Dunning

Tariff
Item
Provided that from and after March 31st, 1938, the words "sixty-five" shall be substituted for the word "sixty" in the immediately preceding proviso;
(3) Provided that the Governor in Council may make such regulations, if any, as are deemed necessary for carrying out the provisions of this item.
British
Preferential
Tariff
Intermediate
Tariff
General
Tariff
Present Rates
[Stage Direction]
Tariff
Intermediate
Tariff
General
Tariff
438d
Front and rear axles; brakes, clutches, internal combustion engines; steering gears; magnetos; rims for pneumatic tires larger than thirty inches by five inches; transmission assemblies; steel road wheels; and complete parts of the foregoing, all of a class or kind not made in Canada, when imported by manufacturers of automobiles, motor vehicles or chassis enumerated in tariff items 438a and 424 for use only in the manufacture of motor trucks or motor truck chassis	
Free
17* p.c.
27* p.c.
Free
17* p.c.
20 p.c. (783)
438e
Parts, n.o.p., for automobiles, motor vehicles or chassis enumerated in tariff items 438a and 424, not to include wireless receiving sets, electric storage batteries, parts of wood, tires and tubes or parts of which the component material of chief value is rubber:-
(1)	Brake linings, and clutch facings whether or not including metallic wires or threads:-
(a)	when made from crude asbestos of Empire
origin	
(b)	when made from crude asbestos of non-
Empire origin	
(2)	Automobile and motor vehicle engines, stripped, n.o.p., and complete parts thereof, n.o.p....
Free 15 p.c. Free
25 p.c. 25 p.c. 25 p.c.
35 p.c. 35 p.c. 35 p.c.
Free 15 p.c. 15 p.c.
22* p.c.
25 p.c. (312a)
22* p.c.	25 p.c. (312)
25 p.c.	27* p.c. (428a)
(3) Parts, n.o.p., whether finished or not
Free
30 p.c.
40 p.c.
Free 15 p.c. 22* p.c. 17* p.c. 22* p.o. 15 p.c. 20 p.o. 15 p.c. 30 p.c. 15 p.c. 15 p.c. 20 p.c.
25 p.c. 25 p.o. 32* p.c. 25 p.c. 30 p.o. 22* p.c. 27* p.c. 30 p.c. 37* p.o. 25 p.c. 25 p.c. 27* p.c.
27* p.c. (428b) 35 p.c. (192)
35 p.o. (199)
35 p.c. (322a) 35 p.o. (323)
25 p.c. (346)
30 p.c. (352)
30 p.c. (354)
45 p.c. (362) 27* p.c. (390) 27* p.c. (390a) 30 p.c. (392)
2410	COMMONS
The Budget-Mr. Dunning
438f
Hot rolled strip of iron or steel with rolled or mill edge, not being of greater value than 2| cents per pound, of a class or kind not made in Canada, when imported by manufacturers of automobiles, motor vehicles or chassis enumerated in tariff items 438a and 424 or by manufacturers of parts of automobiles, motor vehicles or chassis enumerated in the tariff items 438a and 424 to be used in the manufacture of such automobiles, motor vehicles or chassis, or parts thereof, in their own factories	per ton
445a Electric head, side and tail lights, n.o.p.; electric torches or flashlights and complete parts therefor..
445f Electric dynamos or generators and transformers, and complete parts thereof, n.o.p	
445g
445k
445m
Electric motors, and complete parts thereof, n.o.p...
Electric apparatus, and complete parts thereof, n.o.p..
Flame proof electric switch gear, for use underground [DOT] in coal mines, and complete parts thereof	
446a
Manufactures, articles or wares of iron or steel or of which iron or steel or both are the component materials of chief value, n.o.p	
447a Sand cast rolls and chilled cast iron rolls imported by proprietors of rolling mills for use exclusively in rolling iron or steel, or by manufacturers of paper for use exclusively in manufacturing paper in their own factories	
447b Forged steel rolls, hardened and ground, imported by proprietors of rolling mills for use exclusively in rolling non-ferrous metals	
| 22} p.c. 22} p.c. 15 p.c. 20 p.c. Free	30 p.c. 30 p.c. 27} p.c. 27} p.c.	35 p.c. (394b) 35 p.c. (404b) 35 p.c. (427) 30 p.c. (438e) 	
(438i)20 p.c. 25 p.c. 25 p.c. 15 p.c. 15 p.c.	30 p.c. 33} p.c. 33} p.c. 25 p.c. 27} p.c.	30 p.c. (445a) 37} p.c. (445f) 37} p.c. (445g) 30 p.c. (445k) 35 p.c. (446a)$8.00	7} p.c. $4 [DOT] 00 per ton Free	15 p.c. $8.00 $4.00	15 p.c. (382a) $8.00 (382b) $4.00 (818)30 p.c.	20 p.c.	30 p.c.	30 p.c.37} p.e.	25 p.c.	33} p.c.	37} p.c.37} p.c.	25 p.c.	33} p.c.	37} p.c.30 p.c.	15 p.c.	25 p.c.	30 p.e.30 p.c.	Free	20 p.c.	30 p.c.35 p.c.	15 p.c.	27} p.c.	35 p.c.Free	Free	Free	Free15 p.c.	27} p.c.	35 p.c.Free	Free 15 p.c.	Free 27} p.c.	Free 35 p.c.
The Budget-Mr. Dunning

Tariff Item	British	Inter-	Present Rates	Preferential Tariff	Tariff	Tariff	B.P. Tariff	Intermediate Tariff	General Tariff462	Philosophical, photographic, mathematical and optical instruments, n.o.p.; speedometers, cyclometers and pedometers, n.o.p.; complete parts of all the foregoing	15 p.c.	25 p.c.	30 p.c.	15 p.c.	25 p.c.	30 p.c.462a	Photographic cameras and equipment for use by professional photographers and commercial photofinishers in their own business, as follows:- Cameras for professional purposes, for making negatives 4J inches by 65 inches and larger, and the following accessories for use with such cameras: lenses, shutters, exposure meters, range finders, film and plate holders, lens hoods, lens boards, ground glass carriages, reducing backs, reversible adapter backs, lantern slide attachments, film sheaths, combination paper and plate holders, kits, carrying cases, camera stands, camera tripods, camera tripod tops, vignetters, diffusion disks, diffusion disk holders, colour filters, colour filter holders, polarizing screens, polarizing screen holders and backgrounds	
Printers, enlargers, heaters, dryers, mounting presses, print washers, automatic film processers, printing frames and tanks for developing, fixing and washing	Free	Free	Free	25 p.c.	35 p.c.	35 p.c. (288)463	Magic lanterns and slides therefor, n.o.p	Free	20 p.c.	25 p.c.	15 p.c. 15 p.c. 15 p.c. 20 p.c. Free	274 p.c. 274 p.c. 25 p.c. 40 p.c. 20 p.c.	35 p.c. (427) 35 p.c. (446a) 30 p.c. 1462) 40 p.c. (622) 25 p.c.473	Plates for printing in two or more colours, including electrotypes, nickeltypes and all engravings on steel or other metal, for use exclusively in printing, n.o.p.	Free	15 p.c.	20 p.c.	Free	15 p.c.	20 p.c.473a	Printing plates of all kinds for periodical publications enjoying second-class mailing privileges, and matrices, metal bases and copper shells therefor	Free	7£ p.c.	25 p.c.	10 p.c.	15 p.c.	20 p.c.476a	Glassware and other scientific apparatus for laboratory wrork in public hospitals; chairs and tables for surgical operating purposes, and complete parts thereof; infant incubators and complete parts there-	Free	15 p.c.	20 p.c.
The Budget-Mr. Dunning
494b
505a
522c
523a
523b
529a
Cork blocks, boards, planks, slabs, rods or tubes, produced from cork waste or from granulated or ground cork, when for use in Canadian manufactures
Sawn boards, planks and deals planed or dressed on one or both sides, when the edges thereof are jointed or tongued and grooved, n.o.p	
of; electro cardiographs and complete parts thereof, and sensitized film and paper for use therein; apparatus for sterilizing purposes, including bedpan washers and sterilizers but not including washing nor laundry machines; all for the use of any public hospital, under regulations prescribed by the Minister	
Hardwood flooring, tongued and/or grooved, or jointed, viz.:-beech, birch, maple and oak	
Rovings, yams and warps wholly of cotton, not more
advanced than singles, n.o.p	
and, per pound
Rovings, yarns and warps wholly of cotton, including threads, cords and twines generally used for sewing, stitching, packaging and other purposes, n.o.p.; cotton yarns, wholly or partially covered with metallic strip, generally known as tinsel thread...
and, per pound
Woven fabrics, wholly of cotton, not bleached, mercerized nor coloured, n.o.p., and seamless cotton
bags	
and, per pound
Woven fabrics, wholly of cotton, bleached or mercerized, not coloured, n.o.p	
and, per pound
Woven fabrics, wholly of cotton, printed, dyed or
coloured, n.o.p	;
and, per pound
Embroideries, lace, nets, nettings, bobinet, n.o.p.,
fringes and tassels, wholly of cotton	
and, per pound
Lace and embroideries wholly of cotton, not coloured, imported by manufacturers for use exclusively in the manufacture of clothing in their own factories..
Free	Free
Free	Free
17} p.c.	22} p.c.
17} p.c.	22} p.c.
12} p.c.	15 p.c. 3} cts.
	
15 p.c.
15 p.c.
20 p.c. 22} p.c.
20 p.c.
7} p.c.
22} p.c. 3} cts.
20 p.c. 3} cts.
22} p.c. 3} cts.
27} p.c. 3} cts.
27} p.c. 3} cts.
12} p.c.
Free	Free	Free	Free15 p.c.	25 p.c.	30 p.c.20 p.e.	30 p.c.	45 p.c.20 p.c.	30 p.c.	30 p.c.Free	Free	Free	FreeFree	17} p.c.	20 p.c.25 p.c.	17} p.c.	22} p.c.	25 p.c.25 p.e.	17} p.c.	22} p.c.	25 p.c.22} p.e.	12} p.c.	15 p.c.	22} p.c.4 cts.	2 cts.	3} cts.	4 cts.25 p.c.	15 p.c.	22} p.c.	25 p.c.4 cts.	2 cts.	3} cts.	4 cts.25 p.c.	17} p.c.	20 p.c.	25 p.c.4 cts.	2 cts.	3} cts.	4 cts.27} p.c.	20 p.c.	22} p.c.	27} p.c.4 cts.	2 cts.	3} cts.	4 cts.32} p.c.	22} p.c.	27} p.c.	32} p.c.4 cts.	2 cts.	3} cts.	4 cts.30 p.c.	20 p.c.	27} p.c.	30 p.c.4 cts.	2 cts.	3} cts.	4 cts.20 p.c.	1 12} p.c.	17} p.c.	20 p.c.
The Budget-Mr. Dunning

Tariff
Item
British
Preferential
Tariff
Intermediate
Tariff
Clothing, wearing apparel and articles made from woven fabrics, and all textile manufactures, wholly or partially manufactured, composed wholly of cotton, n.o.p.; fabrics wholly of cotton, coated or
impregnated, n.o.p	
and, per pound
25 p.c.
30 p.c. 1} cts.
558b
Rovings, yams and warps wholly of artificial silk or similar synthetic fibres, produced by chemical processes, not more advanced than singles, not coloured, with not more than seven turns to the inch, under such regulations as the Minister may prescribe:
(a)	Produced from cellulose acetate	
Provided that, in no case, shall the duty under
the Intermediate or the General Tariff be less than	per pound.
(b)	N.o.p	
Provided that, in no case, shall the duty under
the Intermediate or the General Tariff be less than	per pound.
p.c.
20 p.c.
30 p.c.
28 cts. 30 p.c.
28 cts.
558d
Rovings, yarns and warps wholly or in part of artificial silk or similar synthetic fibres produced by chemical processes, n.o.p., including threads, cords or twist for sewing, embroidering or other purposes, not to contain silk; artificial silk yarns wholly or partially covered with metallic strip, one pound of which shall contain not less than 10,000 yards; under such regulations as the Minister may prescribe:-
(a) Produced wholly from cellulose acetate....
Provided that, in no case, shall the duty under the Intermediate or the General Tariff be less than	per pound.
7} p.c.
30 p.c. 28 cts.
(b) N.o.p	
Provided that, in no case, shall the duty under the Intermediate or the General Tariff be less than	per pound.
25 p.c.
30 p.c.
28 cts.
to
General Tariff	Present Rates		
B.P. Tariff	Intermediate Tariff	General Tariff35 p.c.	25 p.c.	30 p.c.	35 p.c.4 cts.	2 cts.	3J cts.	4 cts.35 p.c.	20 p.c.	30 p.c.	35 p.c.28 cts.	20 cts.	28 cts.	28 cts.35 p.c.	20 p.c.	30 p.c.	35 p.c.28 cts.	20 cts.	28 cts.	28 cts.35 p.c.	25 p.c.	30 p.c.	35 p.c.28 cts.	28 cts.	28 cts.	28 cts.35 p.c.	25 p.c.	30 p.c.	35 p.c.28 cts.	28 cts.	28 cts.	28 cts.
s
o
The Budget-Mr. Dunning
564a
567a
569c
569e
607
Part 2
Woven fabrics wholly or in part of artificial silk or similar synthetic fibres produced by chemical processes, not to contain wool, not including fabrics in
chief part by weight of silk, n.o.p	
and, per pound
30 p.c.
Irish poplin, composed wholly of silk and wool, not exceeding twenty-five inches in width, imported in the web in lengths of not less than five yards each, under such regulations as the Minister may prescribe, by manufacturers of neckties, scarves or mufflers for use exclusively in the manufacture of such articles in their own factories	
20 p.c.
Clothing, wearing apparel and articles, made from woven fabrics and all textile manufactures, wholly or partially manufactured, n.o.p., of which the component of chief value is artificial silk or similar synthetic fibres produced by chemical processes..	25 p.c.
and,perounce	
Hat braids, of a class or kind not made in Canada, whether woven, knitted or plaited, not exceeding six inches in width, imported for use exclusively in the manufacture of hat bodies or shapes, but not for use in the ornamentation or trimming of such bodies or shapes, under regulations prescribed by the Minister	 Free
Miners' safety helmets for use exclusively in mining operations, firemen's helmets and sand-blast helmets, of a class or kind not made in Canada	
Free
40 p.c. 40 cts.
35 p.c. 5 cts.
Free
Free
Fur skins, wholly or partially dressed, n.o.p	
Provided, that the duty on hare or rabbit skins under the General Tariff shall not be less than	per dozen
10 p.c.
p.C.
Leather, as hereunder described, but not to include suedes, Cabrettas, Spanish capes or African capes, when imported by manufacturers of gloves or leather clothing, for use exclusively in manufacturing gloves or leather clothing in their own factories, viz.:-
(i)	Made from sheepskins	
(ii)	N.o.p	
5 p.c. 5 p.c.
7} p.c. 15 p.c.
45 p.c. 40 eta.
50 p.c. 7 eta.
Free
Free
15 p.c. 72 eta.
20 p.c. 20 p.c.
27$ p.c.	40 p.c.
30 eta.	40 eta.
27$ p.c.	35 p.c.
17 eta.	30 eta.
30 p.c.	40 p.c.
	
Free	Free
Free	Free
22$ p.c.	30 p.c.
75 eta.	*1.50
15 p.c.	25 p.c.
10 p.c.	15 p.c.
	
5 p.c.	7$ p.c.
5 p.c.	7$ p.c.
45 p.c. 40 eta.
40 p.c. per pound 45 eta.
50 p.c. 7 eta.
Free
Free 35 p.c. per dozen, *1.50 27$ p.c.
15 p.c.
72 eta.
20 p.c. 20 p.c.
C/l
The Budget-Mr. Dunning

Tariff Item	British Preferential Tariff	Inter- mediate Tariff	General Tariff	Present Rates	B.P.	Intermediate	GeneralTariff	Tariff	Tariff618a	Comb blanks of hard rubber, not further manufae-	tured than pressed and vulcanized, when imported	by manufacturers of hard rubber combs for use exclusively in the manufacture of such hard rubber	Free	71 p.c.	10 p.c.	Free	71 p.c.	10 p.c.657	Mouthpieces of hard rubber in the rough, aluminum	pipe fitments, pipe bowls moulded from briarwood dust, and briarwood bowls not further processed	than frazed, when imported by manufacturers of tobacco pipes for use exclusively in the manufacture	Free	15 p.c.	25 p.c.	15 p.c. 15 p.c.	30 p.c. 25 p.c.	30 p.c. 27\ p.c.15 p.c.	25 p.c.	25 p.c.171 P-e.	20jp.c.	25 p.c.657a	Cinematograph or moving picture films, positives, one and one-eighth of an inch in width and over, n.o.p	per linear foot	1$ cts.	3 cts.	3 cts.	11 cts.	3 cts.	3 cts.663c	Soya beans, soya bean oil cake and soya bean oil	meal, when imported by manufacturers of animal and poultry feeds or of fertilizers for use exclusively in the manufacture of animal or poultry feeds	Free	Free	Free	Free	Free	Free15 p.c.	25 p.c.	25 p.c.663d	Soya bean oil meal and soya bean flour, inedible,	when imported by manufacturers of glues or adhesives for use exclusively in the manufacture of such glues or adhesives, in their own factories...	Free	Free	Free	15 p.c.	25 p.c.	25 p.c.663e	Sea-weeds or sea-plants, charred, whether powdered	or not, for use exclusively in the feeding of animals..	Free	25 p.c.	25 p.c.	15 p.c.	25 p.c.	25 p.c.695	Paintings in oil or water colours and pastels, valued	221 P-c.	15 p.c.	221 P-e.	25 p.c.	15 p.c.	25 p.c.695b	Hand-made drawings, sketches or designs, but not	including patterns, viz.:-drawings, sketches or designs of wearing apparel, including boots and	shoes, wall or floor coverings and textile fabrics, when imported in single copies of each such drawing, sketch or design for use in the manufacture of wearing apparel, boots or shoes, textile fabrics, wall or floor coverings, or of patterns	Free	Free	Free	Free	Free	Free
to
+-
I-*
o>
g
g
o
[Stage Direction]
77te Budget-Mr. Dunning
Educational moving picture films of all widths, silent or sound, positive or negative, and sound disks or records designed for use with such films, when certified by the Minister as entitled to exemption from Customs duty under the Convention for Facilitating the International Circulation of Films of an Educational Character; subject to such regulations as the Minister may prescribe	
Free
All articles specially designed for the use of the blind, whether for educational, recreational, industrial, personal or other purposes, when for blind persons and imported by, or on the order or certificate of, the Canadian National Institute for the Blind, or other bona fide institution or association for the blind	
Free
Free
Free
(a) Travellers' baggage, under regulations prescribed by the Minister	
Free
(b)	Goods valued at not more than one hundred dollars included in the baggage accompanying residents of Canada returning from abroad after an absence from Canada of not less than forty-eight hours and acquired by them for personal or household use or as souvenirs or gifts, but not bought on commission or as an accommodation for other persons or for sale, under regulations prescribed by the Minister	
Provided that a resident of Canada shall not be entitled to the exemption herein granted within a period of four months from the date of the last exemption allowed, nor shall the exemption be allowed on alcoholic beverages in excess of one quart, or on tobacco in excess of fifty cigars, two hundred cigarettes and two pounds of manufactured tobacco.
Materials and parts as hereunder specified, when imported by manufacturers of umbrellas, parasols, sunshades, walking sticks or canes, under such regulations as the Minister may prescribe, for use in the manufacture of such articles in their own factories:-
Free
(a) Mounts, sticks, rods, ribs, runners, rings, caps, notches, tips, ferrules and assembled frames.
Free
(b) Umbrella-covering fabrics of a kind not made in Canada, whether or not specially treated but not further manufactured than with hemmed
Free
Free
10 p.c.
			
Free	20 p.e.	30 p.c.	35 p.c.Free	20 p.c.	25 p.c.1£ cts.	3 cts.	3 cts.Free	Free	Free	Free(Dutiable at var	ying rates)	Free	Free	Free	FreeFree	(No previous cla	ssification; dutia	ble according tomaterial, etc.)	20 p.c.	Free	17|p.c.	20 p.c.Free	12| p.c.	15 p.c.Free	5 p.c.	7} p.c.
The Budget-Mr. Dunning

Tariff	British Preferential	Inter-	General Tariff	Present Rates	Item	Tariff	Tariff	B.P. Tariff	Intermediate Tariff	General Tariffselvedges, when imported in lengths of not less than ten yards each, with or without natural selvedges	Free	10 p.c.	20 p.c. 40 p.c.	25 p.c. 45 p.c. per yard, 10 cts. 45 p.c. per pound, 40 cts. 25 p.c.27$ p.c. and	
27$ p.c. and		40 p.c.	
805	Materials to be used as adhesives in cementing together glass sheets, when imported by manufacturers of safety or non-shatterable laminated glass, for use exclusively in the manufacture of such glass in their own factories		Free	Free	25 p.c.	30 cts.	40 cts. 25 p.c.	
							
o
[Stage Direction]
§
o
The Budget-Mr. Dunning

The Budget-Mr. Dunning
6. Resolved, that schedule B to the Customs Tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, be amended by striking thereout tariff items 1030 and 1055, the enumerations of goods and the rates of drawback of customs duties set opposite to each of the said items, and by inserting the following items, enumerations and rates of drawback of customs duties in said schedule B:-
Item No.	Goods	When Subject to Drawback	Portion of Duty (not including Special Duty or Dumping Duty) Payable as Drawback1011	Rhinestones, settings for rhinestones, metal spots and beads.	When imported by manufacturers of dress trimmings and used exclusively in their own factories in the manufacture of dresses and dress trimmings...	99 p.c.1025	Hot rolled hexagon bars of Bes-	When used in the manufacture of cold	semer steel not being of greater value than 4 cents per pound.	drawn bars	99 p.c.1030	(a)	Materials, n.o.p	
(b)	Woven fabrics, wholly of cotton, not bleached, mercerized nor coloured, weighing not	When used exclusively in the manufacture of articles enumerated in Tariff Item 236	
When imported under the British Preferential Tariff and used exclusively in the manufacture of articles enumerated	50 p.c.more than seven and one-half pounds per one hundred square yards	in Tariff item 236	99 p.c.1052	Machinery, new or used, of a class or kind not made in	When imported by manufacturers of automobiles and motor vehicles or of	Canada.	automobile and motor vehicle parts to be used in the production of such automobiles and motor vehicles or automobile and motor vehicle parts	99 p.c.1060	Paper of all kinds	When used by the publisher or printer in Canada in the production of periodical publications enjoying second-class mailing privileges	50 p.c.7. Resolved, that schedule C to the Customs	Statutes of Canada, 1927, be amended by add-Tariff, being chapter forty-four of the Revised	ing thereto the following items:-1218	Used or second-hand periodical publications:
Provided, that this item does not affect in any manner periodical publications:-
(a)	Sent, gratis, to Canada for charitable purposes;
(b)	Sent to persons in Canada as casual donations by friends abroad;
(c)	Imported for personal or for institutional use, and not for resale;
(d)	Imported by or for paper mills for use as stock in the manufacture of paper.
1219	Used or second-hand mattresses or materials therefrom:
Provided, that this item does not affect in any manner:
(a)	Mattresses imported under Tariff Items 704, 705, 706, 707, 708, or under tourists' or travellers' vehicle permits;
(b)	Materials from used or second-hand mattresses, when imported after having been cleaned and fumigated, under such regulations as the Minister may prescribe, accompanied by such certificates as he may designate.
8.	Resolved, That any enactment founded upon the foregoing resolutions to amend the Customs Tariff or schedules thereto shall be deemed to have come into force on the 2nd day of May, one thousand nine hundred and thirty six, and to have applied to all goods
mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that date, and to have applied to
foods previously imported for which no entry or consumption was made before that date.
The Budget-Mr. Bennett
Right Hon. R. B. BENNETT (Leader of the Opposition):: Mr. Speaker, there has
grown up in this country a custom of not proceeding with the budget debate promptly on the conclusion of the address by the Finance minister. In the early days of the history of the dominion the debate was immediately proceeded with, but in view of the fact that a large portion of the budget speech, notably that comprising all the tariff changes, has not been read but has been placed on Hansard, where we shall have to read it in order to become familiar with the material contained in the tables and the details of the resolutions, it is obvious that the debate could not usefully be proceeded with now. I had intended, had the changes not been so extensive, to proceed at once, but from the very nature of the circumstances I shall be compelled to move now the adjournment of the debate. I do not know when it would be most convenient to resume it, but whatever suits the convenience of the government will be satisfactory to me.
Motion agreed to and debate adjourned.


Mr. MACKENZIE KING:: As to proceeding with the debate on the budget, the government thought of proceeding on Monday, but if it would better suit the convenience of my right hon. friend we will make it Tuesday.


Richard Bedford Bennett: I greatly appreciate the
courtesy of the right hon. gentleman. I think the budget speech last year was delivered on a Thursday and we continued the debate on the following Tuesday, but it is quite immaterial whether this debate is resumed on Tuesday or Monday. If Tuesday is quite as satisfactory to the government we can make it Tuesday, but if the government prefers to go on with it on Monday we can proceed with it on Monday.


William Lyon Mackenzie King: I think, Mr. Speaker, it would meet with the general approval of the house if you would now call it six o'clock.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.
FISHERIES ACT AMENDMENT On the order:
Resuming debate on the motion of Mr. Reid for the second reading of Bill No. 20, to amend the Fisheries Act, 1932.


Mr. REID:: When the house was last considering this bill the Minister of Fisheries (Mr. Michaud) had not completed his remarks and I believe it was his desire that it should stand over until he had an opportunity to make a further reply.
Motion stands.

The house in committee of supply, Mr. Sanderson in the chair.



DEPARTMENT OP MARINE

[Stage Direction]
Other projects-to provide for the construction, repair and replacement of aids to navigation and buildings and structures used in connection therewith, $379,875.
Mr. STEWART:: Could the minister give
us some details of this vote?


Hon. C. D. HOWE (Minister of Marine):: This refers to a large number of items, chiefly repairs to lighthouses and work of that sort, which have been deferred for a number of years due to measures of economy. They do not appear in the main estimates of this year for the same reason, but in view of the fact that the work would be about seventy-five per cent labour, which would be distributed among a class of people who are very badly in need of help, namely the fishermen and those people living along our sea-coasts and inland waters, it was thought that this would be an opportune time to do this necessary work.


Hugh Alexander Stewart: There is some provision for new construction; has the minister any information with regard to that?


Mr. CLARKE (Rosedale):: Will any of this money be spent on inland waters?


Clarence Decatur Howe: Yes.


Harry Gladstone Clarke: How much?


Clarence Decatur Howe: I will give the figures for the different provinces. In Nova Scotia the amount to be expended totals $99,000; the total for the Charlottetown, Prince Edward Island agency is $11,800; for the New Brunswick agency, $31,625. The amount for the Quebec agency totals $17,500, which will cover work along the lower St. Lawrence river, while the $24,000 allotted to the Montreal agency will cover work on the upper St. Lawrence. The amount allotted to the Ontario agency is $53,500, which will cover work on lake Ontario and lake Erie.

Supply-Marine
Mr. CLARKE Rosedale): Will it go no further than lake Erie?


Clarence Decatur Howe: It will extend up to lake Superior. All the lakes are under the Ontario agency. The amount allotted to the British Columbia agency is $32,450.


Mr. LENNARD:: Are any repairs being done this year to the piers at Hamilton beach? The minister may not be able to furnish this information immediately and perhaps he can give it to me later on.


Clarence Decatur Howe: This vote does not cover canals, which would come under the Department of Railways and Canals. This is a Department of Marine vote.


Mr. WOODSWORTH:: Is any provision being made to furnish greater protection to boats between the mouth of the Red river and the pleasure resorts at the south of lake Winnipeg? The lake at that point is treacherous and a number of lives have been lost. Representations have been made to me by the board of trade of Winnipeg and others asking that the small expenditure necessary be made by the department to make this end of the lake a great deal safer.


Clarence Decatur Howe: Two or three lights are to be built at Winnipeg Beach under this vote. My officials believe that these will give the required aids to navigation on lake Winnipeg.


James Shaver Woodsworth: Would it be possible to have some sort of telephone service or signals to give warning of approaching storms?


Clarence Decatur Howe: The matter of signals has been considered by the lighthouse board, but that board has not recommended them and they are not included. I may say that this lighthouse board is made up of the senior officials of the Department of Marine and others. It passes on all applications for lights, signals or anything in the way of aids to navigation, and ordinarily unless the application passes the board no appropriation is made.


Mr. MacNEIL:: Does this item provide for the maintenance of navigation signals? I have reference to the difficulties that arose recently in connection with needed repairs to navigation signals in the port of Vancouver. These signals went out of operation recently and one of the West Vancouver ferries ran aground. It took several days to secure the services of an expert from Victoria. I should like to know if provisions are being made whereby these signals may be quickly repaired should they go out of order, particularly during the foggy season.


Clarence Decatur Howe: I may say that the repairs mentioned by my hon. friend have been made already. This vote includes $15,000 for rebuilding Burnaby shoals beacon.


Charles Grant MacNeil: Will there also be available expert repair men for immediate repairs of any breakdowns in the signals?


Clarence Decatur Howe: Arrangements have been
made with the Vancouver harbour commissioners that any repairs required to the lights, even though they are not within the jurisdiction of the harbour, will in future be attended to by the mechanics of the Vancouver harbour commission. We think that will be quite an improvement.


Harry Gladstone Clarke: Will any proportion of this amount be spent in Toronto harbour?


Clarence Decatur Howe: There is no amount in this
item for Toronto harbour.


Mr. NEILL:: The amount allowed to
British Columbia, I understood, was $32,000.


Clarence Decatur Howe: 


Alan Webster Neill: One item alone has $15,000
earmarked for it. That does not leave very much for the numerous aids required in the district I represent and that of Skeena. It is evident that the minister has not allowed -at least I ask him if he has considered- the removal of Ripple rock in Seymour narrows? That would cost a lot of money, I admit, but it is a necessary undertaking. Some day, if the matter is not attended to, it is going to cost an enormous loss of life. The rock is submerged about ten feet at low tide. A heavy current runs through there; there is a side current which comes in from a side channel and which tends to drift boats over on to this rock; and all boats of any size, unless they are very powerful, have to wait perhaps five or six hours in order to fit the tide, because they can go in only on slack water, which is a very short time. Some years ago an American boat went up there, struck a rock and pierced her bottom. Lucidly they happened to be able to beach her without loss of life. But traffic there is increasing all the time; there are more boats, and the pressure of keeping up schedules compels them to take a greater chance. Some day a most disastrous marine accident is going to occur there. I have not taken this up with the present minister, but in years gone by I have repeatedly put it up to past governments, and they have all promised consideration. I admit that a large sum would be required. I believe that at one time shipping interests were so much
Supply-M arine

concerned that the United States government made a suggestion that they share part of the expense of the work, because their traffic used the Seymour narrows so much and the danger was so great. But the Canadian government of that time did not think it would be dignified to accept such an offer, or there was some other reason. But if the department is spending money now in a large way for work of that kind I suggest that, if it is not too late, the minister might at least consider that project. I am sure that he will have records with full information on file in his office.


Clarence Decatur Howe: The item in question was
carefully considered but it was left out for two reasons. One is because it would cost somewhere between $300,000 and $500,000, and the second is that it is work which requires very little labour. In this particular schedule we have taken only items where not less than fifty per cent of the expenditure is labour. The purpose of this estimate is to furnish some help to the people along the shore who have been having a bad time. But I shall be glad to look into the matter further and perhaps at some future time under another program we shall be able to do the work. My officers realize that it is quite necessary.


Alan Webster Neill: I thank the minister for
his promise. I admit that a great deal of labour would not be involved, but I think his information regarding the cost is inaccurate. I believe it could be done for $150,000. We had, I think estimates of that cost. I know there are engineers' estimates in the department; whatever their amount is would no doubt be correct. I am speaking only from memory of some years ago, but I thought it did not exceed $150,000.
Mr. MacNEI'L:	Has provision been made
n this item for the repair of floats at the smaller settlements along the coast to enable steamships to call?


Clarence Decatur Howe: The Department of Public
Works has charge of all the floats on this island.


[Stage Direction]
Item agreed to.
To provide for the reconditioning and conversion of government steamers, $175,000.
Alan Webster Neill: Does this cover any provision for replacing the boat called the Newington, on the Pacific coast? It is a lighthouse tender.


Clarence Decatur Howe: Yes, it does. This is a
constructive item, and it is one that I have sponsored personally. We find that we have in the Department of Marine a great number of boats, many of which are over
[Mr. Neill.)
twenty years old and in bad condition. The objection that I found to this work of the department was that all these boats were for special purposes, and after they had performed their little service they were through for the season. The purpose of this item is to revamp several boats and allow them to serve a double purpose. Each boat that is revamped will serve its present purpose and one other. We have now at Sorel a suitable boat which we are going to recondition to replace the Newington. We intend to put in a double bottom, make it into a first-class boat and send it to Prince Rupert. It has ample power and cruising range, and with a few alterations will be very suitable to take the place of the Newington.


Alan Webster Neill: That is gratifying, because
this has been a long-felt want; the service is requiring more boats all the time. When may we expect to have that boat on the Pacific?


Clarence Decatur Howe: We hope to finish the alterations this summer. I should think it will be round there this fall, in September or October.


Richard Bedford Bennett: Which boat is that?


Clarence Decatur Howe: It is coal barge No. 7.


Alan Webster Neill: I suggest that it be given
a proper name, appropriate to the west coast where it is going to operate. It might be called the Alberni instead of being designated by a number.


Clarence Decatur Howe: I shall be glad to consider
that.


Richard Bedford Bennett: Beyond that, what are
the particulars of the $175,000? Has the minister the particulars?


Clarence Decatur Howe: Yes. It is intended to take
the ice-breaker Saurel, do away with its palatial passenger accommodation and make it into a buoy boat as well as an ice-breaker. As we know, it has tremendous power. With a few alterations and some additional equipment it will be able to handle buoys and it will take the place of the Druid, which is a very old boat, and expensive to operate.


Richard Bedford Bennett: What is it estimated
that it will cost?


Clarence Decatur Howe: That cost is $50,000. Then
there is provision for the refitting of the Dollard. The Dollard is a buoy boat operating out of Saint John. By revamping the boilers and giving it greater cruising range it will do its own work and also the work now handled by the Laoirentian, a second buoy boat. We have mentioned coal barge No. 7,

Supply-Marine
which will replace the Newington. We have in Quebec a tug called the Citadelle, which is fitted up as a fire tug. It has never thrown a stream of water. It is a very powerful tug. One of its purposes was to turn the Empress of Britain, but private tugs have come into Quebec to do the work to the satisfaction of the Canadian Pacific; they say that they have no further use for the Citadelle. We will have a separate fire tug which will do the work as well as the Citadelle. We propose to refit the accommodation so that it can replace the Jalobert, now used as the pilot boat at Father Point. It is adequate for that service, and in winter months after its bow has been strengthened, it can be used on the Nova Scotia coast for ice-breaking in the harbours there. It is a lighter boat than the one now in use; I am told that it will foe quite adequate for this work, and that a considerable saving will be made.


Mr. HARTIGAN:: What was the amount again?


Clarence Decatur Howe: It was $50,000.


David James Hartigan: Is it the intention of the minister to abandon the Laurentian?


Clarence Decatur Howe: Yes, after we have been satisfied that the Dollard can do the service adequately we intend to lay up the Laurentian.


Richard Bedford Bennett: The changes mentioned by the minister are changes that we considered many months ago, I do not say in detail, but in the broad principle. While I am not an expert, from the evidence that was presented to me I was of opinion in connection with these old steamers, anywhere from ten to twenty or twenty-five years old-
I think that is the oldest-that to undertake to rebuild a boat constructed for a special purpose, and to reboiler her, having regard to changed conditions in regard to the production of steam and the utilization of other mechanical devices for the production of motive power, was a doubtful venture. For instance, modern science has made great improvements in even the last ten years. In connection with boats for the purpose of taking up and putting down buoys, for example, we have had tremendous changes since the first boat was built for that purpose.
I noticed that the last boat I saw, built for that class of work, was of entirely different construction from the one I saw many years before. The question of marine equipment, such as cranes, and the rapidity with which power can be applied to windlasses and cap-12739-155
stans for the purpose of moving a boat, and that sort of thing, made me douibt whether it was sound economy, apart from anything else, to attempt to recondition these boats. The minister says that he has satisfied himself on the point, and obviously his training has been more closely allied to matters of this kind than mine, but I certainly doubt whether it is sound economy to undertake what he says is being done. Certainly these boats cannot work in the winter if they are equipped only for lifting and putting down the buoys in the St. Lawrence, because the buoys are taken up in the fall and put down in the spring, and a special boat for that purpose cannot be utilized in the winter time for general purposes in Nova Scotia or anywhere else. In other places, where there are continuously sounding buoys, spar buoys and matters of that kind constantly in place, it is the duty of these boats to see that such buoys do not move out of place so that they become faulty aids to navigation. If the minister has satisfied himself, obviously I can only point out to him that the effort we made to see how some of these steamers might be repaired at not too great a cost induced me to believe that for the purposes the minister has suggested it would be sound economy to build new boats. That is all I desire to say in that regard.


Clarence Decatur Howe: We are fortunate, I think, in having in the Department of Marine, in charge at Sorelj, Mr. David Carswell, who was appointed by the late government. He is an able shipbuilder; I know him very well and I have great confidence in him. I might point out to my right hon. friend that the boats we are proposing to remodel are our newest boats. For instance, the Saurel is a splendid ice-breaker, but once it is through breaking ice we have no use for it unless, perhaps, it may be used to carry the governor general.


Richard Bedford Bennett: It took him to the Magdalen islands.


Clarence Decatur Howe: Yes. It is a splendid boat, and it is a pity that it can work only for a month in the spring, breaking ice, and for a month in the fall, keeping the channel open.


Richard Bedford Bennett: The N. B. McLean is in the same class, except that it is sent to Hudson bay.


Clarence Decatur Howe: Yes. The Saurel is our second best ice-breaker and we feel that if we can keep it in service during the summer, if it will do the work of another boat, it is good economy to spend $50,000 on it for equip-

Supply-Marine

ment. I may say that the Citadelle is practically the newest boat we have; it is almost a brand new tug, and its earnings last year were S600. As far as a fire tug goes, a much smaller boat with less power is equally useful, because it must have steam up twenty-four hours a day. Otherwise its only duty is to pump water in case of fire, so in replacing that boat we are releasing a splendid ship which we can use pretty well the year round as a combination pilot boat and ice-breaker, for the small amount of ice-breaking required along the Nova Scotia coast. We feel thatin this way we can keep that boat occupied twelve months a year.


Richard Bedford Bennett: I think I should say to the minister that I do not believe it is sound economy to eliminate entirely the maintenance of a boat for fire protection in Quebec, as long as we have the present type of ships coming there and tying up to the docks and the number of passengers who are landed there. My inquiries, both on this and on the other side of the water, satisfied me that although it might look expensive, nevertheless the maintenance of a fire boat seemed almost essential. The minister knows the great discussion that has taken place over the question of a fire boat at Quebec. The Citadelle, as he says, was not intended originally as a fire boat, but she was provided with equipment which enables her to throw a stream of water well over the sheds at Wolfe's cove, according to my memory, though I speak subject to correction. Only a few months ago I was discussing the matter of fire boat protection in these harbours, and it appears to be the universal opinion that you must have it. In New York, as the minister probably knows better than I do a great deal of money has been thus used; this is one of the matters to which they have paid great attention, and I think it has a profound effect, if I might use that word, upon the whole question of insurance as dealt with by Lloyd's and other world underwriters. I merely mention this because, when we came into office and during succeeding years, discussions regarding a fire boat at Quebec were numerous. Ultimately this boat was equipped for that purpose.


Clarence Decatur Howe: I should like to make it quite clear that we are not taking away from Quebec anything in the way of fire protection. We are sending there a boat not nearly as heavily engined as the Citadelle but we are transferring all the fine pumps and monitors from the Citadelle to this smaller boat.


Richard Bedford Bennett: Will she carry them?


Clarence Decatur Howe: Yes, she is quite capable of carrying them, and this will have the effect of releasing the Citadelle for other work.


Mr. KINLEY:: With regard to the suggestion of the leader of the opposition concerning the advisability of continuing steam power on these boats, I think it is a fair statement to say that older engineers in this country are partial to steam, from long acquaintance, and that the advent of Diesel power perhaps is not received as favourably as it would be by younger men. Whether these boats should be refitted with steam power is a matter for the technical department. I am glad of one thing, however, that we shall have more ice-breaking facilities on the coast of Nova Scotia, because many times during last winter we found that neither the Marine department nor the Fisheries department had a boat available to do the work along our coast.
There is another suggestion that I might make. The coast of Nova Scotia extends for quite a distance, and Halifax is sixteen miles in from the sea. One or more of these boats could very well make their headquarters in some other port and so be closer to the scene of operations when called on. The fact that the Marine department has headquarters in Halifax is no reason why the boats should all be quartered there, and when a boat is called for at Yarmouth or Sydney it should not have to go all that distance. If the boats were stationed along the coast one would always be closer and more available when needed.


Mr. RYAN:: Would Saint John satisfy you?


Clarence Decatur Howe: The Montcalm which is stationed in Nova Scotia waters makes her headquarters at Sydney. This year we found it impossible to do with the Montcalm all the work we were called upon to do. Our idea in having the Citadelle available was that it could work in the southern part of the province and so avoid the necessity of the Montcalm cruising such great distances. We were unable to give satisfaction, and it probably has been a very expensive year for operations.


Richard Bedford Bennett: You will have to change the bows of the Citadelle.


Clarence Decatur Howe: Yes, we are remodelling and strengthening it as part of the repairs.


[Stage Direction]
Item agreed to.
To provide for the removal of derelicts in the harbours of Canada, particularly Port Arthur, Fort William, Sarnia, South Bay and Richelieu river, $70,000.

Supply-M arine
Richard Bedford Bennett: Before the minister speaks on this item, perhaps I should point out that all these three items properly belong to the main estimates, and ordinarily would be found there. He has anticipated placing them in the main or general estimates, and is placing them in these special supplementaries for the reason he has given. These harbours are-I was going to say periodically-raked for derelicts and I thought were fairly clear at the present time, in view of the efforts made in that direction during the last few years. I mean not the last two, but the last few years, because in connection with operations at Port Arthur and Fort William, for instance, the firm which had in hand the placing of that new breakwater and the performance of certain dredging operations cleared out from the harbour-I would not describe them so much as derelicts but impediments to uniform depth of water in both harbours. The minister knows that dredging operations were carried on there in more recent years for the purpose of providing uniform depth of water in both harbours, and of ensuring safety of navigation. My information was that the harbour was swept fairly clear of these derelicts.


Clarence Decatur Howe: Ordinarily we have in the
main estimates an item for the removal of obstructions. This year the item was cut down to take care only of the work under way. We had one or two wrecks on which work was progressing and provided simply for it, the removal of obstructions being a thing we could defer, and we were pruning these estimates as much as we could. However, the removal of derelicts provides a large percentage of labour-


Richard Bedford Bennett: Does it? I thought not; I thought machines and a very small amount of labour were used.


Clarence Decatur Howe: We had a report made on
*these particular derelicts and we found the work of removal was about sixty per cent direct and indirect labour, which brought it into the class of work we were looking for. We are constantly having applications for this work. We have recently made stricter the regulations preventing the beaching of derelicts; it is the duty of every harbour master and other officials to report immediately such beaching to Ottawa when legal action is considered. We hope to prevent these practices in the future. But we have a great number of these. In Port Arthur I think there were some fifteen.


Richard Bedford Bennett: Are they beached or
under water?


Clarence Decatur Howe: Partly beached and partly
under water. The underwater ones are cleaned out in the main channels. In Sarnia-


Richard Bedford Bennett: There were two in the
channel there at one time.


Clarence Decatur Howe: Yes; it seems to have been
the practice in the past, if you got tired of your boat, simply to take it to Port Arthur or Fort William or Sarnia and leave it.


Richard Bedford Bennett: I thought it "left" the
crew.


Clarence Decatur Howe: Yes, possibly. In any event
we have this great number of derelicts. Pressure has been brought to bear upon the department for many years to take care of them, and we felt that this was a proper time.


Richard Bedford Bennett: The minister says that
pressure has been brought to bear upon the department for many years. I may say that ever since I have known anything of the government there has never been a time when there were not some derelicts removed. All the derelicts were not in sea channels, either.
The particular matter I desired to draw attention to is the Richelieu river. I observe that the minister has had his attention directed to it. It has been suggested that an effort is to be made to open a channel to the United States by utilizing the Richelieu river and certain canals. Has this work anything to do with that possibility? That is the only other question I desired to ask about this item.


Clarence Decatur Howe: The item at first covered
Fort William, Port Arthur, Sarnia and South Bay. It was enlarged at the last minute to take care of the Richelieu river.


Richard Bedford Bennett: I can readily understand its being enlarged.


Clarence Decatur Howe: I have not the exact details but we have a small item here for work in the Richelieu river.


Richard Bedford Bennett: But has it to do with
that transcendently important matter of reaching the Atlantic through the Richelieu river and canals down into the state of New York? Recently there has been considerable discussion in United States papers, less in Canadian papers, looking to that ultimate design behind such a work, and I wanted to know from the minister whether or not the suggestion of clearing the channel of the Richelieu river had anything to do with the projected work. The minister knows to what I refer?


Clarence Decatur Howe: Yes, quite.
2426	COMMONS
Supply-Marine-National Harbours Board


Richard Bedford Bennett: It has in view using the river and canals for the purpose of reaching the Atlantic ocean without going out past Quebec at all. by a certain type of small tonnage vessel and by barges. I think there was a time when this route was quite extensively used for barges of small size, but that was long ago. This suggestion I think was in part put forward by certain engineers in New York and apparently certain Canadian engineers thought well of it. I was interested to know whether or not this item contemplates any expenditure for that purpose?


Clarence Decatur Howe: This will do useful and, I
think, necessary work preliminary to that, in cleaning out the channel. The international waterways commission are studying the particular question to which my right bon. friend refers, and we were asked to delegate an engineer to work with them on the project. This is merely cleaning up the river; however, the work will be useful if anything develops the other way.


David James Hartigan: I call the attention of
the minister to the fact that this item refers mostly to western harbours. In. Sydney harbour we have a derelict which the former government tried unsuccessfully to raise and which is still left with us. I think about $2,600 was expended on the raising of that derelict, but still she lies there, a menace to navigation and an eyesore to the people as well as to incoming passengers. I should like to hear from the minister that action will be taken to remove that old derelict.


Clarence Decatur Howe: I should like to say that
there is a contract for the removal of the Pelican, and there is an item in the other estimates to pay for the cost of that work. We are having some difficulty, but we are hopeful that sufficient funds will be made available to complete the removal of that wreck.


Hugh Alexander Stewart: At the time these items were decided upon did the minister have before him an application for the removal of a number of derelicts from the harbour of Kingston? I know that in the past representations were made to the Department of Public Works for the removal of those boats, and some information was obtained about them. Over a period of years representations have been made, quite a number of those derelicts would be standing in the Rideau river; they are just inside the causeway. Have those derelicts been considered by the minister?


Clarence Decatur Howe: I was not aware of any
applications, but my deputy advises me that
IMr. Howe.]
some time ago representations were made. No fresh representations have been made since I took over the department. So far as I recall, the removal of those derelicts is not included in the item.


[Stage Direction]
Item agreed to.
National Harbours Board-Projects already undertaken-Halifax harbour improvements- to provide for payment of amounts retained in connection with certain contracts, four at $500 each, $2,000.
Mr, BENNETT:	What does this item
refer to, and why should it be in the estimates?
Clarence Decatur Howe: It is to provide for amounts
retained on certain contracts.


Richard Bedford Bennett: Why should we have to
come to parliament to get power to return the money? I realize the amount is small.


Clarence Decatur Howe: It is the intention in connection with harbours that for this fiscal year all amounts expended will be voted by parliament. We are doing away with blanket amounts.


Richard Bedford Bennett: Oh, yes, but the power
to return money put up in connection with contracts has never required a vote of parliament, so far as I am aware. I was j-ust asking why the minister comes to parliament to get power to return a man his own money that had been put up in connection with a contract. Either he is entitled to it, in which case no legislation is required, or if he is not entitled to it obviously we should not give it to him without knowing why it is being given.


Clarence Decatur Howe: Nevertheless we must provide for it, and we have no fund for the purpose, other than what is voted by parliament.


Richard Bedford Bennett: This is money that has
been put up.


Clarence Decatur Howe: No.


Richard Bedford Bennett: The item refers to
"amounts retained- in connection with certain contracts."


Clarence Decatur Howe: Yes.


Richard Bedford Bennett: It is the contractor's
money, not ours.


Clarence Decatur Howe: As my right hon. friend
knows, progress estimates are voted less ten per cent. Ninety per cent is paid and ten per cent is held back. The work has been practically completed, and the hold backs have been reduced to $2,000. Nevertheless

Supply-Marine-Saint John Harbour
we have no funds available to pay that $2,000. We are not holding contractors' money; it is money deducted from progress estimates.


Richard Bedford Bennett: I follow the minister.
The explanation is that inasmuch as the harbour had no funds, this sum is merely to pay the balance of a contract price, and is not to return any drawback?


Clarence Decatur Howe: That is correct.


Richard Bedford Bennett: It is the balance of a contract price.


Clarence Decatur Howe: Yes.


[Stage Direction]
Item agreed to.
Saint J ohn harbour improvements-reconstruction of berths, 1, 2, 3 and 4, $1,817,506.
Richard Bedford Bennett: Would the minister give us an explanation of how this matter now stands. The contract was let in our time What is the position to-day?


Clarence Decatur Howe: We are continuing the contract, but at the present time we are having considerable difficulty. I do not know that the points at issue are public property, but there has been a considerable slide of material on the face of that property.


Richard Bedford Bennett: And always will be.
Mr.	HOWE: So	much so	that the	contractor has stopped	work and	has demanded
a readjustment of his contract.
Mr.	BENNETT:	Is that	quite the	fair
way to put it? Was it not that the department instructed certain things to be done and in consequence of their being done the ultimate result was that he declined to continue. They would not let him do it the way the specifications provided.


Clarence Decatur Howe: No, I think my right hon. friend	is mistaken.	I have	followed	the
matter closely, because it is a condition which has given us a great deal of alarm. It is true that some instructions were given that cylinders were to be sunk ahead of the piles, but it is a purely local matter which affects only some ten per cent of the length of the work. The contractor is at liberty to construct the rest of it any way he wishes to do so, but he does not care to proceed with the work unless a readjustment is made.


Richard Bedford Bennett: Was he not interfered with?


Clarence Decatur Howe: No, that is not my information, I may say that I made a special trip to Saint John. The contractor claimed that he had been interfered with. I made it clear
at the time that the order in which work would be done would be left definitely to the contractor, and it has been since that time.


Richard Bedford Bennett: But prior to that time a definite order was given as to the way in which work was to be done, was there not?


Clarence Decatur Howe: I think it is open to question as to whether the instructions given could be construed as an order. I think if the contractor had not cared to make an issue of it the matter would have been straightened out. However I think we have made the situation clear. As I see it there is no reflection upon the contractor; it is a situation which has arisen, but which was not expected by our officers. It is giving us a great deal of concern, and we hope to straighten it out over a period of time. I am simply reporting at this time that the matter is very much in a state of flux.


Richard Bedford Bennett: This is a matter in which I have something more than ordinary personal interest. I was bom not far from there, and when these berths were burned the question as to how they should be replaced became a matter of great interest. We sought the opinion of our departmental engineers, and they wanted cribwork berths. After the soundings were taken it seemed to be clear that to reach hard pan they would have to go down as far as seventy or eighty, and in one case over eighty feet, which is a tremendous distance. The bank is of mud, bay of Fundy mud, and it slopes sharply into the harbour. I remember that when we came into office we had on our hands the construction of west Saint John works; the coffer dam went out twice, and it cost us for extras something like one and a half times the original contractors' bid for the construction of the work, which made me very, very anxious about this particular undertaking. Without being an expert I favoured, personally, a cylindrical concrete pile for the purpose of preventing what I regarded as lateral pressure on the structure forcing it into the harbour. The lack of stability that would come about from the construction of a wooden pile berth would not have been satisfactory; the mooring of a heavy ship would undoubtedly have had a bad effect. I have been around the berths at which heavy ships have been moored, and could almost feel the berths moving. Some of our engineers, probably all of them, did not think it was desirable to put in pile work. The matter was referred to two consulting engineers, one of whom was the chief engineer of the Canadian Pacific railway, who gave us his advice,
2428	COMMONS
Supply-Marine-Saint John Harbour
and the other was the most eminent consulting engineer available in the city of Montreal. I believe his name was Mr. James; that is my recollection. He concurred in the view that the cylindrical concrete pile would be advisable.
The contract was let on the basis of concrete cylindrical piles. My information from inquiry the other day as to how the work was progressing indicated that there had been, shall I say interference from the department with the work as being carried on by the contractors. My inquiry was not from the contractors but from another source. The information was that the contractors had been told that they were to do the work in a certain way which, having regard to the terms of the plans and specifications they thought was undesirable, because it is a tremendous task first of all to prepare the hole, and, second, to build up the cylindrical foundations at a depth of seventy-five or eighty feet in the mud of the bay of Fundy, where it is sharply slipping into the river. It is a tremendous task, and the plans and specifications contemplated some of the difficulties as to the manner in which the work should be carried on. I was informed'-and this is the reason I asked the question-that there was some interference from the department here with the contractors, the net result being that they .said: This is not the way in which we contracted to do this work, and if we are to be subjected to these directions we must have a clear understanding before we go further. It must be. remembered that some of the cylinders are being cast; some have been cast. The cylinders, as the minister knows as an engineer-and I need hardly mention it-are not cast in place but are cast on the ground and put into their place on the sinking of the holes-you might really call them shafts because they are from seventy-five to eighty feet in depth-and that is a matter of some difficulty, though, I understand, not of any great difficulty from an engineering standpoint. But they are always subjected to pressure. The lateral pressure that Sir Alexander Gibb referred to in connection with the dock at Wolfe's Cove was so apparent that this great property was really moving towards the river. At first the movement was not very great, but he recommended that we should take immediate action to prevent that lateral pressure from moving the great structure further into the river, and it has cost substantial sums of money to take the necessary steps to prevent that lateral pressure making itself effective. I am more interested in these new berths at Saint John than in many of these matters because of its location and my

desire to see berths built there in keeping with the work at west Saint John which was finished only a few short months ago, and in keeping with pier B in Halifax harbour. The conditions at Saint John are very difficult. The people of Saint John themselves carried on the necessary undertakings for a number of years, and now that the harbour is in the hands of the commission it is of the utmost importance that this work should be finished as contemplated.
The minister says that there was no suggestion that resulted in action being delayed. But finally the contractors said that if somer body else was to determine how they should do their work they would leave it to that somebody else rather than undertake it themselves. That is a short way of putting the situation, and I wanted information on that point.


Clarence Decatur Howe: First of all, I do not like to say at this time whether the design adopted was the best or not, because I never had imuch use for engineers who would come in after trouble developed and say that they would have done the work in some other way; so we will leave that out of the question.


Richard Bedford Bennett: Quite so.


Clarence Decatur Howe: My attention was first
brought to the situation at Saint John in January when I had a call from the contractor. He said that he was somewhat in doubt about the work there, and he referred to certain instructions. They were issued not from Ottawa but from the harbour commission; it was before there was any attempt at centralization. He asked me to go down and look at the work personally, and I did so. I went down with the general manager for the contractor and I made it clear at that time, and have done so since, because I have had a great deal of experience in handling contracts, that it is the contractor's privilege bo handle his work in any way he likes provided the work in the end is done according to the plans and specifications. I made it clear that that was his privilege, and he was quite satisfied at the time that he had a free hand to do his work in his own way so long as he produced the proper results. The developments were as much a surprise to the contractor as they were to us, perhaps not exactly a surprise because when- you look back at what happened you might reason that it might have been expected. However, trouble has developed and we are doing our best to overcome it. I do not want to repeat the experience of the past and let the cost run

Supply-Marine-Saint John Harbour
away so that eventually it is twice the sum contemplated. We are working very hard in the department to permit the work to be done as originally planned without increasing the cost to the government, and in the course of another week I have the hope that we shall see daylight.


Richard Bedford Bennett: How much has been
spent already?


Clarence Decatur Howe: To the end of March, $823,539.


Richard Bedford Bennett: Is this the balance of
the contract or the whole sum?


Clarence Decatur Howe: The whole sum required.


Richard Bedford Bennett: So it should be something like $800,000 less than we are really voting because $800,000 has already been spent.


Clarence Decatur Howe: These are requirements in
addition to the $823,539. The sum of $2,000,000 was voted under the Public Works Contract Act, 1934, and the contract price was $2,641,039.


William Michael Ryan: The leader of the opposition
has asked a question I was going to ask. Is this additional for the amount of the contract, and for unforeseen expenses?


Clarence Decatur Howe: It is the balance required
to finish the contract that has been placed. The amount appropriated under the Public Works Construction Act, 1934, was less than the contract price, and this is the amount required to complete the contract.


Richard Bedford Bennett: Which added to the sum already paid, will complete the contract?


Clarence Decatur Howe: Correct.


William Michael Ryan: As this item comes under
the supplementary estimates dealing more or less with relief, I would ask the minister to see that the contractors engage local labour as much as possible. I was pleased to hear the leader of the opposition state that he was anxious to have this work completed, but we in the city of Saint John would have been much better satisfied if he had expressed the same anxiety two or three years ago, because the delay in starting this work has been a great handicap to the port of Saint John. Some years ago the house voted unanimously for the carrying out of this work, but for a reason which could probably be explained by the leader of the opposition himself this undertaking was delayed for two or three years.


Richard Bedford Bennett: Not for two or three
years.


William Michael Ryan: A couple of years anyway.


Richard Bedford Bennett: Not a couple.


William Michael Ryan: And pressure was brought to bear upon the then government to go on with that work.


Richard Bedford Bennett: That is not so, but it
does not make any difference.


William Michael Ryan: Living in Saint John I am
familiar with what has taken place there.


Richard Bedford Bennett: But not here.


William Michael Ryan: And had the leader of the
opposition expressed the same anxiety a couple of years ago that he does to-day we would now be much better off in the port of Saint John.


Richard Bedford Bennett: That is about the thanks one would expect from the hon. member for Saint John-Albert (Mr. Ryan) for the interest that one has in the harbour there. After the fire there would not have been a berth there at all of the class now being built but for the interest we took in it. Great difficulties were experienced in west Saint John, and the cost of those facilities was tremendous, beyond all reason. The contract had been let before the late government came into office, and the works were not finished there until the end of 1934. Two coffer dams went out in the meantime, and the extras that we had to pay under a contract that never should have been made were 150 per cent more than the original contract itself. We paid $600,000 in settlement for extras on a contract foT $400,000 because coffer dams went out on two occasions.
When this matter came up we realized that it was not local but national. It is a national port and it affects the whole of Canada. The west is as deeply interested in it as is Saint John, and we determined to try and get berths there that at least would not slip into the harbour and that would not bring about the difficulties which had been experienced with the other west Saint John works. Four engineers from the departments of Railways and Canals, Marine, Public Works and National Defence went down there at my personal insistence and investigated the matter. They took the greatest possible care in preparing their recommendations. I have said that they were of the opinion that cribwork would be better, first, because it was less expensive in times of economic difficulty and, second, because they believed that having regard to the situation and the conditions prevailing, it would be desirable to have that
2430	COMMONS
Supply-Marine-Chicoutimi Harbour
type of berth. Perhaps it was a case where fools rush in where angels fear to tread. I had a strong personal opinion that it was desirable that these berths should be built upon concrete cylindrical piers and I arrived at that conclusion because of certain investigations I had made on one occasion into a harbour in Great Britain. It later developed that the borers had made their appearance in that harbour, but that was after the contract had been let. I am not quite sure as to the time, but I think it was after the contract had been let. At any rate, we referred the matter to a consulting engineer; we referred it to the Canadian Pacific engineer and finally with the aid of Mr. Gray, the resident engineer, who was in favour of concrete cylindrical piers, we had plans and specifications prepared and asked for tenders. We were told that there were very few contractors in this country who could do this work.
We are now told that if we had been as much interested in this two years ago the situation would have been a good deal better than it is now. It is because we were so much interested in it that we succeeded in having the contract let for the construction of these berths with concrete cylinders. This was in accordance with the views held by tihe resident engineer and in keeping with one of the best berth facilities provided in the old country in one of its harbours. I have the interest which a native son is always permitted to have in the development of the harbour of Saint John, not only because it happens to be in New Brunswick but because it is one of the national harbours on the Atlantic coast upon which the west and other par,ts of Canada must rely to reach the sea and the markets of the world during the winter season. The effort that has been made has been continuous. It involved a lot of money and I want to say that the efforts to get that money were at times very great. At the expense of other works which were delayed we went forward with this although the very limited number of men who were prepared to tender on the work made it more difficult than it otherwise would have been. We are now told that if we had been a little more anxious about it, it would have been a little better for Saint John. This is a very good illustration of the ingratitude which follows public life.


[Stage Direction]
Item agreed to.
Chicoutimi harbour improvements-road to make connection between dock and new bridge and connecting dock sidings with Roberval and Saguenay terminal, $13,663.52.
Clarence Decatur Howe: This item is to complete
item 28 of the Public Works Construction

Act, 1934. It is a small amount to finish up a contract already let.


Richard Bedford Bennett: Has the minister visited
this harbour?


Clarence Decatur Howe: Unfortunately I have not.


Richard Bedford Bennett: I was hoping he had as
I should like to have his frank opinion as to whether or not the works at this place can ever be justified in their present location. We found them there as part of the, shall I say legacy that we had to take over. I am not complaining about that, but large commitments were made involving the expenditure of vast sums of money. Has the minister before him a statement of what has been spent there? I do not want to put him to any great trouble, but I should like to know what has been spent up to the present time.


Clarence Decatur Howe: If the right hon. gentleman will allow me to give that when we are discussing the harbour estimates, I shall be prepared with the full information.


Richard Bedford Bennett: That is quite satisfactory.


Hugh Alexander Stewart: This brings up a point in connection with several of these items. The minister, I understand, has said that provision was made for this work in the Public Works Construction Act, 1935. I have always been of the opinion that it was not necessary to revote items which appeared in that act in the same manner as we revote items in the regular estimates. The items in the Public Works Construction Aot, 1934, were carried on without being revoted, and I am of opinion that it is not necessary to revote in this instance. Statutory appropriations are made available until the work is completed. I do not know just why these items appear in these estimates when provision has already been made. It may be the government's policy, but it seems to me that this is not necessary at all.


Clarence Decatur Howe: As a matter of government policy we believe that it is better to budget for the items and have them show in the expenditures for this year, but I may say that some of the public works items have been curtailed and we believe that as of April 1 we should note the money we are spending this year.


Richard Bedford Bennett: Although it has once been voted?


Clarence Decatur Howe: That is quite true, but I understand it is intended to repeal these acts.


Hugh Alexander Stewart: The effect of this is really to pad the estimates; you are making it

Supply-Marine-Quebec Harbour
appear that you are providing for works that have already been provided for. At the end of the estimates is an analysis of the expenditures and the total for projects already undertaken is $30,418,341.66. I take it that funds for these items have already been provided for under the public works construction acts. As I say, the effect of this method is to create the impression that a large amount of money is being provided this year for works whereas the money was provided in years gone by.


Clarence Decatur Howe: I do not know that the money was provided, but the expenditures were authorized. I think the people who are spending the money this year will have to find it. We prefer to wipe out the former appropriations and appropriate the money again and we shall have to find the money to be expended on these works during this fiscal year.


Hugh Alexander Stewart: Putting them into these estimates is not finding the money any more than it would be finding the money by putting them into the regular estimates. Did the minister say that it was the intention of the government to repeal the public works construction acts of 1934 and 1935?


Clarence Decatur Howe: I cannot announce that definitely, as that would be the privilege of the Minister of Finance (Mr. Dunning), but that is my understanding as we were asked to provide for work for the current year, whether or not it appeared in the public works construction acts of 1934 and 1935.


Richard Bedford Bennett: In any event, this Chicoutimi item would require an appropriation?


Clarence Decatur Howe: Yes; I understand it is an addition.


Hugh Alexander Stewart: That is different if it is in addition to what has been provided already.


Mr. MacINNIS:: Could the minister tell us if any part of the projects mentioned here are already completed and, if so, what is the total amount of those completed?


Clarence Decatur Howe: I may say that the Halifax project is all completed. That S2,000 is purely for hold back that is required until certain terms of the contracts have been complied with. In the case of Chicoutimi the expenditure last year was $153,500, and this $13,500 completes the work there.


[Stage Direction]
Item agreed to.
Quebec harbour improvements-
To provide for payment of amounts retained in connection with certain contracts, $6,866.71.
New quay wall-To widen west side, pier No. 1, Princess Louise docks, $808,202.73.
Bituminous macadam road, Gilmour hill- provision for payment of claim for additional work done under contract, $7,177.92.
Dredging at Wolfe's Cove terminal, $179,906.70. Dredging St. Charles river and Louise basin, $203,355.81.
Resurfacing Wolfe's Cove yard, $18,159.53. Repairs to wharves and sheds, Princess Louise docks, $17,000.
Richard Bedford Bennett: I should like to ask two or three questions about that. First, how much of the total $1,240,000 has been spent? Second, are contracts outstanding for all the work there mentioned? Third, why is it necessary to revote money that was the subject matter of much discussion in this house and with respect to which there was no lapsing of the estimate? The point I desire to make to the minister is that the old estimate did not lapse at the end of the fiscal year. Why are we voting this a second time? I was on the other side when we were putting it through a year ago, endeavouring to explain why it had come about that we had to make the expenditure. Now I should like to know whether the contracts are let, how much has been expended, and why it is necessary to vote this a second time.


Clarence Decatur Howe: The first item under this is a sum of $6,866 to provide for the clearing up of certain contracts. I think that is similar to the item for Halifax, that is retained percentages that will be released. Then there is the new quay wall for the Princess Louise docks, $808,202. That is a contract which was let some months ago to the Ogilvie Construction Company. There was some difficulty about engineering, and when we came into office we found it in a very unsatisfactory state, and decided, not to cancel the contract but to suspend the work until we could review the engineering. We have now reviewed the engineering and revised it. We are voting the amount of that contract here so that we can go on with the work this summer.


Richard Bedford Bennett: Is it a new contract, or do the old contractors carry it on?


Clarence Decatur Howe: We have made no rearrangement of the contract. They still have the contract although they have not done any work, and I assume we can readjust the matter with them so that they can carry it on.


Percy John Rowe: When was the original contract drawn?


Clarence Decatur Howe: July 24, 1935.


Mr. STIRLING:: In what way does the minister mean that he did not agree with the

Supply-Marine-Quebec Harbour
engineering? Were the plans submitted not satisfactory to the department and to the minister?


Clarence Decatur Howe: We found that the plans had been changed, I think, three times from the time the contract was let until the time that I reviewed the matter.


Richard Bedford Bennett: It was a question of the condition of the existing works, which had not been looked after for a long time, plus the question of widening the berth.


Clarence Decatur Howe: I think they were working on the third plan. The contract had been let on a plan that was not suitable for the location. When the nature of the bottom was found, changes were necessary, and changes were made. For some reason or another the second plan was not satisfactory, and at the time I was there the third plan was under consideration.


Grote Stirling: And yet the contract
had been let.


Clarence Decatur Howe: The contract was let, yes.
These changes were made after the contract was let.


Hugh Alexander Stewart: That was a contract by the harbour commission, was it?


Clarence Decatur Howe: No, it was under the Public
Works Construction Act.


Angus MacInnis: I wonder whether the
minister could let us know if the amount in the present estimate was the original amount of the contract.


Clarence Decatur Howe: The amount of the contract is $734,000. The amount of $808,000 includes supervision. It is the same vote for that project as is in the Public Works Construction Act. We have revoted it as it was.


Richard Bedford Bennett: Is this not a correct way to put it: The plans and specifications were prepared by a consulting engineer, who loked after Three Rivers and two or three other harbours.


Clarence Decatur Howe: Mr. Gohier.


Richard Bedford Bennett: Yes. He has had considerable experience, according to my information, and he was regarded very highly in his profession, but I understand his politics were not quite satisfactory after the change of government.


An hon. MEMBER:: Order.


Richard Bedford Bennett: Order! Yes, it was in
order that they were unsatisfactory. But what happened in consequence of that was

that difficulties were raised about the plans and specifications. The contract had actually been let, as I recollect, before the change of government took place.


Clarence Decatur Howe: Three months before. But
the contract had been changed twice before this government came into power. The plans had been changed twice.


Richard Bedford Bennett: I was going to continue: The plans and specifications contemplated changes and alterations of the existing contract; on investigation it was found that the conditions of that existing work were much worse than were apparent at the time the contract was made, and the contractor immediately pointed that out. Is that not the fact? I think that will be found to be the fact.


Clarence Decatur Howe: Yes.


Richard Bedford Bennett: I am not quite sure
about this, because I am carrying all these particulars in my head, and they cover every part of Canada. The minister knows perfectly well that with regard to the old harbour one of two things has to be done: Either we have to spend some money, or all the outcome of that vast expenditure there will ultimately crumble and fall away. I refer to the work on the King's wharf and to the Louise basin and the work at what is called the Old harbour. We had reports from time to time about that Old harbour, and it will be recalled that when the last appropriation was made to the harbour commissioners it was stated in this house, when that resolution was before it, that that would be the last money which would be asked for Quebec, because the sum spent there has been very large; my memory is that it is something like $50,000,000 for that harbour. When Wolfe's Cove was finally chosen as the site for this new wharf a shed was put there which would do credit to New York; it is a magnificent double-decked shed. The berth itself was inspected by Sir Alexander Gibb. He found that lateral pressure was gradually pushing it towards the river, and we took steps to remedy that. There remained one other question with respect to 'that. On the up river side there was a deposit of gravel and earth which navigators found dangerous in the stern movement of a large ship like the Empress of Britain, and the engineers recommended that we should dredge that out. That item is here, $179,000. At that time we felt that we did not have the money, but finally, after a conference between those responsible for the berthing of this large ship and the

Supply-Marine-Quebec Harbour
engineers, it was realized that that deposit of earth and gravel on the up river side of the berth, which necessarily would interfere with the stern movement of the ship, should be removed, and I thought we let the contract for the dredging, but I see it is here. My view was that the contract was let and the work commenced Last fall so that when spring opened this year that public danger would be so minimized that there would be no difficulty about the movement of this large ship. In fact two of them are more or less affected by that deposit, but not the Duchesses, because it was at a sufficient distance from the point where they lay at the berth not to be important. The other items mentioned are those connected with the Old harbour, and more again at Wolfe's Cove in connection with the resurfacing of the yard. It will be remembered that when the yard sank into place and was finally settled it was contemplated that it had to be resurfaced at a later date. This is to complete that work. Perhaps the minister can tell me whether or not contracts are outstanding with respect to all those, and to what extent money has been expended.


Clarence Decatur Howe: I must congratulate my right hon. friend on his excellent memory; I think it is amazing, and it is certainly accurate. Perhaps, however, I should correct his impression about Mr. Gohier. I had some trouble getting into touch with Mr. Gohier, but when he came in he first laid his resignation on the table and started his discussion from that point.


Richard Bedford Bennett: Perhaps he was wiser than some; he knew that if he did not do so a statute might be passed to remove him.


Clarence Decatur Howe: Possibly. I may say that Mr. Gohier has a very good reputation as a drainage engineer, but he admitted that his experience in this line was limited. Perhaps he was put into a false position at Three Rivers, but I wish to make it clear that he was not dismissed. Our relations were very friendly; as a matter of fact I like him. I may say, however, in discussing these contracts, that this 16,800 item is only a clean-up. Under the $808,000 item there has been practically no work done. A few piles were driven, enough to discover the difficulties, and the matter was reserved for further investigation. There it was a question of whether or not concrete piles could be driven, and we found they could not. We expect to get on with that after a bit.


Richard Bedford Bennett: What is the position in regard to the dredging of the St. Charles river and Louise basin?


Clarence Decatur Howe: That contract is continuing.
It was at so much a yard, and the yardage is quite considerable. This makes provision for both contracts.


Richard Bedford Bennett: Part of the work was done years ago, as a matter of fact, and this was for the purpose of endeavouring to clean it up.	.


Clarence Decatur Howe: Yes, that is right.


Hugh Alexander Stewart: In the Supplementary Public Works Construction Act of 1935 there was an item of $1,250,000 for Quebec harbour improvements and maintenance. I suppose that is the item from which these contracts sprung?


Clarence Decatur Howe: Yes.


Hugh Alexander Stewart: Were all these contracts let before the change of government? When was the work in the basin undertaken?


Clarence Decatur Howe: They were all let before the change of government.


Hugh Alexander Stewart: The same remark I made about these other items would apply to this one, of course.


Clarence Decatur Howe: Both these dredging contracts were let September 31, 1935, dangerously close to the date of the election.


Mr. GREEN:: May I ask the minister whether the business through the port of Quebec has been increasing or decreasing in the past few years.


Clarence Decatur Howe: I may say that we are voting the operating expenses of Quebec harbour in the regular estimates. This is really a revote concerning contracts under construction. If my hon friend would not mind holding his question until we have the operating figures before us, I shall be glad to answer it in detail at that time.


Richard Bedford Bennett: I think the minister might well say that there is no operating revenue.


Clarence Decatur Howe: We get some revenue, but the expenses are much greater.


Richard Bedford Bennett: Quite; I should have said no net operating revenue.


Howard Charles Green: Can the minister say now as to whether the business of the port is increasing or decreasing?


Clarence Decatur Howe: 
Howard Charles Green: Over wrhat period has there been a decrease?


Clarence Decatur Howe: As I say, this is rather embarrassing; I am quite new to this task, and I have not the operating figures before me. This matter will come before parliament later, and if my hon. friend does not mind waiting until the operating estimates are up I shall be glad to answer those questions.


[Stage Direction]
Item agreed to.
Three Rivers harbour improvements-
New transit shed on new wharves, $145,000. Reconstruction of old wooden wharves, roads, railway tracks and lighting system, $137,600.
Richard Bedford Bennett: How much of the money voted for that purpose has been spent? The transit shed is finished, is it not?


Clarence Decatur Howe: No, it is not started as yet. It is under contract, but as my right hon. friend will remember there was some delay in regard to a difficulty about the site. Two small sheds were built, but we were unable to start the main transit shed; we could not tear down the old building because of some contracts outstanding.


Richard Bedford Bennett: The difficulty was that the International Paper Company's paper had to be cared for pending construction of the new shed, and until that was arranged the old shed could not be torn down.


Clarence Decatur Howe: Yes.


Richard Bedford Bennett: The contract is still outstanding?


Clarence Decatur Howe: Yes.


Richard Bedford Bennett: 
Clarence Decatur Howe: Yes, they are both quarter contracts.


Richard Bedford Bennett: Does the minister know how much money has been paid out on the contract so far?


Clarence Decatur Howe: I may say that this is to some extent a painful item. I think the complete cost will be about twice the cost of the original contract.


Richard Bedford Bennett: For what reason?


Clarence Decatur Howe: The design had to be radically changed after the work was in progress. In connection with the retaining walls it was found impossible to drive in the original location, and it was moved out in the river a

considerable distance, increasing the cost. I should be able to explain this very well, because I had several painful experiences in trying to come to a settlement.


Richard Bedford Bennett: There was an old and a new pier at Three Rivers, was there not? My memory is that there were two, an old one and a new one.


Clarence Decatur Howe: I understand there was an old wharf at that point, but this new wharf is being constructed in front of the old wharf, to replace it. There was great difficulty in getting the piles down, as my hon. friend remembers; it was a concrete sheet pile, and the piles had to be increased in dimension because it was found impossible to drive the piles originally specified.


Richard Bedford Bennett: Perhaps we can discuss the details when we come to the Three Rivers harbour item in the regular estimates.


Clarence Decatur Howe: I shall be very glad to do so. Item agreed to.
Montreal harbour improvements-
Raising wharf, sections 38 to 40, $20,971.31. Reconstruction of raceways in Windmill Point area, $180,990.95.
Laurier Pier, reconstruction, $85,375.30. Sutherland Pier, reconstruction and extension, $655,904.24.
Alexandra Pier, reconstruction, $847,000. Raising wharf and railroad tracks, sections 35-40, $47,290.74.
Extension of marine tower ietty, elevator 3 $35,557.42.
Reconstruction of Windmill Point wharf-upstream section, $1,000,000.


Richard Bedford Bennett: Perhaps the minister
would take up these items one by one and say with respect to which ones there are contracts outstanding and to what extent payments have been made on account. I must say to the minister that I do challenge the passing of this item a second time. Let me put it to the minister in this way: When the contracts were made, payments were required. The auditor general had to have some authority for the payments, and his authority was the appropriation by parliament of specific sums to pay those contracts. Now we are revoting the same amount of money as we voted originally, for the same contracts, although contracts are outstanding and partly paid for by the appropriation we made last year. I cannot understand just why that should be done, and I am not quite sure as to the regularity of it. At the moment, however, perhaps the minister would be good enough to say in a general way whether the contracts are outstanding and, if he has them available, to give the figures a3 to what has been paid.

Supply-Marine-Montreal Harbour


Clarence Decatur Howe: The first item has to do with raising the wharf, sections 38 to 40. That is Public Works Construction Act 1934 item No. 108, and the contract amounted to $242,000. This is the clean-up item. I understand the work has been practically finished and this is the contractor's drawback.


Richard Bedford Bennett: This is the item in connection with which the diminution in the volume of water in the harbour necessitated work being done so that ships might get to the docks?


Clarence Decatur Howe: Yes. The next item has to do with the reconstruction of raceways in the Windmill Point area. My right hon. friend will recall that in this connection we had to rebuild certain raceways.


Richard Bedford Bennett: Yes, and it was an expensive process, too. Contracts for certain of those raceways have been let?


Clarence Decatur Howe: This item has not beer
awarded, it was at loose ends as between the pier and-


Richard Bedford Bennett: They did some work
by day work clearing it up?


Clarence Decatur Howe: Yes, and certain raceways
were built. But this is necessary work as between the two different contracts, Dufresne and Atlas.


Richard Bedford Bennett: The Laurier pier is down towards the basin?


Clarence Decatur Howe: Yes, that is an existing contract, the original contract, $288,439.


Grote Stirling: This is the most easterly one?


Clarence Decatur Howe: Yes, this is the furthest down the river, in front of No. 3 elevator.


Richard Bedford Bennett: Is this to pay the
balance of the contract?


Clarence Decatur Howe: Yes.


Richard Bedford Bennett: The Sutherland pier is
in the same locality?


Clarence Decatur Howe: No, I was wrong, this is
even further below Laurier.


Grote Stirling: Is Laurier the southeasterly one?


Clarence Decatur Howe: Yes. This is a contract for
$710,910 and this amount is to complete. At the close of the season $137,326 was spent.


Richard Bedford Bennett: The next item is the
Alexandra pier.


Clarence Decatur Howe: Yes. There was a vote for
rebuilding the Alexandra pier, and one contract had been awarded, and tenders called for the second contract. On looking into the matter we found that while the work could have been completed last season there was no possible way of using it last season on account of the dredging program in the harbour, and we felt that we could very well hold the work over until the current fiscal year without any loss to shipping interests. We have revised the work to some extent and cut down the cost. We are not doing the full amount of work that was included in the other contracts.


Richard Bedford Bennett: Was the contract let?


Clarence Decatur Howe: The contract for one section, the inner one, was awarded to Angus Robertson, Limited, $774,700.


Richard Bedford Bennett: How .much has been
spent on that?


Clarence Decatur Howe: Nothing; the work was not
completed; the contract is stall outstanding and we believe it may be possible to make a revision of the contract to include the work now proposed.


Richard Bedford Bennett: The sum proposed to be spent is the difference between that and $800,000?


Clarence Decatur Howe: No; the whole amount of
$847,000 will be spent to do that work.


Richard Bedford Bennett: Then $700,000 of it is
referable to the contract?


Clarence Decatur Howe: Yes, the contract outstanding for that amount.


Mr. FINN:: When it says Sutherland pier or Alexandra pier reconstruction, does that mean a pier that had fallen down or disappeared, or is it a new pier?


Clarence Decatur Howe: No. The Alexandra pier is
one of the important piers in Montreal harbour, but due to the lowering of the water levels in the harbour it was necessary to dredge alongside of it. The construction of the pier did not permit dredging of the required depth rock alongside without some alterations to the pier. This puts a new face on the pier, carried down to a point that permits the slip to be deepened.


Richard Bedford Bennett: The pier would fall
down-


Clarence Decatur Howe: Yes, if we dredge it without this other work.


Grote Stirling: Has the minister committed the government to further dredging within the area of Montreal harbour? Last year, if I remember correctly, the thirty-five
2436	COMMONS
Supply-Marine-Montreal Harbour
foot channel was up to within four thousand feet of the bridge, and there was controversy as to whether it was desirable to carry that extra depth into the harbour area. Has the minister come to any decision on that?


Clarence Decatur Howe: A contract was let for it last year, a little over $1,500,000 for dredging in the harbour itself. I think there can be no real controversy about the desirability of extending that channel to the head of the harbour. The condition was that the thirty-five foot channel was carried to the harbour limits, that being four thousand feet below the harbour bridge. At that point there was a jump in the bottom of seven feet, up to the twenty-eight foot level. I think there can be no difference of opinion as to the desirability of carrying that thirty-five foot level on the 1897 datum to the foot of the Lachine canal and into the principal slips in Montreal harbour.


Grote Stirling: The minister considers that it will not lower the level in Montreal harbour in a way which will do harm to the level of the river?


Clarence Decatur Howe: No. The difficulty there is in making a better outlet to Montreal harbour. I do not think that dredging in the harbour will change the position, but as we improve the St. Lawrence river below there is no question that when we take twelve inches off the bottom we take about five inches off the top. That goes on continuously. I think engineers will agree that is the result.


Grote Stirling: But this is a question of taking seven feet off the bottom.


Clarence Decatur Howe: But only in the harbour.


Richard Bedford Bennett: At the time we had to deal with this matter, I understood the condition was that the thirty-five foot channel from Montreal to the sea had been practically completed. The profile shows that some rock and earth have to be removed between the harbour and the bridge, further out towards the sea, and between the bridge and Montreal harbour; there were I think three places where there had to be some removal of earth and rock to clean it up and then the work was complete. Coming from the lakes we have thirty-five feet down at the basin; then the harbour itself carried only twenty-eight feet of water, and as a result it was contended -and I put this to the minister-that the swiftness of the flow out of the harbour into the river, by reason of the depth of the channel being thirty-five feet, had a direct effect upon the depth of water in the harbour itself; and, as my hon. friend the engineer

to my left suggests, multiplied by the extra area. That is the position put to us. On the other hand engineers said that the thing to do was to carry the thirty-five foot channel right through the harbour so as to make it a complete thirty-five foot channel from the basin to the river. That is how the proposition was put to us as I remember; I speak subject to correction. Then, owing to the diminution of water in the harbour last year and the year before, these wharves were left without sufficient depth of water to enable the ships to get in beside them, and if dredging were carried on to deepen the berths the piers would be standing on insecure foundations that might fall out. The work that has been described was along the edge of the piers to keep the pier in place and make it serviceable when the dredging was completed. Two or three ships of one line had to leave partly loaded because of insufficient depth of water, for instance, at the piers which the Cunard and the Canadian Pacific lines used. In order to take a part cargo they went to these piers, but could not load a full cargo.
To complete this work to thirty-five feet through the harbour will cost considerable money. In the meantime we deflected our operations to the basin and made good these piers and deepened the basin; that is my recollection. Now, does this contemplate the deepening of the channel through the harbour, the floor of which at the moment is some six or seven feet higher than the bottom of the thirty-five foot channel that leads into the river?


Clarence Decatur Howe: Perhaps my right hon. friend will recall that when the main estimates were passed we had a vote of $2,000,000 for dredging the St. Lawrence. At least $1,500,000 of that was to be spent in Montreal hajbour.


Richard Bedford Bennett: For what purpose?


Clarence Decatur Howe: For deepening the channel through the harbour and the approaches to these docks. And about $500,000 was to take out the bar below. That was not done. It is true that we have thirty-five feet of water, but that is to the 18fl7 datum, and the effect of the dredging-I think that is what my engineer friend refers to-is to lower the datum. So that while we have thirty-five feet at the 1897 datum we no longer have the 1897 datum. The datum is about two feet lower.


Richard Bedford Bennett: The volume of water going into the harbour is two feet less than it was in 1897.


Clarence Decatur Howe: The flow out is quicker.

Supply-Marine-Montreal Harbour


Richard Bedford Bennett: Certain weirs were built to impede the flow?


Clarence Decatur Howe: Yes.


Richard Bedford Bennett: And certain engineers said that they thought those weirs did not serve a useful purpose. Has the minister seen the profile from the point going out to sea, up to the harbour?


Clarence Decatur Howe: I have examined it closely. I was quite concerned about how the money should be spent there.


Richard Bedford Bennett: That was the finest bit of profile work I have seen.


Clarence Decatur Howe: Excellent.


Richard Bedford Bennett: I thought it was the best I had seen. I put it up on the wall in the railway committee room, so that the members might see it. I have not seen any profile I thought was as complete as that of that harbour. It was so clear I could understand it myself.


Clarence Decatur Howe: It is excellent work.


Grote Stirling: If the minister says that we are now committed to carrying this deep channel right through Montreal harbour, it follows also that it must be carried into each of the existing piers.


Clarence Decatur Howe: That is correct.


Grote Stirling: As a consequence of that does it not also mean that each of those piers will now have to be rebuilt to the extra depth?


Clarence Decatur Howe: The work of rebuilding those piers is pretty well completed. The Alexandra pier is the last one to be carried down to the depth, and of course the newer piers were carried down to the new datum when they were built. The King Edward pier was carried down two or three years ago. When we have completed the Alexandra pier we shall have finished them.


Hugh Alexander Stewart: In what position is the work involved in the million dollar item?


Clarence Decatur Howe: The contract was for $1,478,147, and the amount that has been spent prior to March 31, amounted to almost $400,000.


Hugh Alexander Stewart: This provides for the balance?


Clarence Decatur Howe: Yes; it provides for the completion of the work.


Hugh Alexander Stewart: This item appears in the Public Works Construction Act, 1935.


Clarence Decatur Howe: No, it is not under the Public Works Construction Act.


Hugh Alexander Stewart: In the Public Works Construction Act, 1935, there is a general item of $3,500,000 for Montreal harbour improvements and deepening, and I just wondered whether the money had been provided out of that amount.


Clarence Decatur Howe: No; about $1,500,000 out of the $3,000,000 was spent on dredging Montreal harbour, and the other work was in connection with the Alexandra pier, the Laurier pier and the Sutherland pier. This particular work was authorized as a loan to the Montreal harbour commissioners.


Richard Bedford Bennett: In order that the money might be made available for them, we put it in that estimate; that is all. They are to get the money from the dominion government, but in accordance with the provisions of the harbour act the harbour itself issued their debentures, and the government advanced the money. That is the position.


Clarence Decatur Howe: Yes.


Grote Stirling: Are the corrective works being constructed or designed down stream being continued? There was to be a breakwater or weir connecting several islands, and the purpose was to tend to raise the level in the harbour. I do not think that is covered in any of these items, but is the work continuing?


Clarence Decatur Howe: The only weir of any importance was the one near Sorel connecting the mainland with an island.


Richard Bedford Bennett: Was there not a small
one outside the harbour, before that, which the engineers thought was of no particular value?


Clarence Decatur Howe: I believe I was responsible
for the suggestion.


Richard Bedford Bennett: No, that was said before the hon. member took office.


Clarence Decatur Howe: There was work continuing for a number of years in maintaining this particular weir about which I speak. It is below Montreal harbour and above Sorel.


Grote Stirling: The purpose was to correct the diminution in the level of the water in Montreal harbour.


Clarence Decatur Howe: Yes.


Grote Stirling: If the government is
committed to a thirty-five foot channel right up to the harbour we must look for a lowering of the water in Montreal harbour, which has been giving serious trouble in past years. That being one of the factors, what
2438	COMMONS
Supply-Marine-Halifax Harbour
corrective work does the government contemplate to hold the water up in Montreal harbour?


Clarence Decatur Howe: In the main estimates we
have an appropriation for a board of engineers to study the entire water levels of the St. Lawrence,. We expect a second interim report from them shortly. They are very much engaged with a plan which we hope will supersede the dredging, in an attempt to check the water and raise the level back to the 1897 datum. But we are doing nothing at this time. There is nothing provided this year, and we can do nothing until we receive a conclusive report from the board of engineers.


[Stage Direction]
Item agreed to.
Clarence Decatur Howe: Yes.


John James Kinley: On April 23, as reported
on page 2116 of Hansard, when the national harbours board was under discussion, the junior member for Halifax made a reference to the taking over of the Halifax cold storage plant. At that time I made this interjection:
Mr. Kinley:	After it became a white
elephant.
My statement indicated that the cold storage had been a financial loss. I have some financial and commercial interests in Halifax, and of course I was interested in the port and thought I was justified in making the statement. After I made that remark the leader of the opposition said this:
Halifax harbour improvements-new sheds, pier " B," provision of cargo handling and fire prevention equipment, $6,400.


Richard Bedford Bennett: What was the final cost
of this pier? I believe it was between
55,000,000 and $6,000,000. I know the moneys were outstanding when we came into office, and the pier was not finished until 1934 or 1935. Is this a vote for further completion of the work?


Clarence Decatur Howe: This is just a matter of fire
prevention equipment. The shed was finished.


Richard Bedford Bennett: A sprinkler system was put in there.
Mr. Bennett: It did not; it paid its interest.


Richard Bedford Bennett: Yes.


John James Kinley: I did not take issue at
that time with the leader of the opposition, because I wanted to be sure of my facte. I now have before me a return indicating that it made an operating loss each and every year, before taking into consideration depreciation on plant and equipment. The figures show that during the time it operated it made a gross loss of $503,132.37. Under the circumstances I shall have to put this part of the return on Hansard.


Richard Bedford Bennett: No, you cannot do it


Clarence Decatur Howe: Yes. This is for two tractors and sixteen trailers.


Richard Bedford Bennett: The harbour commission would have paid this, had it not been
in that way.


John James Kinley: Shall I have to read it?


Richard Bedford Bennett: Yes.
for taking over the harbour.	Mr. KINLEY: Very well; it is as follows:
-	April 30/30 1929-30 9 months	April 30/31 1930-31	April 30/32 1931-32	April 30/33 1932-33	August 31/33 1933-34 4 months	Total$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.Total revenue	72,011 03	129,292 71	78,366 89	73,992 32	27,478 38	381,141 33
Expenditures- Wages and salaries..		49,440 34 13,061 74 13,069 60 275 00	70,071 98 16,764 90 19,530 00 182 00 1,200 00 1,728 18 21,114 58	61,138 55 13,161 97 18,425 00 545 00 1,203 64 1,429 99 15,693 94	51,829 86 13,257 31 18,150 00 545 00 1,030 26 495 53 11,364 97	17,657 92 6,276 97 6,050 00 161 66 351 26 765 74 2,716 64	250,138 65 62,522 89 75,224 60 1,708 66 4,800 50 6.343 97 67,942 43
Power								
Taxes, city									
" provincial								
" Workmen's Compensation Board.. Water			1,015 34 1,924 53 17,053 30					
Various								
							
95,838 85	130,591 64	111,598 09	96,672 93	33,980 19	468,681 70Operating loss	23,827 82 75,592 00	1,298 93 102,000 00	33,231 20 102,000 00	22,680 61 102,000 00	6,501 81 34,000 00	87,540 37 415,592 00Interest on bonds (Aug. April 30/30)	5/29.	
Gross loss			99,419 82	103,298 93	135,231 20	124,680 61	40,501 81	503,132 37
							
IMr. Stirling.]

I thought I might be doing an injustice to business people with whom I am acquainted if I made a statement that was not well founded, and I therefore looked up the facts and this was the result of my examination.


Richard Bedford Bennett: The hon. member for Queens-Lunenburg (Mr. Kinley) has directed attention to my statement, which he seems to think was erroneous. I want to point out, first, that the site was let by the former government to the people who constructed the cold storage enterprise in the centre of the harbour facilities; second, that the work was constructed under the provisions of the Cold Storage Act, whereby a certain subsidy was available on the completion of the work; that subsidy was mortgaged for the purpose of paying the interest on the securities that were issued, and the securities issued were in accordance with the terms of the statute. That is what I was endeavouring to make clear to the hon. gentleman. That is, this work was not a private enterprise in the sense in which that term is used. It was an enterprise carried forward undeir the provisions of a special statute that provides for subsidies being given out of the public exchequer for cold storage facilities. Those facilities were erected in that harbour and my complaint was, if I might put it in that way, that I could not understand why any person would permit the centre of a harbour to be alienated by a long term lease to a private enterprise for the purpose of constructing facilities that were of the very essence to the successful marketing of perishable products such as fish. But the subsidy was a subsidy earned under the act, and that subsidy was mortgaged to pay the interest. That is what I had in mind with respect to the question of interest.
I will look further into the matter because, if I have misunderstood the situation, I shall certainly be glad to make a correction. But the revenue does not include the subsidy; that is my point. The revenue for the first nine months of 1929-30 was $72,000 odd. The next year it went to $129,000; 1931-32, $78,0001932-33, $73,000; 1933-34, four months, $27,000. The total revenue prior to 1934 was $381,000. But that has nothing to do with the subsidy, which under the trust deed was mortgaged for the purpose of paying the people who bought the securities, and the securities were put on the market on the basis of the subsidy thus being paid, as my hon. friend may recall. This was before the late government was in office. The expenditures do not deal with that phase at all but merely show the operating loss, being the difference between the revenue and the sum that was expended, exclusive of interest. After the first year
1, 1936
Supply-Marine-Halifax Harbour
the interest was a steady amount of $102,000, and for the four months of 1933-34, $27'(K)0.
The subsidy bore such close relation to the charges that they were able substantially to pay them, although not in full. When I say that the interest was paid, when they sold the plant to the harbour board they reduced the interest rate to three per cent, if my memory serves me correctly.
The order in council is P.C. 2196 and I am indebted to my hon. friend from Queens-Lunenburg for handing it to me from among his papers. The order in council is dated October 21, 1933, and after referring to what had taken place, that the cold storage plant had been offered for the price of $1,700,000, said purchase price to be satisfied by Halifax harbour commission debentures bearing interest at the rate of three per cent and to be for a term of five years, it says:
1.	Whereas our study convinces us that private enterprise now has and will continue to have under present and anticipated near future general business conditions great difficulty in maintaining to the required extent the operation of all departments of the plant of the Nova Beotia Public Cold Storage Terminals, Limited,
2.	And whereas the continued operation without interruption of all departments of said plant is essential to the adequate conduct of the business of the port of Halifax for the purpose of providing regulated temperature storage for all classes of perishable commodities which pass through the port, both export and import, and also for storage which the said plant provides,
3.	And whereas the report of the Royal Commission on Maritime Claims in Par 17 page 30, states:
" We must not underestimate the rapidity with which development of traffic can be expedited through the development of facilities for handling the traffic (including requisite cold storage) and through making known, by all the sources that are open to the energetic administration of harbour commissions in the shipping exchanges of the world, and to shippers, the facilities that are offered at any given port,"
4.	And whereas the authority of the port of Halifax is in a position to eliminate duplications of cost if the operation of said plant is under its jurisdiction and at the same time is in a position to more adequately utilize the said plant in connection with harbour operations than is now the case.
5.	And whereas there is a responsibility placed upon the authority of the port of Halifax to use its best efforts to encourage the fish industry through the port in so far as the provision of port transportation facilities is concerned,
6.	And whereas the great desirability of recovering the site located in the centre of the ocean terminals which was leased in 1927 to the said company for 99 years at a nominal rental is a factor which very materially enters into the situation,
7.	And whereas a joint appraisal has just been completed of the present day value of the plant and equipment of the said company all as located at the ocean terminals as aforesaid, which joint appraisal has been made and



Supply-Marine-Halifax Harbour
certified to by J. J. Macdonald, chief engineer of the Halifax harbour commission, and by C H Pringle, appointed for such purpose by tlie hon. the Minister of Marine, and which joint report states that the physical valuation of said plant and equipment as of the present time is $1,683,441. and having in mind further that clause 7 ot the lease from the crown (Department of Railways and Canals) made the 6th day of April, 1927 under which the Nova Scotia Public Cold Storage terminals. Limited, are in possession of the property provides:
7 That should the lessee at any time during the term of this lease, except for the purposes of repairs to or renewals of the said buildings, and cold and dry storage plant or for causes beyond the control of the lessee, discontinue the operations of his cold and dry storage plant upon the said land for the full period ot one year, this lease may, in any such case, at the option of the lessor, upon writen notice from the Minister of Railways and Canals to the lessee to that effect, be forthwith cancelled.
Then they can take over the property within thirty days at a value based upon the actual cost of construction and acquisition thereof^ to the lessee, less the amount of depreciation therein, as may be determined by three arbitrators who shall be appointed within the next succeeding thirty days. The order in council continues:
The minister, therefore, recommends that the Halifax harbour commissioners be authorized and empowered under section 10 of the Halifax Harbour Commissioners Act, being chapter 58 of the statutes of 1927, to acquire the property, assets and undertaking of the Nova Scotia Public Cold Storage Terminals, Limited, under the terms and conditions hereinbefore recited and subject to the further condition that the necessary resolutions of the shareholders and bondholders of the said Nova Scotia Public Cold Storage Terminals Limited, are duly passed at properly convened meetings of the said shareholders and bondholders approving of and accepting the terms of sale of the property, assets and undertaking as aforesaid, and the acceptance of the purchase price therefor in manner and form hereinbefore recited.
The minister further recommends that approval be given under section 18 of the aforesaid act, of the issue of $1,700,000 debentures of the Halifax harbour commissioners, dated 1st November, 1933, due 1st November, 1938, with interest at the rate of 3 per cent per annum payable half-yearly, principal and interest payable in lawful money of Canada, in full discharge of the purchase price of the property, assets and undertaking of the Nova Scotia Public Cold Storage Terminals, Limited.
The subsidy no longer became necessary as it was taken over in the public interest. Unfortunately-and I say this not in any fault-finding sense-it was discontinued and the minister gave them notice that the property was to be taken over at the cost to them, which was largely in excess of $1,700,000, less depreciation. If the amount could not be arrived at amicably, it was to be settled by arbitration.


John James Kinley: The cost appeared in the order in council.


Richard Bedford Bennett: The amount arrived at by arbitration was $1,683,441, and they made it $1,700,000. Mr. Macdonald, the engineer who was taken over to England by Sir Alexander Gibb, was one of those who determined the value. I well recall that we asked the minister to get someone who had no relation to the martime provinces for the purpose of fixing the value, and he secured Mr. Pringle, a cold storage expert, who I believe had something to do with Canada Packers in Toronto.
I was not, I think, in council the day the order was passed, but I am thoroughly familiar with the transaction. I was extremely anxious that someone outside the maritime provinces should estimate the value of this plant. That is how I say it was able to pay three per cent on $1,700,000, but the subsidy is in excess of that sum. I am not at the moment able to indicate whether it paid the interest on the original bond issue at five per cent, but the subsidy was marked for that purpose. I will look up to find out how much the subsidy was.


John James Kinley: I have it here, $620,284.61.


Richard Bedford Bennett: Not for one year?


John James Kinley: It was paid as the work was being constructed.


Richard Bedford Bennett: There was an annual subsidy that was to be continued.


John James Kinley: They received $537,580.61 prior to August, 1931, and there was still $82,704 to come. I think they got thirty per cent, and I believe my statement is warranted, that the government took the property over after it became unprofitable to the private interests.


Richard Bedford Bennett: The lease which the government of the day made provided that if they abandoned the works, then the Minister of Railways could take it over at the price fixed in the lease, namely, the cost of the plant, less depreciation. If the amount could not be arrived at between the parties, it was to be settled by arbitration. As a matter of fact, the minister anticipated this action, first, because the private enterprise said they were losing money; second, because the harbour commission said they wanted the cold storage property and, third, because the bondholders threatened to foreclose. The lease contemplated that there should not be a foreclosure of that valuable property in the centre of ithe harbour. If the hon. member will look at the order in council again he will see that it

Supply-Marine-Halifax Harbour
provides that should the private enterprise not operate the property he was to take it over, not as a party to a foreclosure but at a price. That price was to be the cost, less depreciation.


John James Kinley: The cost to the lessee.


Richard Bedford Bennett: Yes, whatever it cost them to put the property there, less depreciation. That was a principal factor in determining the attitude of mind of those responsible for it. The private interests were desirous of discharging their obligations to the security holders who said they would take three per cent if the matter could be closed up. It was closed up, practically in accordance with the terms of the lease made by the government in 1927, namely, the taking over of the enterprise at the cost to the private company, less depreciation. When they could not agree, it was settled by arbitration, one arbitrator being Mr. Macdonald, who, I believe, represented the private interests, and the other being a gentleman who was more or less an authority on cold storage and who made a very detailed report. The arbitrators set the amount at SI,683,000, and we paid SI ,700,000.


John James Kinley: I find the following in the report dated March 22, 1932:
Re: Acquisition Halifax Cold Storage Plant by the Halifax Harbour Commissioners This matter was the subject of some considerable investigation by Sir Alexander Gibb and his commission and the Halifax harbour commissioners made definite representations to the Gibb commission regarding the situation surrounding the cold storage plant and its acquisition by this commission.
Nova Scotia Public Cold Storage Terminals Limited was incorporated on December 28, 1926, under the Nova Scotia Companies' Act, for the purpose of constructing and operating at the port of Halifax a cold storage plant suitable to care for the requirements peculiar to the community.
The following securities were issued to finance this project:
Bonds

$1,700,000 (par value) 6 per cent dated Nov. 1/28.
7 per cent Cumulative preference shares $220,000 (par value).
$50,000 No par value common shares at $1 per share paid for in cash.
The cost figures as furnished us by the company are as follows:
Payments to contractors as per evidence furnished to and accepted by Department of Agriculture under subsidy agreemeat	
$2,067,617	76Cost of small subsequent additions	
3,185	16Discount and commission on securities sold to	raise funds..	220,900	00
Interest paid on bonds to
November	1, 1931	 306,000	00
Total	 $2,507,702 92
Deduct
Received on account of subsidy
to	August, 1931	
$ 537,580	61Balance	
$2,060,122	31
Add
Premium on funds or cost of bond	interest,	approximately..	8,000	00Total	
$2,068,122	31
Notes
Subsidy _yet to come-still payable to company, $82.704.71-half of which is payable in August, 1932, and half payable in August, 1933.
Lease of property-The premises were leased to the company for a long period by the Department of Railways at a nominal rental of $100 per year. For the purpose of this statement, no value is placed on this lease.


Robert Emmett Finn: What year was that subsidy in?


John James Kinley: 1932 and 1933. It appeared that this company was unable to continue and the bondholders were getting anxious and held several meetings. There are letters on the file to show that they decided they would have to sell the property either to the government or to other private interests if the government would not take it over. Perhaps I should say harbour board instead of the government.


Richard Bedford Bennett: They are the same thing in this regard.


John James Kinley: Mr. Pringle, the engineer, made an estimate of the cost and the depreciation some time before the final estimate was made. His first estimate was that the plant was worth $1,328,897. Another joint appraisal was made afterwards and the value was raised to $1,683,441.


Richard Bedford Bennett: He left out the value cf the lease the first time.


John James Kinley: The value of the lease was only $100 per year. I agree that it was left out, but it was not worth $300,000. Paragraph 7 of the order in council was invoked which reads:
That should the lessee at any time during the term of this lease, except for the purposes of repairs to or renewals of the said buildings, and cold and dry storage plant or for causes beyond the control of the lessee, discontinue the operations of his cold and dry storage plant upon the said land for the full period of one year, this lease may, in any such case, at the option of the lessor upon written notice from the Minister of Railways and Canals to the lessee to that effect, be forthwith cancelled, and the lessor shall thereupon take over and become owner of the said buildings and cold and dry storage plant, and shall pay to the lessee therefor the amount-
2442	COMMONS
Supply-Marine-Halifax Harbour
Now mark this:
-of the value of the said buildings and cold and dry storage plant as may then be agreed upon between the lessor and the lessee or
This is the part that was invoked:
-failing such agreement within thirty days from the date of such cancellation the amount of the value of the said buildings and cold and dry storage plant, based upon the actual cost of'construction and acquisition thereof to the lessee,-
Now what was the cost of this to the lessee?


Richard Bedford Bennett: $2,067,617.


John James Kinley: Less depreciation, which
brings it down to $1,683,000. And in that you washed out the government subsidy of over 8600,000. Now, if I undertake to build a building, and you say that if it does not pay you will take it over from me at what it cost m.e, and you put in $50,000 and I put in $100,000, it did not co9t me $150,000. it cost me only $100,000. It seems to me that the provisions of this order in council meant that these people should get back the actual money they put into the building, but the government bought back their own subsidy. It finaly cost the government $1,700,000 in bonds, plus the subsidy of $537,580.61; in addition it cost them another $82,704.71 in subsidy; and it appears from the records that there was another $60,000 as between the Halifax harbour board and the cold storage company, because there is an extra estimate of $60,000. It appeal's that these people originally put $50,000 into this plant; the government of Canada lost over $600,000, and it looks as though the promoters came out with a profit.


Richard Bedford Bennett: No, they lost $50,000.


John James Kinley: I think they got an
extra $80,000 in the settlement.


Richard Bedford Bennett: No.


John James Kinley: I would not be sure about
it, but it appears that way.


Richard Bedford Bennett: No. The order in
council provides what they got.


John James Kinley: There was a contract
between the harbour board and the cold storage plant-


Richard Bedford Bennett: That may have been
some cash they had.


John James Kinley: The return indicates $60,000 extra estimates, as between the harbour board and the Cold Storage Company. I said it became a white elephant and all I want to do is to justify myself and

the friends whom I know in many business ways in the city of Halifax, when I said the commission took this over when it was a white elephant. The statement of the leader of the opposition rather hit me cold, as I thought I knew what I was talking about, and I could not let his statement go. I knew that the minute I went there I would be told: Why did you go up there and say those irresponsible things? I wanted to be sure of what I said, and I think it is even worse than what I said. This is the order in council to which I have referred:



P.C. 2195

[Stage Direction]
The committee of the privy council have had before them a report dated 16th October, 1933, from the Minister of Marine, submitting that he has had under consideration resolutions of the Halifax harbour commissioners recommending, for the reasons set out therein, that the said commissioners be authorized and empowered to acquire the property, assets and undertaking of the Nova Scotia Public Cold Storage Terminals, Limited, located at Halifax, N.S., free from all liens and encumbrances at the date of the taking over of such property, assets and undertaking by the said commissioners for the price or sum of $1,700,000, said purchase price to be satisfied by Halifax harbour commissioners' debentures to bear interest at the rate of 3 per cent per annum and to be for a term of five years from 1st November, 1933.
Having in mind reasons, inter alia, stated by the Halifax harbour commissioners in the aforesaid resolutions as follows:
1.	Whereas our study convinces us that
private enterprise now has and will continue to have under present and anticipated near future general business conditions great difficulty in maintaining to the required extent the operation of all departments of the plant of the Nova Scotia Public Cold Storage Terminals, Limited:	.
2.	And -whereas the continued operation without interruption of all departments of said plant is essential to the adequate conduct of the business of the port of Halifax for the purpose of providing regulated temperature storage for all classes of perishable commodities which pass through the port, both export and import, and also for storage which the said plant provides:
3.	And whereas the report of the Royal Commission on Maritime Claims in Par. 17, page 30, states:
We must not underestimate the rapidity with which development of traffic can be expedited through the development of facilities for handling the traffic (including requisite cold storage) and through making known, by all the sources that are open to the energetic administration of harbour commissions in the shipping exchanges of the world, and to shippers, the facilities that are offered at any given port.
4.	And whereas the authority of the port of Halifax is in a position to eliminate duplications of cost if the operation of said plant is under its jurisdiction and at the same time is in a position to more adequately utilize the said plant in connection with harbour operations than is now the case;

5.	Anti whereas there is a responsibility placed upon the authority of the port of Halifax to use its best efforts to encourage the fish industry through the port insofar as the provision of port transportation facilities is concerned, and the operation of said plant by the port authority will permit of great assistance being given to the fishing industry;
6.	And whereas the great desirability of recovering the site located in the centre of the ocean terminals which was leased in 1927 to the said company for 99 years at a nominal rental, is a factor which very materially enters into the situation;
7.	And whereas a joint appraisal has just been completed of the present day value of the plant and equipment of the said company all as located at the ocean terminals as aforesaid, which joint appraisal has been made and certified to by J. J. Macdonald, chief engineer of the Halifax harbour commission, and by C. H. Pringle, appointed for such purpose by the honourable the Minister of Marine, and which joint report states that the physical valuation of said plant and equipment as of the present time is $1,683,441;
and having in mind further that clause 7 of the lease from the crown (Department of Railways and Canals) made the 6th day of April. 1927. under which the Nova Scotia Public Cold Storage Terminals, Limited are in possession of the property provides;
7. That should the lessee at any time during the term of this lease, except for the purposes of repairs to or renewals of the said buildings, and cold and dry storage plant or for causes beyond the control of the lessee, discontinue the operations of his cold and dry storage plant upon the said land for the full period of one year, this lease may, in any such case, at the option of the lessor upon written notice from the Minister of Railways and Canals to the lessee to that effect, be forthwith cancelled, and the lessor shall thereupon take over and become owner of the said buildings and cold and dry storage plant, and shall pay to the lessee therefor the amount of the value of the said buildings and cold and dry storage plant as may then be agreed upon between the lessor and the -lessee or, failing such agreement within thirty days from the date of such cancellation the amount of the value of the said buildings and cold and dry storage plant, based upon the actual cost of construction and acquisition thereof to the lessee, less the amount of depreciation therein, as may be determined by three arbitrators who shall be appointed within the next succeeding thirty days, one arbitrator by the lessor, one of the lessee and the third by the two arbitrators so appointed: The minister, therefore, recommends that the Halifax harbour commissioners be authorized and empowered under section 10 of the Halifax Harbour Commissioners' Act, being chapter 58 of the statutes of 1927. to acquire the property, assets and undertaking of the Nova Scotia Public Cold Storage Terminals, Limited, under the terms and conditions hereinbefore recited and subject to the further condition that the necessary resolution of the shareholders and bondholders of the said Nova Scotia Public Cold Storage Terminals Limited, are duly passed at properly convened meetings of the said shareholders and bondholders approving of and accepting the terms of sale of the property, assets and undertakings as aforesaid, and the acceptance of the purchase price therefore in manner and form hereinbefore recited. The minister further recommends that
Supply-Marine-Halifax Harbour
approval be given under section 18 of the aforesaid act, of the issue of $1,700,000 debentures of the Halifax harbour commissioners, dated 1st November, 1933, due 1st November, 1938, with interest at the rate of 3 per cent per annum payable half-yearly, principal and interest payable in lawful money of Canada, in full discharge of the purchase price of the property, assets and undertaking of the Nova Scotia Public Cold Storage Terminals, Limited.
Clarence Decatur Howe: Mr. Chairman, possibly I am late in raising this point of order, but may [DOT] I remark that these items before us are for capital expenditure and have nothing to do with the cold storage plant.


John James Kinley: That is capital too.


Clarence Decatur Howe: Later we shall be passing the operating statement of the cold storage plant, and it seems to me that this discussion would be more appropriate at that time.
Mr. KINLE1 : It might be more appropriate then, but it is in order now, I submit.


Robert Emmett Finn: It has been said that "between craft and credulity the voice of reason is stifled.'' Fortunately I was not a representative of Halifax when the cold storage plant was constructed. I think in fairness to the hon. member for Queens-Lunenburg (Mr. Kinley) and also in fairness to the right hon. the leader of the opposition I should state my recollection as to this plant. I agree with one statement made by the leader of the opposition, and I saw a sound reason to-night for thinking that if he had remained on this side of the house he would have become a member of the profession represented by my hon. friend the Minister of Railways, and would have been lost to the legal profession, because he has shown to-night a very fine grasp of the engineering difficulties in connection with many public works the ramifications of which extend practically from one end of Canada to the other.
With reference to this particular work, as I remember it was started under a Liberal administration; then there was a subsidy given to it; the cold storage plant was carried on, and finally it got into financial difficulties.
I think it went into liquidation, or there was an attempt to reorganize it and carry it on as a going concern independently of the harbour commission, who have it at the present time. As to the amounts of money that were placed in it, if I remember aright there was a subsidy of $500,000. The plant was built, and I think the right hon. leader of the opposition is correct when he says that perhaps a fine part of that great seafront was alienated from shipping when it was used as the location of the cold storage plant, and that there were other places where that

Supply-Marine-Halifax Harbour
plant could have been put with greater advantage to the broader shipping interests of the port of Halifax. But the plant continued to be in a see-saw position, and finally it was taken over. I do not know who constituted the Nova Scotia Cold Storage Company, Limited. I do not know whether there was a reorganization after there had been talk of liquidation. All I know is this, that in so far as that plant was concerned there could not be a very great depreciation because it is a structure that has not been built very long, and if the development of the port of Halifax is what we hope it will be, I oelieve that plant can be operated under the Minister of Transport and his board and made a success. I have no doubt that there were certain moneys involved in its construction, both under the company and through the subsidy which was given by the government. I had no opportunity of looking into this question, but as it is a matter relating to the city of Halifax, of which I have the honour to be one of the members, and my own colleague not being in the chamber at the moment, I make this explanation.


Mr. ISNOR:: He is here.


Mr. YOUNG:: He is always here.


Robert Emmett Finn: I am very glad my hon. friend is here. I did not think he was very far away, because we find that he turns up at the right moment, and while we may have some disagreements over matters that concern only ourselves, I hope we are not going to be at sword's point on the particular issue that is involved in the matter which has been brought up to-night by the hon. member for Queens-Lunenburg and answered by the right hon. the leader of the opposition. I was tired; I had an appointment with my couch, and if I had known my hon. friend and colleague was here I would have retired. But when I looked about me I did not see that fine personality, and I did not think I should allow an opportunity to pass to say something in regard to the port of Halifax, in connection with construction that was carried on there, not in my time but in the latter days of the Liberal administration, continued under the right hon. leader of the opposition and finally taken over by the harbour commission under his jurisdiction when he had the honour of being Prime Minister of Canada.


Richard Bedford Bennett: I want to correct one misapprehension, even though it may delay the committee for a moment. Shortly, the position is this: 1. The government of the day leased a property for ninety-nine years at ilOO a year for the construction of a cold
(Mr. Finn.]
storage plant. 2. The Department of Agriculture was satisfied and gave certificates that the cost was $2,067,617. 3. There were outstanding against the property securities to the extent of $1,700,000, carrying interest at the rate of six per cent per annum. 4. Having regard to the terms of the lease, which provided that if taken over the property should be valued at cost less depreciation, a decision was arrived at that the value was $1,683,000, or, in round figures, $1,700,000, being the amount of the bonds. The net result was that the proprietors or promoters, if you call them such, lost every dollar they had put into the enterprise, and the bondholders got three per cent harbour commission securities instead of the six per cent securities they formerly held upon the property. If my hon. friend from Queens-Lunenburg, from the remarks I made the other evening, concluded that I endeavoured to convey the thought that five per cent interest had been paid, then it was perfectly proper for him to direct attention to the fact that such was not the case. I spoke very rapidly, making an interjection in the midst of what was said, but what I endeavoured to make clear to him was that the interest of the three per cent securities had been paid since.


John James Kinley: By the government?


Richard Bedford Bennett: By the harbour commission, and that was all I desired to say. It was not, therefore, taken over as a white elephant; it was taken over at the instance of the harbour board for reasons that I think should be apparent to anyone. To have that property, under those circumstances, in the middle of the harbour facilities at Halifax was not in keeping with what they conceived to be the best interests of the port. They were clamouring for it, but it was not delivered over to them in such a way that those who had put their money into it saved anything. The property passed to the harbour board for the amount of the outstanding bonds, at the new rate of three per cent instead of six per cent. The bondholders now have bonds of the harbour board instead of the long term six per cent securities they had, which were based upon a trust deed securing the property and the lease. The lease itself, at $100 per annum for ninc-ty-nine years, was valued by some person at a very high figure, having regard to the location of the property.


John James Kinley: I do not desire to enter into any further discussion with the right hon. gentleman; the return is on Hansard, and the return can speak for itself. I want to say to my hon. friend from Halifax that they took very little off for depreciation. There was a

Supply-Marine-Montreal Harbour
refrigerating plant that cost about $90,000, that had to be washed out, and the allowance for depreciation under the circumstances was very small.


[Stage Direction]
Item agreed to.
Chicoutimi harbour improvements-improvement of roadways, $17,000.
Richard Bedford Bennett: We will discuss this when the other items are under consideration.


[Stage Direction]
Item agreed to.
Montreal harbour improvements-
Dredging by harbour plant, $90,820.07.
Strengthening of sections 30-31 and 39-40, $225,000.
Strengthening and repairing Imperial Oil wharf, $50,000.
Clarence Decatur Howe: I may say that this is new capital expenditure in the port of Montreal. We have a dredging fleet of our own there, and it is customary to do a certain amount of work adjacent to wharves. That has been done for some years. The other item is for work in connection with deepening; it is minor work and is intended to be done by the harbour's own staff. There is also the strengthening of sections 30-31 and 39-40, and the repairing of the Imperial Oil wharf.


Grote Stirling: What sort of strengthening?


Clarence Decatur Howe: The difficulty there is that the wharf is pushing out due to the loads. This is to drive piles in and put up platforms to relieve the pressure, so that the wharf can be used for heavy storage.


Hugh Alexander Stewart: The Public Works Construction Act, to which I return from time to time, contained a provision that in the carrying out of contracts of this kind tenders should be invited and the contracts should be awarded under the direction of the governor in council. I should like to ask the minister what is the intention of the government in that respect.


Clarence Decatur Howe: I may say that it is the intention to call for tenders for this work.


Hugh Alexander Stewart: I do not mean the work that is to be done by the harbour plant.


Clarence Decatur Howe: The harbour act provides that all work costing over $10,000 must be let by public tender, and we intend to follow that provision.


Richard Bedford Bennett: May I direct the attention of the right hon. Prime Minister to a matter we have been discussing this evening, namely the passing for the second time of estimates with respect to public expenditures.
In these supplementary estimates we are dealing with about $30,000,000 that this house passed last year, item by item. There was no limitation as to time placed upon these items; in other words the appropriations thus made by parliament, item by item, were not appropriations that lapsed on the 31st day of March, 1936. We are now engaged in passing these same items in their entirety, although part of the expenditures have been made and apparently the auditor general has found them satisfactory. I cannot understand just why we should ask parliament to pass a second time items that have been considered and passed by parliament in detail. This is not a question of a blank cheque; these are items that were considered and passed in detail; the numbers of the items of last year could be given and were given this evening. In these circumstances it would seem that these estimates have been padded by something like $30,000,000. That is, instead of providing for new expenditures these items are for expenditures on works that are partly under contract and partly in process of completion. In one instance new plans were necessary because of certain developments that took place after the original contract was made, but in any event all these expenditures have been passed by parliament. They formed part of the act assented to by his excellency last year. I do think it is improper, shall I say, to ask parliament to pass for the second time and for the full amount, the same items when a part of the expenditures thus authorized by parliament last year has been made and the auditor general has approved of payments made under the authority of those items.


William Lyon Mackenzie King: May I say to my right hon. friend that the government is simply carrying out what its members contended, when they were in opposition, should have been done by the then government, namely voting the supply necessary for the fiscal year, and in that way giving parliament complete control and complete knowledge of all expenditures for the year. We take the position which was always taken until my right hon. friend came into office, that parliament's power in voting supplies should be restricted to voting supplies only for a year at a time. When expenditure on public works have extended over more than one year, amounts unnecessary to complete the works were revoted. Take the public works estimates. As the exMinister of Public Works (Mr. Stewart) well knows, where the public works might take three or four years to construct certain sums would be voted each year, and what was not
2446	COMMONS
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spent in one year of the amounts so voted was revoted in a subsequent year. That is the only way in which it is possible to distinguish what is properly chargeable to one year and to another. It is equally important that there should be a distinction between what is properly chargeable to one administration and what is properly chargeable to another. That is an additional reason why this year we are asking parliament to vote what is essential to carry on work being done in the present fiscal year. It is simply keeping the control of the House of Commons over expenditure in a manner that makes the contemplated expenditure intelligible to this house and intelligible to the public, and on record in a form which will be of service to those who have to do with the finances of the country in years to come.


Richard Bedford Bennett: The right hon. gentleman apparently forgets that the statement he makes is exactly at variance with what the practice has been. I wonder whether he forgets the appropriation of a given sum we made for the federal district commission for many years. I wonder whether he forgets the appropriation made by statute for technical education. When an appropriation is made by statute it becomes payable out of the consolidated revenue fund. For instance, old age pensions are not in the appropriation bill this year. Why not? Because the statute provides that whatever sum is necessary shall be taken out of the consolidated revenue fund. The Public Works Construction Act was exactly of that nature. Every item was considered and dealt with by the House of Commons, and to the extent that the House of Commons approved, the appropriation bill which is now a chapter of the statutes of Canada for last year and the year before indicates the maximum expenditure that can be made. And it is unnecessary to vote an amount from year to year, in the same way that it is unnecessary to vote judges' salaries, nr to vote any charge against the consolidated revenue fund where a given sum is to be paid for a given number of years-the federal district commission is an illustration-or where you have it during a term, such as the natural life of judges or other officials. Another class is where a given sum is appropriated, such as
110,000,000 or some other such sum. Technical education is an illustration; another would be the Public Highways Act. Those are appropriations made by parliament of lump sums, and each year in the public accounts there appears a statement as to what has been expended, so that the balance is then available within the period of time indicated for the

purpose for which parliament appropriated the money.
This act comes clearly within that category. We voted for public works and undertakings the sums of money set opposite each particular item; when they were crystallized into a statute, as they were, and the only interest that governments have each succeeding year is to determine how much still remains available for that purpose. When it is found that an extra amount is required the minister comes in, just as he has done here in one case, and says that a further sum is required and that sum appears m tne estimates.
As the matter stands now these estimates are deceptive, because if they are going to be voted, the house must vote only the balance and not the whole, and now the vote is being asked for the whole. When the right hon. gentleman says "so that one administration may know where it is with respect to the preceding administration," that can be determined only if the balance is voted, not the whole. But he is voting the whole.
I raised the point only because I thought there was an oversight. I did not think for a moment that the right hon. gentleman thought the whole amount should be voted when only part remains to be expended. I thought it was put in without realizing that there had been, a substantial payment made. That having been paid, the only amount parliament should vote would be the balance, and it is unneeescsary to do this unless there is a limitation of time within which the first appropriation would lapse. As there is no provision for the lapsing of the appropriation it still continues in full force and validity. the same as the Technical Education Act or the Judges' Act or old age pensions, or any act that authorizes a charge against the consolidated revenue fund, as did the public works construction acts of 1934 and 1935.


William Lyon Mackenzie King: When my
right hon. friend uses the word "deceptive," it makes it necessary for me to say that the deception, if there was any, was a deception practised by himself when he was on this side of the house.


Richard Bedford Bennett: All right, we will deal
with that; do not make any mistake.


William Lyon Mackenzie King: My right hon. friend used the word "deceptive."


Richard Bedford Bennett: I did, and it is true.


William Lyon Mackenzie King: And I give
back to him his own words. I say, that is

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what he did when he was on this side of the house.


Richard Bedford Bennett: If someone will hand
me the statute-


William Lyon Mackenzie King: Yes, he
enacted a statute, and for what purpose? Let me give an example. He enacted a statute making provision for a barracks in his own city of Calgary which was to cost more than a million dollars. He knew that if he put the item in the regular supply bill, all that this parliament could be asked to vote would be enough to cover the work for one year. When supply came up in subsequent years parliament would be asked to vote what further amounts might be necessaiy for each succeeding year in turn. But in order, I assume, that there should be only one consideration of this subject, my right hon. friend put the total amount required in a special act of parliament and asked parliament to vote this amount, in the name of relief for the unemployed, where the real purpose was to build a barracks for the mounted police in Calgary.


Richard Bedford Bennett: It was not the mounted
police; it was the permanent militia. [DOT]


William Lyon Mackenzie King: The permanent militia, I should say. And having arranged for the appropriation by a special statute, he says the work should be carried on possibly for the next two or three years, chargeable to the incoming administration, but that the new government has no right to draw the attention of parliament or the country to that fact or to that method of dealing with public moneys. That is wherein, at the time, we said there was deception in the manner in which these appropriations were being made. There was deception in yet another way. The house and the country were told that this money was necessary to help the unemployed. It was not intended for the unemployed at all; much of it was meant to build barracks or armouries or other undertakings of that kind which my right hon. friend knew very well this house would not have been prepared to vote in the regular way. It was for that reason these buildings were charged up to unemployment relief account instead of to National Defence or Public Works of the character mentioned.
In regard to moneys being voted by a statute, may I draw the attention of the house to the fact that where a statute does provide sums for such purposes as mentioned, attention is drawn to that very fact in the estimates. I have in my hand the estimates for this year for the administration of justice.
Here are the amounts required for the fiscal year, at the bottom of the page in connection with the summary; amount to be voted, so much, authorized by statute, so much.


Richard Bedford Bennett: The house does not vote it.


William Lyon Mackenzie King: No, but attention is drawn to the fact that there has been a special statute making the appropriation. All amounts required for the fiscal year are shown in that way. But as my right hon. friend knows there is a great difference between a statute which makes provision for some service that in the natural order of things is to run over a course of years, as for example property to be maintained by the federal improvement commission, and the regular supply bill. It is well known that the commission will carry on its work for a number of years, and provision is made up to a certain point by statute on maintenance account, so that the commission may plan ahead with an assurance that the necessary amount will be forthcoming every year. However, we come to a quite different category when we deal with public buildings and works. May I draw attention to the fact that all that is contained in these estimates is in the nature of special estimates, the greater part of which are in connection with making provision for employment and relief. It is essential that there should be a very clear line of demarcation between what is being expended in any one year and what is being expended in the following years. The estimates have been prepared in this way just to avoid any deception and to bring to the attention of hon. members and the country that which is properly chargeable to one fiscal year and that which is properly chargeable to another.
Also, may I add, there are in these estimates a number of undertakings which the present administration would never have thought of entering into, if they had not been commenced by the previous administration. My right hon. friend now says, "Do not mention these things; you have no right to bring them to the attention of parliament. You ought to have left them alone. The sums necessary to complete them were voted by statute which binds you for years to come." The position we take is just the opposite. We believe the public and this House of Commons ought to have their attention drawn to all outlays, and we have done so in part by separately indicating projects which are already undertaken and which have to be continued or left as waste. We have distinguished those projects from other projects which we feel are justified

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from the point of view of helping to afford employment, but which in addition may be justified on grounds of being necessary at some time, either at present or of necessity later on.
I do not think there is any ground for taking exception to parliament discussing twice a matter which ought perhaps bo be discussed ten times.


Richard Bedford Bennett: Mr. Chairman, if the right hon. gentleman's memory was as accurate as it should be he would remember that we gave effect to the very contention which he has made, in the statute in question. By section 4 we find that:
The governor in council may pay out of moneys provided for that purpose in the consolidated revenue fund such sums of money as may be necessary for all or any of the purposes of this act, not exceeding in the aggregate the sum of forty million dollars.
That is found in chapter 59 of the statutes for 1934, assented to on July 3 of that year. Then, in a schedule is found a detail of every item, there being 182 in all. Having regard to what was said by the right hon. gentleman and his friends, we provided by section 10 that:
The Minister of Finance shall make a report to parliament within the first thirty days of each session during the currency of this act, containing a statement of all moneys expended under the provisions thereof and the purposes to which they were applied.
The act as framed and passed met the very contentions of the right hon. gentleman. I recall his making them. In our desire to try to meet his, shall I say critical views, possibly exacting views, we provided first of all that the details of the 182 items should be given. We provided, second that the entire cost should not exceed the sum total of the estimated cost, namely $40,000,000, and provided, third, that in each year while these works were incomplete the Minister of Finance should lay before parliament a statement showing what sums had been expended, and for what purposes. That is, there was complete parliamentary control of the situation.
Let us deal with the second argument. The second argument is that these were not relief measures in any sense, and that although the preamble adopted by parliament declared that the measure was "to accelerate recovery to more normal economic conditions" and to place money in circulation for the purpose of tending to increase employment and reduce expenditures for relief purposes, the right hon. gentleman says that is not accurate and that "Bennett desired to build a barracks at Calgary, and he chose this method to do it." I have explained the matter often; it seems 	.
unnecessary to do it again, but I shall do it because the constant reiteration of a statement which is unwarranted very often induces people to believe that it has some substance in fact.
The truth is that for many years the Department of Militia have been endeavouring to secure adequate accommodation for their permanent unit, and it will perhaps please the right hon. gentleman to know that owing to the physical configuration of the land upon which these facilities are being provided, a distinguished British officer passing through this country within the last month expressed the view that this was the finest lay-out he had seen in the British empire, because it lent itself to this particular type of development.
If we have a permanent militia-and we have-either we will provide for it or we will not. As a matter of fact when this item was first brought up I had not any idea that an expenditure at Calgary was contemplated. It was not done for the purpose of endeavouring to have it dealt with in any way other than the regular manner. Discussions had taken place from time to time, and on more than one occasion-once in the public press -the right hon. gentleman referred to it as being for the mounted police. The very appropriation asked for by the Minister of National Defence with respect to air facilities involves the utilization of these premises for that purpose.
But let us look at the matter in another way. The other answer is this:	If these
works and undertakings are not for relief purposes, then the government has stultified itself, because times without number the Minister of Labour has declared that when this bill was brought down it would contain provisions which would indicate what was intended to be done, and the very class of expenditures provided for in the Public Works Construction Act of 1934 are continued in these appropriations. So that if these appropriations are for relief purposes, then the appropriations of 1934 and 1935 must be. And if the appropriations for 1934 and 1935 are not valid appropriations for relief, then all this story we have listened to for weeks, as to what was to happen when the bill was brought down showing the broad intention of the government with respect to providing relief measures, is wholly unsound and unwarranted. Surely the right hon. gentleman must take either one horn of the dilemma or the other, because he cannot allege on the one hand that the provision we made to deal with the situation was deceptive

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when, on the other, with an exactly similar project upon which not a cent has been expended he takes a similar course. He cannot say that one is deceptive, unless the other is also.
But I go further. I will take one item, a very simple one. In part of item 373 we are asked to vote $20,971. We know that $242,000 has already been expended there. As I said it is an illustration of a proper item to be in this estimate. But when you come down to an item in connection with the city of Quebec, for instance, and dredging at Wolfe's Cove, an item of $179,906.70, we find that part of the money has been spent. The minister was good enough to say it was true that the contract had been let, and part of the work had been done. It was let months ago, because it was desirable to do it in the fall, if possible, so that the berthing of ships would not be interfered with in the spring.
Therefore we get down to this, that if these projects are sound to-night they were sound in 1934, and if they were sound in 1934 or 1935 they are sound to-night, because they [DOT] are similar. Secondly, if it was deception to ask parliament to vote these items giving in detail the estimated expenditures, it is equally deceptive, if not more so, to assert that an entire sum, part of which has been expended, shall be available when it is not available. In fact, if the Prime Minister will be good enough to look at his own estimates he will find that he has already given some notice to the public that they are not a correct statement of what can be spent. The summary given at page 18 shows that the projects already undertaken involve $30,418,341.66 of the total. I was pointing out that of that sum part had been spent. The minister who has been dealing with his estimates was good enough to indicate to us how much still remained to be expended out of these sums.
There is no necessity to make unwarranted observations with respect to the matter. I was pointing out what I still think is unsound constitutional practice, for the auditor general in making his examination of estimates has before him the statutory authority. That statutory authority was chapter 59, the Public Works Construction Act, 1934, with 182 items, and he checks against that. Now, when this appropriation bill is before him, containing a repetition of the same figures, he is going to be in the difficulty of finding substantial portions of that already spent and noted in his books, while the appropriation is for the whole sum. The minister assures us that it
is intended not to increase the amount available but to leave it at what it originally was. Therefore the auditor general will have before him two statutes, one of them chapter 59. Take one item, for example, for $25,000. The other statute would be the chapter that this appropriation bill happens to be, containing the same item of $25,000, which makes a total of $50,000. Now, under the Public Works Construction Act, 1934, chapter 59, the limitation on the total expenditure was
840,000,000, and the ministry is required by law to present within thirty days a statement showing the expenditures made, so that the incoming administration may know what sum has not been spent and what has been.
I only suggest in the best of good faith that if the Prime Minister would look into this he would observe that a parliamentary practice is being established which is novel in character, without precedent, and which involves the making available so far as the auditor general is concerned of, in some instances twice the amount that parliament intended to make available for the particular purpose indicated either by chapter 59 of 1934 or by the appropriation act that may be based upon these estimates.
M;. MACKENZIE KING: I do not want to take up the time of the committee, there is not much time left, but may 1 just link up what I have to say with the remarks made by the leader of the opposition with respect to the Calgary building. He says that building was needed for the permanent force, that there was there an excellent site and that it was needed for military purposes. If that was the case I say that my right hon. friend, when he was in office, should have had the amount necer=sary placed in the regular estimates of either the Department of Public Works or the Department of National Defence. Then parliament would have been voting, without any possibility of deception, money intended for military purposes. Had those estimates been brought down in that form parliament might have voted any sum, but all that could have been spent without an additional appropriation, thus bringing the question before parliament again, would have been the amount provided for in the fiscal year to which the appropriation applied. That would have been the regular and proper way to proceed, but according to what the leader of the opposition says his government did not proceed in that way. Though the building was wanted for military purposes; though it was properly an appropriation for the Department of National

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Defence or for the Department of Public Works, constructing a building for the Department of National Defence, it was placed in a statute which purported to be a measure for the relief of the unemployed. Parliament was asked to vote these large sums for unemployment relief purposes. My right hon. friend and his friends were thereafter in a position to go out to the country and say: Here are the total sums we have voted for unemployment relief, while presumably from what we are now being told there was no thought of spending the greater part of these sums for the next couple of years.
What we have done is to take projects, such as this which were on the list for purposes of relief and examine them and find out if work upon them has already been undertaken. If such were the case and to cease work would have meant throwing away the money already expended, we have continued the projects and are now asking parliament to vote the necessary amounts to complete them. What has been already spent was spent in the last fiscal year. What we are asking parliament now to do is to vote enough money to complete these works which, if they are not completed, will simply mean just so much money has been completely thrown away, and the works left totally unfinished. But where there are works which are specially needed and which are required for, say the Department of Public Works or the Department of National Defence, they will appear in the regular estimates for those departments. They will not appear in these special estimates which are primarily for the purpose of relief.
There are some new projects which are added here. Take the public works shown n the estimates. These works would not have been gone on with, at this time, if it were not that there is need for furnishing employment in these different- communities. For that reason the government has decided to ask parliament to vote these moneys now. But it will be noted that in the regular estimates there are various items which relate to the regular work of these departments, and parliament in voting these amounts will be voting just what it would be called upon to vote if there had not been any period of depression at all. I think that keeping the items distinct, distinguishing between what is regular expenditure and expenditure arising out of the depression, is entirely the correct way of bringing before the country the state of the finances and what the depression is costing. Certainly voting moneys for a period of one year at a time

is the traditional and correct method where parliament is being asked to vote money for public expenditure.


Richard Bedford Bennett: I am so sorry that the
right hon. gentleman should have made the next to the last statement that he did. He said that these estimates covered works which were not such as would be dealt with by the main estimates.


William Lyon Mackenzie King: At this time.


Richard Bedford Bennett: All right. Take item 357:
Extension of existing facilities-
Trenton, Ontario

Royal Canadian Air Force station-single officers' building

married airmen's quarters-married officers' quarters.
The total of the item is $430,000. Take the next one:
Ottawa, Ontario-Rockeliffe air station, Royal Canadian Air Force-men's barrack building, $160,000.
Take the next item, number 359:
St. Johns, P.Q.-Garage at permanent force barracks, $22,000:	administration building,

Take the next one:
London, Ontario-Garage for Royal Canadian Army Service Corps vehicles at Wolseley barracks, $20,000.
Take item 364:
Esquimalt, B.C.-Joint service magazine, $125,000.
All these items are in exactly the same category as Calgary barracks. They never had any place in the estimates of 18l35 or in the Public Works Construction Act of 1934. They are new. We never heard of them at all until they came down in these estimates. That is a complete refutation of the argument which the right hon. gentleman just now advanced.


William Lyon Mackenzie King: No. Take the item my right hon. friend quoted covering the extension of existing facilities at Trenton, Ontario, Royal Canadian Air Force station. My right hon. friend started these works at Trenton.


Richard Bedford Bennett: No, no.


William Lyon Mackenzie King: These are National Defence projects already undertaken.


Richard Bedford Bennett: These are not undertaken; these are new.


William Lyon Mackenzie King: These are extensions of existing facilities.


Richard Bedford Bennett: But we did not undertake them.

The Late D'Arcy B. Plunkett


William Lyon Mackenzie King: If these facilities were not existing and did not require an extension these items would not appear here at this time. These are in the nature of extensions to works already in existence. It might be said that this is in a way killing two birds with one stone, making necessary extensions and giving employment to those who need it.


[Stage Direction]
Item agreed to.
Progress reported.
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Monday, May 4, 1936