1936-05-14

Right Hon. W. L. MACKENZIE KING (Prime Minister) moved:: That the name of Mr. Clarke (Rosedale) be substituted for that of Mr. Plunkett on the standing committee on mines, forests and waters.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Mr. S. W. JACOBS (Cartier) moved that the first report of the standing committee on standing orders be concurred in.
Motion agreed to.
Questions

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. BOULANGER:: 1.	Who is the postmaster of Quebec city?
2.	When was he appointed?
3.	Was he appointed by the Civil Service
Commission ?	_
4.	Who were the other applicants?
5.	What are the names, ages, occupations, salaries, qualifications and addresses of the persons who determined the qualifications of the applicants?


Mr. RINFRET:: 1.	Jean-Baptiste L. Morin.
2.	January 1, 1933.
3.	Promoted following a promotional competition held1 by the Civil Service Commission.
4.	Alleyn, John Alexander; Arteau, Jean-Baptiste Henri; Pelletier, Pierre Alphonse Jules; Pouliot, Joseph Alphonse.
5.	The candidates were given ratings by the district superintendent of postal1 service, Mr. S.	Tanner Green, whose headquarters was Quebec city, on-(1) Seniority (length of service) ; (2) Efficiency of service; (3) Fitness to fill the vacant position. Weights to these ratings were given in the commission.
Mr. Green, who entered the postal service in 1885, (July 1), was sixty-nine years of age in 1933, and his salary was $4,620 per annum when, as district superintendent of postal service he rated the candidates in this promotional competition. Mr. Green was resident at Quebec city.



DOMINION HOUSING ACT

Mr. MALLETTE:: 1.	How many loans have been made since January 1, 1936, under the Dominion Housing Act, 1935, through authorized institutions (a) in the city of Montreal; (b) in each of the other municipalities situated on the island of Montreal ?
2.	What was the total amount of such loans made in each municipality?


Mr. DUNNING:: 1.	(a) 20 (representing 55 family units).
(b) Mount Royal	 12
Pointe Claire	 5
Hampstead	 4
Westmount	 1
Hudson Heights	 1
Cote St-Luc	 2
2. Montreal	$	201,615
Mount Royal	 96,639
Pointe Claire	 17,978
Hampstead	 31,300
Westmount	 13,000
Hudson Heights	 4,000
Cote St-Luc	 8,350
JMr. Jacobs.]



CANADLAN TRAVEL BUREAU

Mr. MALLETTE:: 1.	What firms have been given contracts for publicity by the dominion tourist bureau?
2.	Where are these firms located?
3.	What is the amount of each contract?
4.	When does each contract expire?


Mr. HOWE:: It is assumed that these questions relate to the Canadian Travel Bureau.
1.	1935-McConnell, Baxter & Eastman.
1936-MacLaren Advertising Company.
2.	Toronto.
3.	1935-$173,608.32.
1936-$176,459.11.
4.	These contracts cover the placing of advertising in certain periodicals, both newspapers and magazines, in the United States. They are not term contracts, but are for certain stipulated services,, as and when required.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. WARD:: 1.	What number of annuity contracts has been issued by the government annuities branch during the fiscal year ending March 31, 1936?
2.	How much was received as premium payments during that year?
3.	What are the names of the special fulltime representatives who received commissions from the sale of government annuities during the fiscal year ending March 31, 1936?
4.	In what cities were they located?
5.	What total remuneration did each representative receive, as commission or otherwise, during that year?
6.	What total amount of money has been transferred from the consolidated revenue fund for the maintenance of the government annuity reserves from September 1, 1908, to March 31, 1936, over and above the 4 per cent interest credited to the fund each year?
7.	Are the reserves at present set up by the government annuities branch higher or lower than the reserves which life insurance companies would be required to hold for the same contracts under the Canadian and British Insurance Companies Act, 1932?
8.	Is the single premium charged by the annuities branch for an annuity guaranteeing a male age 60, $100 per annum for life without guaranteed payments higher or lower than the rate of $1,262 charged at present by the British government through the national debt commissions for a similar contract?
9.	What single premium does the annuities branch charge for this contract?


GOVERNMENT OWNED GRAIN ELEVATORS
Mr. CHURCH:: 1.	How many grain elevators of all kinds are owned by the government of Canada?
2.	Where are they located, and what is the capacity of each?

B.N.A. Act-Mr. Lapointe (Quebec East)
3. When was each of such elevators constructed ?
4. What was the cost of each of such elevators ?
5.	By whom were the said elevators designed?
6.	What money compensation was paid for such designs ?
7.	By whom were the plans and specifications for the construction of each of such elevators prepared?
8.	What money compensation was paid for the preparation of such plans and specifications?
9.	By whom was each of such elevators constructed?
10.	Who supervised the construction of each of such elevators?
11.	What money compensation, if any, was paid for such supervision ?
12.	Are any of such elevators equipped with special hoppers?
13.	If equipped with such special hoppers, by whom were such hoppers designed, what money compensation was paid for such designs, and what was the cost of such equipment?
14.	Is any royalty being paid in connection with hopper equipment used in such elevators?
15.	If so, what is the amount of such royalty, to whom is it paid, and what was the amount paid during each year since such equipment was placed in the several elevators?



BRITISH NORTH AMERICA ACT


Hon. ERNEST LAPOINTE (Minister of Justice) moved:: That an humble address be presented to His Most Excellent Majesty the King, in the following words:-
To the King's Most Excellent Majesty:
Most Gracious Sovereign:
We, Your Majesty's most dutiful and loyal subjects, the	Commons of Canada in
parliament assembled, humbly approach Your Majesty praying that you may graciously be pleased to give your consent to submitting a measure to the parliament of the United Kingdom of Great Britain and Northern Ireland to amend the British North America Acts, 1867 to 1930, and the British North America Act, 1907, and that such measure be expressed as follows:-[DOT]
An act to amend the nrovisions of the British North America Acts, 1867 to 1930, relating to taxation and to enable the government of Canada to guarantee debts of the provinces of Canada.
Whereas an address has been presented to His Majesty by the Senate and Commons of Canada requesting the enactment of the provisions hereinafter set forth:
Be it therefore enacted by the King's Most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and the Commons, in this present parliament, assembled, and by the authority of the same, as follows:-
1. (1) Section ninety-two of the British North America Act, 1867, is amended by adding thereto as clause 2A the following:-
2A. Indirect taxation within the province in
respect of:

(1)	retail sales, other than of all alcoholic beverages, spirits, malt, tobacco, cigarettes and cigars which are subject to customs and excise duty or tax in Canada or other than of all goods and articles for delivery without the province;
(ii) the patronage of hotels, restaurants and places of amusement or entertainment;
in order to the raising of a revenue for provincial purposes.
(2)	The said clause 2A shall be deemed to have retroactive effect with respect to provincial legislation in force at the passing of this act.
2.	The parliament of Canada may authorize the government of Canada to guarantee the payment of the principal, interest and sinking fund of any securities (hereinafter called "guaranteed securities") which any province of Canada may from time to time make or issue, and, subject to the provisions of this act may prescribe the terms and conditions upon which any guarantee so authorized shall be given, and the provisions of this act shall, in the event of any such guarantee being given, apply and have full force and effect notwithstanding anything contained in the British North America Acts. 1867 to 1930, the British North America Act, 1907, the parliament of Canada Act, 1875, the Canada (Ontario Boundary) Act, 1889, the Canadian Speaker (Appointment of Deputy) Act, 1895, session 2, or any acts, orders, rules and regulations passed or made thereunder or pursuant thereto establishing a province or admitting a colony or province into the union or affecting the constitutional relationship between Canada and a province.
3.	The legislature of any province of Canada may, with reference to the principal, interest and sinking fund of securities which the province may from time to time make or issue, authorize the government of the said province to enter into an arrangement with the government of Canada whereby the government of Canada shall guarantee the payment of the principal, interest and sinking fund of such securities.
4.	(1) For the purpose of securing Canada against loss resulting from the giving of a guarantee under the authority of this act, the government of Canada, whenever in its opinion any default has occurred in respect of any payment on account of principal, interest or sinking fund of the guaranteed securities, may:
(a)	withhold any payment to the province on acount of any grant payable by the government of Canada to the province for its local purposes or for the support of its government and legislature or on account of interest in respect of its public debt or in lieu of public lands or on any other account whatsoever;
(b)	effect payment in whole or in part of any such grant by payment direct to a creditor of the province of any amount owing to such creditor on account of the guaranteed securities. In this and the next succeeding paragraph "creditor" shall include a trustee of a sinking fund;
(c)	out of any revenue received or collected by the government of Canada or any department or officer thereof for or on behalf of the province, make payment direct to a creditor of the province of any amount owing to such creditor on account of the guaranteed securi ties.
2796	COMMONS
B.NA. Act-Mr. Lapointe (Quebec East)
(2) The legislature of any province may charge the principal, interest or sinking fund of the guaranteed securities on any revenue of the province, upon terms that such revenue shall, if the government of Canada so requires, be disbursed exclusively in payment of such principal, interest or sinking fund and may, if the government of Canada so requires, provide for the depositing of all funds from the revenue so charged in a trust account in _ a bank or banks for the purpose of implementing the said charge.
5.	This act may be cited as the British North America Act, 1936, and the British North America Acts, 1867 to 1930, the British North America Act, 1907, and this act, may be cited together as the British North America Acts, 1867 to 1936.
He said: Mr. Speaker, the purpose of the resolution, as every hon. member will have learned from reading it, is that an address be presented to His Majesty the King asking for amendments to the British North America Act respecting two particular matters.
The resolution comes as a result of deliberations and discussions which took place at the dominion-provincial conference of 1935, and at meetings of various subconferences and committees subsequently held. There is no connection with the wider subject of Canada asking for power to amend its own constitution. That matter is still being investigated, and when the work is completed the result will be submitted to the various provinces before it is placed before the house for discussion.
The two subjects dealt with in the resolution are matters of particular urgency because of the serious financial difficulties in which some of the provinces have found themselves in the last two or three years, and indeed in which they find themselves at this time. The purpose of the resolution is to help relieve a situation created by an emergency, but one which might occur again if a similar situation developed.
The first change suggested is one respecting taxation. It is to widen to some extent the field of taxation allocated to the province, or rather to remove doubts as to the validity of taxes which have been already actually levied by the provinces and have been in force since.
This subject of taxation has always been a difficult one. It was so when confederation was entered into. It was the subject of many discussions at the Quebec conference and in the confederation debates which took place afterward. Of course at the time the only revenue of the various provinces which entered into confederation was customs and excise. They had to relinquish that source of revenue, but something else had to be provided in order to enable them to provide for local

improvements, local administration and provincial matters generally. Various alternatives were suggested and discussed, one being that they should retain customs and excise revenue, another that the federal power should give to the provinces part of the revenue derived from customs and excise. There was also the alternative of giving them a subsidy, and another of direct taxation. Many of the delegates who took part in the discussions were strongly opposed to the policy of paying subsidies to the provinces as not being conducive to economy and to the proper supervision of expenditure by the local authority, but finally a compromise was reached under which a certain subsidy was to be paid to the provinces in lieu of customs and excise revenue. There was a fixed subsidy, another based on per capita of population; and the field of direct taxation also was given to the provinces.
Subsection 2 of section 92 of the British North America Act gives to the province direct taxation within the province in order to the raising of a revenue for provincial purposes. Two conditions are imposed: first, it is to be direct taxation; and second, it is to be within the province.
I said that many of the fathers of confederation were strongly opposed to financing the provinces by means of subsidy. Mr. Brown especially was opposed to that method of financing the province. Mr. Duncan in the confederation debates also took a very strong stand against it; I could quote his words but I do not think it is necessary. Later the same stand was taken by the statesmen who dealt with this matter. I have here the words of Sir Wilfrid Laurier when he introduced the Alberta and Saskatchewan bills. He said:
It is a sound principle of finance and a still sounder principle of government, that those who have the duty of expending the revenue of a country should also be saddled with the responsibility of levying and providing it. That principle has been departed from in our case.... I do not think it is sound; it is the duty of everybody in this house and in this country to take confederation as we find it, with its good points and its blemishes, and carry it to the end of the principle upon which it was established.
He even said then:
The day may come probably at no distant time, when the whole subject of the provincial subsidies will have to be taken up in a more radical way than any in which we can deal with it to-day.
He reaffirmed that stand in 1907 when the provincial subsidies were increased. He said:
If the principle be admitted of a contribution being made from the dominion treasury to the provinces, the provision made by the

B.N.A. Act-Mr. Lapointe (Quebec East)
British North America Act for contributions to the provinces has proved to be absolutely insufficient and inadequate. The experience of forty years had brought this fact again and again to the attention of parliament and the people of Canada; ... not once, not twice, nor thrice, but periodically and systematically parliament has been asked at almost regular intervals to vote in favour of now one province and now another province appropriations far in excess of anything that had been stipulated by the British North America Act.... All these have been made by parliament without any guiding principle, but simply as the expediency of the moment suggested, or rather as the financial difficulties of one province or the other were more or less urgent.
At the same time Sir George Foster, then Mr. Foster, a former minister of finance, suggested that the province should be allowed a certain percentage of the customs revenue in preference to an increase in subsidy. He said that such an arrangement would do away with future raids on the federal exchequer.
Hon. gentlemen can see by reading the debates that took place on these various occasions that every time an increased subsidy was granted it was stipulated that this last arrangement was to be final, that there should not be in the future any more demands for increased subsidies. Even in the British North America Act itself, in section 118, which is the one relating to grants to the provinces, you will read these words;
Such grants shall be in full settlement of all future demands on Canada ...
And so forth. But, Mr. Speaker, those hopes and expectations were not realized, because periodically since there have been movements for increases in these grants. When such requests for increases were granted it was always with that same condition of finality, but apparently in this case it cannot be final.
I said that there have been movements periodically to increase the subsidies. Even after the increases I have mentioned had been granted, in 1913, the year before the war, an interprovincial conference passed a resolution along the lines suggested by Sir George Foster in the debates of 1907, asking that ten per cent of the revenue collected by the federal government in customs and excise should be paid to the provinces. The war came a few months afterwards and no action was taken on that resolution, but conditions became worse on account of the situation created by the war. Until 1914 the federal government's main source of revenue, in fact almost the only source, was customs and excise. There were certain revenues from the Post Office Department, when there were surpluses; there was some revenue from the head tax on Chinese, but apart from these
sources of revenue there was practically no other taxation in Canada. On account of the exigencies of the war, the federal government had to adopt forms of direct taxation as well as the indirect taxation in the form of customs, excise, and so on. When this was first done, Sir Thomas White, then Minister of Finance, said he was doing it reluctantly because he thought the field of direct taxation should be left to the provinces if it were at all possible so to do. However, the federal government could not obtain the necessary revenue in any other way than by the full use of its powers in that regard. Thus all the fields of taxation were in-vaded-^perhaps I should say "used'" rather than "invaded," as this was done legally- by the central government.
Of course the provinces complained bitterly about this new situation. They were forced to resort to many new taxes for the purpose of securing required revenues. Commodities were taxed in such a way as to throw some doubt upon the legality of the action. In order to show the house what was done in this connection I shall refer to the taxing of gasoline and fuel oil in British Columbia, which illustrates very well the situation with regard to this sort of taxatidn. In 1924 the province of British Columbia imposed a tax on oil. This was challenged, the matter going as far as the privy council in the case of Attorney General of British Columbia v. Canadian Pacific Railway Company. I should like to read the decision of the privy council in this case, because it shows the nature of the action. It reads;
Held, the British Columbia Fuel Oil Tax Act 1923, which provides that every person who shall purchase within the province fuel oil sold for the first time after its manufacture in or importation into the province shall pay a tax thereon, comes within the general principle which determines that the tax is an indirect one and, therefore, invalid within the meaning of the British North America Act 1867, s. 92, head 2.
This particular tax was declared invalid. IIoweveT, the province of British Columbia wanted to tax fuel oil and gasoline, so fhey proceeded in another way. Another statute was passed which was also challenged and submitted finally to the privy council in the case of Attorney General for British Columbia v. Kingcome Navigation Company, in which it was held:
The Fuel Oil Tax Act, 1930, of British Columbia, which imposes a tax upon every consumer of fuel oil according to the quantity which he has consumed, is valid under s. 92, head 2. of the British North America Act, 1867; the tax is direct taxation, because it is demanded from the very persons who it is
2798	COMMONS
B.N.A. Act-Mr. Lapointe (Quebec East)
intended or desired should pay it. As the tax does not relate to any commercial dealing with the commodity it does not fall within the category of customs and excise duties, which are within the legislative powers of the dominions, both because they are by nature indirect taxes and having regard to s. 122 of the act. The act being within the legislative power given by s. 92. head 2, and not purporting to regulate trade and commerce, is not invalid as infringing the dominion authority under s. 91, head 2, to legislate for that purpose.
This second act was declared to be constitutional and within the authority of the province. In this case the person was being taxed, it was not the commodity. The privy council adopted the definition of John Stuart Mill as to direct and indirect taxation. This definition is as follows:
Taxes are either direct or indirect. A direct tax is one which is demanded from the very persons who it is intended or desired should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another; such are the excise or customs. The producer or importer of a commodity is called upon to pay a tax upon it, not with the intention to levy a peculiar contribution upon him, but to tax through him the consumers of the commodity, from whom it is supposed that he will recover the amount by means of an advance in price.
Lord Thankerton said:
Customs and excise duties are, in their essence, trading taxes, and may be said to be more concerned with the commodity in respect of which the taxation is imposed than with the particular person from whom the tax is exacted.
The privy council decision of 1934 has practically settled the law with regard to direct and indirect taxes, but even now it is difficult to come to a definite decision in connection with some sorts of taxes. At the dominion-provincial conference of 1927 this matter was discussed. It was found that when one province imposed a tax on oil, the other provinces followed suit. Taxes were imposed on other commodities and the provinces complained that their power was being challenged, not by the federal authorities but by certain taxpayers, and they were always being subjected to litigation and to the necessity of having to defray the cost of very expensive trials. Mr. Price, then Attorney General of Ontario, was particularly emphatic about it. Mr. Baxter, then Premier of New Brunswick, suggested that the British North America Act should be amended for the purpose of defining what a direct tax was, and that it should mean anything apart from customs and excise. This was supported by some of the other provinces, but nothing was done with regard to that suggestion. At the last dominion-provincial

conference it was again suggested that the field should be extended to them, including everything apart from customs and excise.


Mr. BENNETT:: Including income tax.


Ernest Lapointe: Including income tax, yes. So as I have stated the taxation virtually exists at the present time. They have taken the power of taxing in the way I have indicated, and when we pass a resolution here agreeing thereto we are practically doing what Lord Chesterfield advised his son to do: What you cannot avoid doing, do gracefully. They wanted us to drop the income tax and many other fields of taxation, to which of course the dominion did not agree.
The feature of the amendment which seems to meet with objection is its retroactivity. My right hon. friend alluded to that in the debate on the budget and I believe the hon. member for St. Lawrence-St. George (Mr. Cahan) also indicated his opposition to it. Of course the principle of retroactivity is not generally desirable in legislation, I am free to admit; but what makes it undesirable also makes exception to the principle necessary perhaps, and it is after all public interest, the social good. The principle of retroactivity is not desirable because it would affect, for instance, criminal matters. If a man does something which is not a crime you cannot three years afterwards declare it to be a crime and say that the penalty should apply to what had been done at that time. The matter under consideration here, however, is not at all similar. It is rather to remove doubts as to the power of taxation in the provinces with respect to certain matters like fuel oil and gasoline. Moreover, it is not, as has been claimed, so unprecedented that an amendment to the constitution should contain a retroactive clause. As a matter of fact, in most of the amendments that have been made to the British North America Act since 1867 there has been a retroactive clause. For instance, the British North America Act of 1871 was for the purpose of ratifying the Manitoba act which had been passed by this dominion, creating the province of Manitoba, in 1870, and section 5 of the amending act declares:
The following acts passed by the said parliament of Canada and intituled respectively, "An Act for the temporary government of Rupert's Land and the North Western Territory when united with Canada"; and "An Act to amend and continue the act thirty-two and thirty-three Victoria, chapter three, and to establish and provide for the government of the province of Manitoba," shall be and be deemed to have been valid and effectual for all purposes whatsoever from the date at which

B.N.A. Act-Mr. Lapointe (Quebec East)
they respectively received the assent, in the Queen's name, of the Governor General of the said Dominion of Canada.
And the preamble of the imperial statute specifically states that the purpose is to remove doubts as to the power of the dominion parliament to enact the act creating the province of Manitoba, It may be said that there was nothing there concerning taxation. I think there was. The province of Manitoba had been in effect constituted. The lieutenant governor had been appointed in 1870, a general election in the province took place in that year, there was a government there, and there was a session of the legislature of Manitoba in which taxation was imposed, before the amending act of 1871 gave the full powers to create the province of Manitoba.
In 1875 there was another amendment to the British North America Act in which the preamble also stated that doubts had been expressed as to the power of the dominion parliament with regard to the matter concerning that act, and section 2 reads:
The act of the parliament of Canada, passed in the thirty-first year of the reign of her present majesty, chapter 24, intituled "An Act to provide for oaths to witnesses being administered in certain cases for the purposes of either house of parliament," shall be deemed to be valid and to have been valid, as from the date at which the royal assent was given thereto by the Governor General of the Dominion of Canada.
In 1886 there was another amendment to the British North America Act. Section 2 reads:
Any act passed by the parliament of Canada before the passing of this act for the purpose mentioned in this act shall, if not disallowed by the queen, be, and shall be deemed to have been, valid and effectual from the date at which it received the assent, in her majesty's name, of the Governor General of Canada.
And so on. In 1895 there was an amendment with respect to the appointment of a deputy speaker, in which the act of the parliament of Canada was also deemed to be valid and to have been valid as from the date at which royal assent thereto was given. But more recently, prior to the statute of Westminster, 1930, there were doubts and there had always been strong controversial debates as to whether this and other dominions of the British commonwealth had the right of extraterritoriality with respect to legislation. The courts had decided that the effect of a law of Canada did not go beyond the limits of this country; others had decided that there was the power of extraterritoriality. However, this was settled by the statute of Westminster, section 3 of which provides:
It is hereby declared and enacted that the parliament of a dominion has full power to make laws having extraterritorial operations.
This was the language used in the Westminster statute. It was for the purpose of giving retroactive validity to all legislation in which extraterritoriality-


Mr. CAHAN:: Will the minister please expand that idea? From what does he infer that the Westminster act with regard to the territorial jurisdiction of the parliament of Canada was retroactive in effect?


Ernest Lapointe: I cannot do better than quote the dominion statute of 1933. As far as I am concerned I cannot concede that Canada did not have this power of extraterritorial jurisdiction; I always claimed that we had, and that this was merely declaratory of a power which the dominion already possessed. But that was not the view of everybody: I heard different views expressed in the house prior to 1930. However, in 1933 parliament thought fit to enact the following statute, chapter 39 of the dominion statutes:
Every act of the parliament of Canada now in force enacted orior to the eleventh clay of December, 1931, which in terms or by necessary or reasonable implication was intended, as to the whole or any part thereof, to have extraterritorial operation, shall be construed as if at the date of its enactment the parliament of Canada then had full rower to make laws having extraterritorial operation as provided by the Statute of Westminster, 1931.


Charles Hazlitt Cahan: That is the Canadian act, but not an act of the United Kingdom.


Ernest Lapointe: Obviously the Canadian government and the Canadian parliament in 1933 thought it better to pass an act, in exercise of the powers conferred by the statute of Westminster, declaring that any act passed before 1931 in which there was a clause of extraterritoriality was in effect as if that power had always been possessed by parliament.
I quite admit that it would be better if we were not compelled to make any such changes in the powers of taxation. It would be much easier, it would be along the line of least resistance, to stay as we are and leave to the provinces the power of direct taxation and nothing more. But we are forced by circumstances created through the economic difficulties in which the provinces find themselves, and because they cannot have sufficient revenues without using the power of taxation which we are conceding to them. The only alternative would be more subsidies, and all our statesmen in the past-the fathers of confederation as well as those who have dealt subsequently with this matter-have been of the opinion that it is wrong to subsidize the
2800	COMMONS
B.NA. Act-Mr. Lapointe (Quebec East)
provinces instead of giving them the power to levy and collect their own revenues by taxing their own people with the authorization of their respective legislatures. As I say, that is the alternative, and as far as I am concerned I am inclined to favour letting the provinces possess the power of using this method of taxation which they have been employing during the last few years.
As to the question whether it is desirable that the provinces of a federal state should have this power, it is to be observed that it is possessed by members of other confederations. In the nation to the south of us the states have the power of indirect taxation, except customs and excise-the very thing that our provinces have been asking for, and which we are not willing to grant them, even at this time. In Australia they have the same difficulties as we have. But this consideration would apply more to the second part of the resolution, though it will be noted that the statutes of Australia empower the commonwealth parliament to come to the relief of the states when they are in financial difficulties and to lend them money, in a way which is not mentioned at all in our own constitutional act.
It is the unanimous wish of the provinces that this should be granted to them. They have accepted it, although they wanted more. The drafting of the amendment was their work as well as that of the law officers of the crown, and this amendment meets their views.
The power of indirect taxation is not given to them except with regard to the retail sales tax, and from this tax are excepted certain commodities upon which there is already a very high rate of customs or excise duty, so that it was thought undesirable that the provinces should invade this field. There is another exception, as to goods which might be sold and delivered outside the limits of a province; this, according to the experts of the finance and other departments, can be easily adjusted. The financial advisers of the government have approved of the scheme which is embodied in this resolution.
The second matter mentioned in the resolution, and which is a subject of this amendment, is the provision of some method of financially helping the provinces. I believe it is the universal opinion in Canada that the system of lending money to and piling debts upon the provinces by the Dominion of Canada must be ended. This is for the purpose of helping the provinces when financially embarrassed to obtain the guarantee of the dominion government, subject to certain conditions, for their borrowings and to em-
[Mr. "F. T-aoointe.l
power them to give securities to the dominion in pursuance of that guarantee. Here, again, all the provinces through their representatives have agreed. Most of them stated that they would not take advantage of the scheme which may be devised in virtue of this agreement, but they are all agreed that they and the dominion should have the power, if it comes to a special difficulty, to take advantage of it.
The question of a loan council, which is not referred to at all in this amendment, is a matter that may be discussed later. If it should be established it would be for the purpose of devising a method of coming under the provisions of this amendment, but that question does not come within the sphere of the discussion of this resolution. It is not fair that the present system should continue without some guarantee of this kind. It is not fair to the provinces concerned; it is not fair to the dominion, and more particularly it is not fair to the other provinces which are meeting their obligations, and which would have to share the loss if anything should happen to prevent the reimbursement of the loans made by the dominion to some province. In some newspaper, within the last week or two, I read that this was a colonial move, which would subject Canada to imperial control, and all that sort of thing. Well, Mr. Speaker, I claim to be a good Canadian national, and I think I am as jealous as anyone of the autonomy of Canada. I fail to see where anyone could find any such thing in this address. Quite the contrary; this amendment will empower Canada to settle its own financial affairs; it is designed to create some structure which will permit Canada to deal with its own problems, in its own way, by its own citizens. How could anyone find some dangerous imperial scheme behind it? I fail to see it, and if someone else sees it I wish he would explain it to me.
I have taken longer than I had intended, Mr. Speaker, but I repeat that this amendment is for the purpose of enabling the dominion and the provinces to try to solve their present difficulties. As a Canadian 1 have the hope, and I am quite sure, that Canadians will find a way to deal with their difficulties and that the provinces and the dominion will cooperate in the future as they have in the past. It is with that hope that I submit this resolution and ask for the support of the house.


Charles Hazlitt Cahan: Mr. Speaker, the address now under consideration has been divided by the Minister of Justice (Mr. Lapointe) into two

B.N.A. Act-Mr. Cahan
parts which cannot be said to be interrelated. With regard to the second part, dealing with the power to be given the parliament of Canada to authorize the government of Canada to guarantee payment of the principal, interest and sinking fund of certain provincial securities and to receive pledges or guarantees with respect to the liquidation of provincial indebtedness, personally I should have thought-and I have seen no legal opinion to the contrary-that at present Canada is authorized to do that by legislative enactments of the parliament of Canada under the general provisions of section 91, dealing with peace, order and good government. I can see no reason why it should be suggested that the loans which have been made during recent years to the provinces were not validly made and were not within the jurisdiction of this parliament and the government of Canada,
As to the other suggestion contained in this address, that the legislatures should be authorized to give certain guarantees to the dominion government with respect to the payment of the guaranteed securities and the interest thereon, I should have thought that end could have been accomplished by statutory enactments of the provinces concerned, in other words that by cooperation between this parliament and the legislatures of the provinces the same end could have been achieved more quickly and equally effectively.
There is, however, one element that enters into this part of the address. Paragraph 4 authorizes the government of Canada, in payment of principal, interest or sinking fund of the guaranteed securities, to withhold payment to the provinces of subsidies which have been granted in part by statute of the parliament of the United Kingdom and in part by statutory enactments of the parliament of Canada. It may be that in order to authorize the government of Canada to withhold the payment of subsidies when provincial governments are in default, or to withhold the payment of other funds in the nature of revenues received or collected by the government of Canada on behalf of the province, or to make direct payment of these funds to the creditor of the province, some additional statutory authority is required to remove any doubt as to the authority of parliament and of the government to deal with such matters by virtue of legislation of the parliament of Canada. But I do say, by way of suggestion, that instead of the rather verbose and extensive enactment suggested in this address, the desired end might have been accomplished by a short enactment of the parliament of the United Kingdom expressed in ten or a dozen
lines. However, a short time ago I noticed that on March 23 the Minister of Finance (Mr. Dunning) wrote:
The dominion government to-day were strongly of the view that it would not be advisable to go forward with constitutional amendment bill resolution for which is now on the order paper if any of the provinces object to its being proceeded with.
I have read the correspondence as submitted, but I fail to find that the government of any province has acquiesced in this legislation with the exception of the government of one province, Saskatchewan. Therefore it may be premature to invoke the legislative power of the parliament of the United Kingdom before it is ascertained at least that the governments of the several provinces are disposed to acquiesce in and carry out the general policy which the Minister of Finance has announced. I do not know when he changed his mind, but apparently it has been changed. I say that because the tenor of the correspondence, as I understood it, was that he would not proceed with the address to secure a statute of the parliament of the United Kingdom unless there was clear evidence that the governments of the provinces would acquiesce therein, and by virtue of the same statute enact provincial legislation to authorize the province to enter into such an agreement.


Mr. DUNNING:: I do not think the correspondence the hon. member quotes quite bears out that statement.


Charles Hazlitt Cahan: Possibly not, but the inference I have indicated can be fairly drawn from it. I do not wish to misrepresent the position of the hon. member. I remember a smile of approval that awakened some controversy in the house, because that was one of the matters of which I approved at the time the Minister of Finance made his statement.
However that may be, it seems to me opposition to that part of the address is not justified to the extent that opposition to the first part of the address may be fully justified. We have reached a situation in Canada which has been brought about partly by the undue expenditures of some of the provinces, expenditures which if their nature were well known to the public of those provinces could not have been justified by public opinion. On the other hand some of the western provinces have been overtaken with emergent conditions by reason of which the parliament of Canada has been fully justified in extending such necessary financial aid and assistance as lay within the power and disposition of
B.N.A. Act-Mr. Cahan

parliament. Therefore with regard to the second part of the address I for one will not vigorously oppose it. I should prefer to have had it drafted in somewhat clearer terms and to have limited it to dealing with emergent conditions, as we now know them; because I clearly foresee that this address, if expressed is an enactment of the parliament of the United Kingdom, will simply lead to more intense agitation in the future to compel the parliament and government of Canada to assume the existing liabilities and to guarantee future liabilities of the several provinces whenever and however they may be incurred, reasonably or otherwise.
The Minister of Justice has called attention to the fact that from the day parliament began to grant subsidies there has been continuous agitation by the provinces for additional legislation of either the parliament of the united kingdom, or of this parliament, under which the federal treasury would undertake to provide increased additional annual subsidies to meet provincial expenditures. And as pointed out by Sir Wilfrid Laurier in the quotation read by the Minister of Justice, we never will be free from recurring difficulties of that kind until some way is found by which the responsibility of the government spending the money shall be extended to and include responsibility for providing revenues by taxation or otherwise to meet the expenditures so deemed necessary.
Referring to my native province of Nova Scotia, may I say that a government with so distinguished a member and attorney general as the late Sir John Thompson was turned out of office in that province because of the large annual expenditures it was making on public services, an amount which at that time was less than $400,000 a year. The people were so much aroused over this enormous expenditure by a province the population of which was then not much less than its present population, that they ro9e in their wrath and by the ballot box turned that government out of office. And yet no province has been more persistently and continuously demanding financial assistance from the federal treasury. And to-day, although renewed grants have been given, I notice that with annual expenditures reaching at least several millions of dollars the government of Nova Scotia assumes it will have a large deficit- on financial operations for the current year.
I was hoping, somewhat from a personal point of view', in view of the position taken by the Prime Minister (Mr. Mackenzie King) when in opposition, that with the support of all provincial governments and
[Mr Cahan.]
premiers following the last general election he would be placed in a position whereby through conference, discussion and agreement he could reach some final disposition of these great difficulties, through curtailment of the large and excessive expenditures of the provinces or by insisting that they assume full responsibility for raising the revenues necessary t-o cover their expenditures. I suggest there are no difficulties under the present Canadian constitution in the way of a province providing revenues necessary to meet its reasonable expenditures, if it will assume that responsibility. The reason the provincial governments do not wish to exercise the powers they now have is that the imposition of direct taxation would bring to the minds of the electorate the absolute necessity for curtailment and restriction of provincial expenditures to a limit reasonably within the financial means of -the people .resident within those provinces, w'ho are subject to provincial taxation.
I do not contend therefore that the house should reject the second part of the address. I wish it were -expressed in other terms; preferably that it were expressed as a definite amendment to one or more sections of the British North America Act, or in the alternative that it were made the subject of a new British North America Act for the year 1930. But apart from that, and dealing now with the first part, I entertain very strong objection to the first part of these proposed enactments. In the first place, as one who has lived since the confederation was formed, and as one who within twenty years of the confederation opposed two very earnest, exciting and strenuous campaigns in Nova Scotia in favour of secession of the province and the repeal of the union-the first part I ever took in political life-


Charles Avery Dunning: You are in favour of repeal, are you?


Charles Hazlitt Cahan: No; I met Mr. Fielding night after night for weeks debating his program of secession and although he carried the province in the provincial election of 1886 I think I contributed something, and I have thanked God that I did contribute something towards reversing that decision in 1887. No one could later in life admire that gentleman more than I, but he so developed in Canadian politics, as a member of this house and as a member of the Canadian government that-you could hardly conceive in his later life that he had entertained the narrow view's which he attempted to perpetuate when leading as premier of the province in the legislature of which I was leader of the opposition.

B.N.A. Act-Mr. Cahan


Richard Bedford Bennett: He even disfranchised
civil servants.


Charles Hazlitt Cahan: Amendments to the constitution are not matters that can be dealt with so frivolously as amendments to or changes in municipal regulations with regard to the imposition of a dog tax or something of the sort. One of the younger members of this house stated, as reported the other day, that the British North America Act was hurried in its preparation of two or three weeks. I suggest to him that he study more carefully the history of the French and British communities that settled north of the forty-ninth parallel. The germs of the confederation idea came from the sixty thousand men of the French race and of the Catholic religion who were left practically deserted when the naval and military and civil authorities of France evacuated Quebec and Montreal, and left those people under the guidance of their clergy to work out their own destin5f on the banks of the St. Lawrence river. The germs of the confederation idea were in the minds of the tens *of thousands of men who left the New England states, and especially the state of New York, and came down and settled in western Nova Scotia, which then comprised the shores *of New Brunswick to the Maine border, and there attempted to work out their own destiny as British subjects, enjoying, as they hoped to [DOT]do, the liberties and privileges which appertain to British citizenship. I know something about that. I cannot give this as a fact but I know that in my early days it was stated in western Nova Scotia, where I was born, that so many people came to Nova Scotia and settled there as a result of the war of revolution in the United States that at the close of that revolutionary war there were more graduates of Harvard university settled in Nova Scotia than in all other parts of the world-men of education and men of culture who assisted with the other immigrants from the United Kingdom-and from Germany even; because the German settlers of Lunenburg were among the best-in working out the *constitutional reforms which give full liberty and parliamentary privileges to colonials of British citizenship.
I do not know so very much about Ontario, but I do know this, that after the battle of Culloden the followers of Bonnie Prince Charlie under Flora Macdonald left by thousands and settled in northern Carolina, forming there new Scotch settlements. At the outbreak of the war which we call the revolutionary war they enlisted in hundreds and thousands in the ranks of the British, and when finally New York fell, those men with their families, Scotsmen who had fought in favour
of the Stuarts, Scotsmen who had fought against the British crown in their day, came with their oxen and with their teams, and others by boats up the Hudson river, across the frontier, and established the Scotch settlements at Glengarry, Cornwall, Argenteuil and along the banks of the Ottawa river, and attempted, as they did successfully, to reestablish for themselves homes under British sovereignty. These men brought with them the ideas which germinated and found expression in the British North America Act, that act representing an expression of the profoundest emotions of these people and of others who had been born and bred in this country, all of whom agreed, irrespective of their political affiliations, to unite to carry the confederation program to success. And entertaining those ideas-because I have lived for a certain time of my life among men who would rather fight and die than see any changes made in the British North America Act which they regarded as contrary to their best traditions and their best aspirations-I look upon that act, I look upon the constitution of Canada as something that should not be amended frivolously or without impartial and anxious investigation and study.
The program which we are initiating on this occasion is, I think, to be regretted because the adoption of this address will reaffirm the past procedure by which amendments to the British North America Act of 1867 may be procured from the parliament of the united kingdom, upon an address from the parliament of Canada alone, and without any express acquiescence or consent on the part of the legislatures or governments of the several provinces of Canada. All the prolonged discussions which we have had during the years with regard to new arrangements for amending the constitution of Canada by the acquiescence and consent of minorities and by the acquiescence and consent of the several provinces are now abandoned so far as this amendment is concerned, and we reaffirm the procedure adopted in times past, and always accepted by the parliament of the united kingdom in times past, that amendments to the British North America Act are made and will continue to be made on an address from the parliament of Canada alone. To proceed in this manner is establishing, in view of recent discussions of, a very unfortunate precedent.
The Minister of Justice has said that there has been so much doubt as to the legislative authority of the provinces in respect to taxation that the legislation suggested in the first part of this address should be passed to remove those doubts. I suggest that we have reached
B.N.A. Act-Mr. Cahan

a stage in the development of judicial decisions in Canada when there is now no doubt with regard to the division between the acts of the provinces which are ultra vires in that they imposed indirect taxation, and those which are intra vires by reason of the imposition of direct taxation. Section 92 of the British North America Act provides:
In each province the legislature may exclusively make laws in relation to matters coming within the classes of subjects next hereinafter enumerated; that is to say,-
2.	Direct taxation within the province in order to the raising of a revenue for provincial purposes.
If this proposed amendment is sent to the British parliament in the form . in which it is now expressed, I do not think it will prove creditable to whatever department drafted it. It proposes the addition of a new paragraph to section 92 of the British North America Act, to be known as paragraph 2A. Where do you add it? Do you add it at the end of section 92? Do you incorporate it with paragraph 2, or is it intended that paragraph 2 shall be divided, one part comprising the present paragraph 2 and the other part comprising the new paragraph 2A? As it is provided in this address, the imposition of indirect taxation within the province is not related to the governing preamble, if I may call it that, of section 92. At least it should read thus:
.In each province the legislature may exclusively make laws in relation to matters coming within the classes of subjects next hereinafter enumerated; that is to say,-
2A. Indirect taxation within the province in respect of:
(i)	retail sales, other than of all alcoholic beverages, spirits, malt, tobacco, cigarettes and cigars which are subject to customs and excise duty or tax in Canada or other than of all goods and articles for delivery without the province;
(ii)	the patronage of hotels, restaurants and places of amusement or entertainment;
in order to the raising of a revenue for provincial purposes.
I doubt even if one had the enlightenment and perspicacity of the famed Philadelphia lawyer, whether he could decide what is meant by the patronage of hotels, the patronage of restaurants and the patronage of places of amusement or entertainment. In a constitutional amendment of the importance of this one, which tends to undermine and, I think I am safe in saying, to destroy the financial stability of the government of the Dominion of Canada, we should not use the language of ordinary parlance; we should so express ourselves in English or in French as to convey a clear and definite and unr ambiguous meaning. I suggest, therefore, that [Mr Cahan. j
the address should set forth the exact words and form of the proposed amendment. I suggest that the end would best be obtained by repealing the existing clause 2 of section 92 of the British North America Act and substituting therefor a new clause to cover the old clause and the proposed amendment. If we were amending an act of the parliament of Canada we would deal with it with a certain degree of circumspection so as to have it appear properly upon the statute books.
What does this clause imply? There is only one exception with regard to indirect taxation within the province. You can impose indirect taxation with respect to all commodities except alcoholic beverages, spirits, malt, tobacco, cigarettes and cigars. On the other vast range of commodities which enter into the ordinary consumption of the people of Canada, the provinces are left free to impose such indirect taxation as they may be disposed to enact.
The hon. gentleman referred to certain decisions which have been given with respect to what is direct or indirect in connection with the imposition of taxes by provincial legislatures. He referred to several decisions and I intend to refer briefly to two or three in an eSort to show that there is no real inconsistency or confusion between those decisions; that there exist clear and express definitions of the indirect taxation which it has been sought unlawfully to impose and of the direct taxes which may be lawfully imposed under the British North America Act as it exists at the present time. I quote from the case of 'the Attorney General for Manitoba v. the Attorney General for Canada, 1925 Appeal Cases, page 561. The question here was in connection with sales of grain on the exchange in Manitoba. Viscount Haldane says at page 566:
As to the test to be applied in answering this question, there is now no room for doubt. By successive decisions of this board-
The judicial committee of the privy council.

the principle as laid down by Mill and other political economists has been judicially adopted as the test for determining whether a tax is or is not direct within the meaning of s. 92, head 2, of the British North America Act. The principle is that a direct tax is one that is demanded from the very person who it is intended or desired should pay it. An indirect tax is that which is demanded from one person in the expectation and with the intention that he shall indemnify himself at the expense of another. Of such taxes excise and customs are given as examples.
A clear definition was also given in 1925 by the judicial committee of the privy council. The only difficulty was that the provinces

B.N.A. Act-Mr. Cahan
were,-I dislike to use the word-endeavouring to filch jurisdiction from the parliament of Canada. I trust I am not using that word improperly. They were endeavouring to increase their jurisdiction with regard to taxation at the expense of the federal taxing authority. Therefore they were not prepared to accept that clear definition as to direct and indirect taxation.


Charles Avery Dunning: Is the case the hon. gentleman is quoting that referring to the Manitoba tax on futures?


Charles Hazlitt Cahan: It had to do with the sales of grain, but futures are involved to a certain extent.


Charles Avery Dunning: They were trying to tax the people of another province, which is a different question.


Charles Hazlitt Cahan: That was not the ground of the decision.


Charles Avery Dunning: One of the grounds.


Charles Hazlitt Cahan: The decision which I have just read was on the question whether it was indirect or direct taxation.


Mr. THORSON:: The question whether it was taxation within the province was also involved.


Charles Hazlitt Cahan: Quite so, but in citing the decision I am confining myself to the distinction between indirect and direct taxation.
The next decision which I think is important is that of the Attorney General for British Columbia and the Canadian Pacific Railway Company, 1927 Appeal Cases, 934. This case arose out of a statute of the province of British Columbia authorizing taxes to be imposed on sales of fuel oil, and the judgment of the court may, I think, be summarized in this form. If from the terms of the act there appears an expectation and intention that the person required to pay the tax will indemnify himself on resale of the commodity taxed, the act is ultra vires of the provincial legislature. The act in question provided that every person who purchased within the province fuel oil sold for the first time in its manufacture in or importation into the province should pay for provincial purposes a tax equal to i cent per gallon on the oil pur. chased. It was held by the judicial committee of the privy council that under the terms of the provincial statute this tax would apply even if the first purchasers bought and resold the oil they had bought and that therefore the tax became an indirect tax and its imposition was ultra vires of the provincial legislature.
The next case which seems to be of importance is that of the King v. Caledonian Collieries, 1928 Appeal Cases, 358. In this case the provincial legislature sought to impose what they called a direct tax payable by the owner of a mine upon the gross revenue of his mine as received during each preceding month. The tax was imposed upon the gross revenue and it was held by the judicial committee of the privy council to be in reality a tax upon the aggregate of sums received from the sales of coal and equivalent to a tax upon every sum received from the sale of coal and therefore that this tax was ultra vires of the provincial legislature. It was in fact a tax imposed upon the gross retail business of a mining company, compelling the mining company to pay the tax and leaving the company free to collect compensation for the tax from those who purchased and consumed the coal.
The next case, in my opinion a very important one, clarifies the situation; it is the Attorney General for British Columbia v. Kingcome Navigation Company, 1933 Appeal Cases, 45. The material provisions of the act of the British Columbia legislature for 1930, as amended by the act of 1932, which came under investigation in this case, were as follows:
2.	For the raising of a revenue for provincial purposes every person who consumes any fuel oil in the province shall pay to the Minister of Finance a tax in respect of that fuel oil at the rate of J cent a gallon.
3.	The tax imposed by this act shall be paid and collected at such times and in such manner as the regulations may prescribe.
4.	The amount of any tax imposed by this act may be recovered by action in any court as for a debt due to the crown in right of the province, and the court may make an order as to the costs of the action in favour of or against the crown. In every action for the recovery of any tax imposed by this act, the burden of proving the quantity of fuel oil consumed by the defendant, and of proving that the tax has been paid in respect of the fuel oil in question, shall be upon the defendant.
The burden of proof was made very clear. Their lordships in their decision quote the previous decisions of the judicial committee to which I have referred, and declare:
These decisions, in their lordships' opinion, make clear that if the tax is demanded from the very persons who it is intended or desired should pay it, the taxation is direct, and that it is none the less direct, even if it might be described as an excise tax, for instance, or is collected as an excise tax.
And at page 59 they continue:
Turning then to the provisions of the Fuel Oil Act here in question, it is clear that the act purports to exact the tax from a person who has consumed fuel oil, the amount of the tax being computed broadly according to the amount consumed. The act does not relate to any commercial transaction in the commodity
B.N.A. Act-Mr. Cahan

between the taxpayer and someone else. Their lordships are unable to find, on examination of the act, any justification for the suggestion that the tax is truly imposed in respect of the transaction by which the taxpayer acquires the property in the fuel oil, nor in respect of any contract or' arrangement under which the oil is consumed, though it is of course possible that individual taxpayers may recoup themselves by such a contract or arrangement; but this cannot affect the nature of the tax. Accordingly their lordships are of opinion that the tax is direct taxation within the meaning of section 92, head 2, of the British North America Act.
It is clear therefore that this Fuel Oil Act of British Columbia, imposing a tax upon every consumer of fuel oil according to the quantity which be has actually consumed, is valid and that it is direct taxation because it is exacted from the very persons who it is intended or desired should pay it.
Any lawyer or layman who reads and compares carefully that decision of 1933 and the decision of 1927 may clearly determine, I believe, the difference between an indirect and a direct tax in regard to sales made in Canada.


Mr. FINN:: Were both those judgments
which the hon. gentleman has read delivered by the same tribunal?


Charles Hazlitt Cahan: Yes, the judicial committee of the privy council-a different personnel from year to year, I assume, but the same judicial tribunal.
Under this proposed amendment, if it goes into effect, the provincial legislature will be enabled to levy an annual tax or a monthly tax upon the gross retail sales of each and every department store, general store, merchant, druggist or village grocery, compel returns to be made by each and all of the retail sales which each of them has made, and enforce payment of such a tax, for which compensation may in turn be collected in the increased prices charged for all commodities sold and comprised in such retail sales.
The provincial legislature, if this amendment is adopted, may impose and collect such taxes from certain commodities-I repeat, from certain commodities-and exempt other commodities from such taxes. The provincial legislature in any of the provinces may, if this amendment goes into effect, impose such taxes on the products of other provinces when retailed in the one province which enacts the legislation, while exempting from tax the commodities produced in that province which exercises its legislative jurisdiction by imposing indirect taxation. This fact opens up a very broad inquiry. The very basis of the British North America Act

was that customs duties on interprovincial trade wrnre abolished, and therefore, under section 122 of the British North America Act, all customs and excise duties were vested in the parliament of Canada and in the government of Canada. But this proposed amendment will clearly authorize each of the several provinces to impose discriminatory excise taxes upon the retail trades, and so in effect retard or practically preclude interprovincial trade with the other provinces, and so impose these taxes as to raise a protective wall of excise duties, instead of a protective wall of customs duties, against the trade of that province with the other provinces of Canada. This proposed amendment, I suggest, nullifies the most important provision of the British North America Act with regard to the imposition of taxes and will thus retard or preclude free interprovincial trade between the several provinces of Canada.


Joseph Thorarinn Thorson: The dominion government will still have the power of disallowance of provincial legislation.


Charles Hazlitt Cahan: That is another thing. I have not seen any such stubborn and vigorous resistance, on the part of this or previous governments, to any prejudicial provincial legislation as to suggest that they will have the courage to disallow, as my hon. friend suggests, provincial legislation of that kind. Take it for what it is worth, but as a matter of fact my opinion is that the power to disallow provincial legislation should play a very important part in the administration of dominion and provincial affairs; but this government will recognize, as previous governments have recognized, that a province which is powerful and strong, and whose political support is required for other purposes, will not be restricted by the administration of effective veto power.


William Lyon Mackenzie King: We might leave out the last qualification.


Charles Hazlitt Cahan: Effective veto power?


William Lyon Mackenzie King: No,-"whose
political support is required." I do not think that needs to be mentioned.


Charles Hazlitt Cahan: Well, perhaps not. I was
not applying it to the right hon. gentleman; I was applying it generally. We who have watched the development of political affairs, and especially of partisan organizations, in Canada for a number of years know that there are powerful influences of that kind which may be brought to bear against the exercise of the veto power in respect of provincial legislation prejudicially affecting any other province of Canada.

B.N.A. Act-Mr. Cahan
Let us see where we are at. If hon. members wish to study further the probable results of this amendment, I ask them to apply to the Department of National Revenue or to the King's Printer and secure an office consolidation to date of the Special War Revenue acts and amendments, and they will find, under sections 85 and 86, the law under which the existing sales tax is imposed in Canada. Speaking generally-there are some slight exceptions-it is payable by the producer or manufacturer at the time of the delivery of such goods to the purchaser thereof, and it is payable by the importer or transferee in Canada of the importer of foreign goods, upon the value as fixed, according to the statute, of the imports so brought into the country. Then you read, in schedule 3 to section 89 of the act, the large number of commodities which the parliament of Canada in its wisdom has exempted from the operation of the sales tax, and, remembering that this proposed amendment to the British North America Act will allow each and every province to impose sales taxes upon the retail of each and every one of these commodities now exempted, you will see the wide scope of this proposed legislation. More than that, when you realize that, under the decisions of the judicial committee of the privy council, each and every of these provincial legislatures may impose the tax, not upon the purchaser of the commodity. but by entering every village store and compelling a return of the total of its retail sales for a year or month or any other period-


Charles Avery Dunning: You mean they can do that now?


Charles Hazlitt Cahan: No, they can do it under
this proposed amendment.


Charles Avery Dunning: But not now.


Charles Hazlitt Cahan: That is the one thing they
cannot do now, under the decision I read. The judicial committee held that that was indirect taxation, but you are now opening up anew the whole scope of indirect taxation.


Mr. TUCKER:: Is the hon. member not overlooking the words, "indirect taxation within the province"?


Charles Hazlitt Cahan: Oh, I am dealing with it
generally. I am not overlooking it. These retail sales are made in the province. It may be possible-though I do not wish to enter into that for the purposes of this discussion-that a resident of Ottawa could go across to Hull, make certain retail purchases,
ask to have the articles delivered in Ottawa, and thereby escape the Quebec provincial retail sales tax. But I am now dealing with general principles.
Now let us look at the facts. In his budget address the Minister of Finance gave certain figures. They are general figures, and for 1935-36 they were subject to adjustment as of March 31, but I take the figures as he gave them in his budget address. For the year ending March 31, 1935, the sales tax of the dominion aggregated 872,447,000, in round figures. For the year just closed on March 31, 1936, it was estimated that the sales tax would aggregate 877,000,000, and while in his estimated revenues for the current year the minister did not take fully into account the proposed increase, yet he very frankly stated that the increase in the sales tax from six per cent to eight per cent, as far as he could say at that moment, probably would provide an additional revenue of
823,000,000. Of course I am not quoting these figures for the purpose of holding the minister to these estimates but simply for the purposes of illustration. Assuming that the proposed sales tax of eight per cent on commodities sold by either the producer, the manufacturer or the importer bring in a return of 8100,000,000 for the present year, I ask hon. members to compare that with the actual amount raised annually through customs duties in recent years. The suggestion is made that because the federal department and government have jurisdiction with regard to customs taxes, and because these customs taxes are so immense, the federal treasury should share these receipts with those provinces who have been clamouring for assistance. But I call attention to the fact that the total customs duties collected in Canada for the year ending March 31, 1935, were only 876,562,000, and the estimated collections for the year ended March 31, 1936, there being a few odds and ends which might come into the account as of March, amounted to only about $74,000,000.


Charles Avery Dunning: That is approximately
correct.


Charles Hazlitt Cahan: Then if you are to give these provinces this wide jurisdiction which will enable them to impose what are virtually excise taxes, indirect taxation, upon every dealer who is not a wholesaler-unless he engages in the retail trade also-and upon every petty store throughout the whole country, a tax upon the aggregate retail sales made by that store, you are authorizing a taxation which must directly compete with the federal sales tax which you are imposing at

B.N.A. Act-Mr. Cahan

a very high rates for the purpose of assisting us to do what I am glad to see the Minister of Finance endeavouring to do, that is, to come somewhere near meeting the annual expenditures of this dominion.
In view of that result; in view of the door that you are opening up to excessive taxation ; in view of the fact that, even if you do not extend dominion taxation, just between the dominion and the province you are now authorizing a turnover tax upon everything sold in the retail trade of this country, do you not think parliament should hesitate before passing this address in the form in which it is expressed and without more consideration than has been given it by the public? I have looked through the report of the recent dominion-provincial conference. I listened to the suggestion of the Prime Minister when he laid that report upon the table, that for the first time in recent history there was laid upon the table a full, complete and accurate account of what had transpired at a dominion-provincial conference. Therefore with hope and expectation I took up the volume, thinking I would find some definite information which I had never been able to obtain from a public document of that kind, but I found nothing. I found nothing of any discussion that took place, either in the conference itself or in the meetings of the several committees, which disclosed that there had been any clear, intelligent and earnest effort to ascertain what this proposed amendment would mean to the people of Canada and to the trade and commerce of this country. In fact I could not find a single reference to that. I may have overlooked something; it is some days since I examined this report and perhaps my memory is not as good as it used to be, but I do not remember finding a single suggestion in the whole report that it was proposed to transfer to the provinces authority to levy indirect taxation on all retail sales.
I suggest, therefore, that such an important change in the operation and administration of the finances of Canada should not be made, or at least such an amendment to the con-"f.itution of Canada should not be made until [DOT]bis proposition is laid before the people of Canada generally so that there may be full, fair and frank discussion of its import and of its prospective results. On that ground, therefore, I am opposed, and must express my opposition, to the first part of the address.
There is a further point. I do not intend to return to the question of what t'he patronage of hotels means. I do not know. It may mean that I must pay a tax every time I

enter the door of a hotel in order to buy a cigar, as I sometimes do in the city of Montreal on my way from my residence to my office. Does it mean a tax on the entire receipts of the hotel from all the people who attend that hotel during six months or a year? It is indirect, and therefore you can compel each hotel in each city and town to make a return under oath at the end of a month or a year showing the entire receipts of the hotel from its customers, from those who are lodging there or others who may be transient visitors.


Richard Bedford Bennett: Excluding liquors and
oeers.


Charles Hazlitt Cahan: Except the purchases of their liquors, cigars and cigarettes. But upon the entire receipts of the hotel, with the exception of those of the bar, you can compel returns and impose a very heavy retail tax upon them. The scope will be wide, if it is carried out to the full extent that it may well be carried. As a result, I suggest that in the course of the next two years the Minister of Finance will be on his knees before the provincial governments praying that they come to his aid and share with him something of the spoils they will be able to acquire out of this amendment to the British North America Act.


Charles Avery Dunning: That is a new thought.


Charles Hazlitt Cahan: Well, it is an obvious thought, when one compares the greatly reduced revenues we obtain annually from customs taxes, revenues which I believe are to be still further reduced-at least I thought I heard that suggestion from hon. members on the Liberal side of the house who discussed the budget.


Charles Avery Dunning: I think the hon. member may depend upon the volume of revenue returned being rather higher.


Charles Hazlitt Cahan: I should hope so. If retail sales are to be taxed to any extent provincial authorities may desire, we will undermine and involve in extreme difficulty the whole administration of federal finance.
The address contains these words:
(2) The said clause 2A shall be deemed to have retroactive effect with respect to provincial legislation in force at the passing of this act.
Well, I confess that when some doubts were expressed as to the original admission of Manitoba under a clause of the British North America Act which provided for the admission of Rupert's Land, as Rupert's Land was somewhat more extensive than that part of it which was described as Manitoba when Manitoba was formed into a province, it was deemed expedient in dealing wtih an important con-

B.N.A. Act-Mr. Blackmore
stitutional matter to have the admission of Manitoba confirmed. That is altogether different from this retroactive legislation.
In this instance the courts of the country have declared that the imposition of indirect taxation by the legislatures of the several provinces is and has been unauthorized, that it was illegally effected; that it was as much illegal as if I, passing on the street, put my hand in another person's pocket and took out his pocketbook. The only difference would be that if I took the pocketbook I would be subject either to civil action for the return of the money or to criminal action for violence and robbery upon the public highway. But the provinces were able to protect themselves from civil action by refusing petitions of right to allow civil actions to be brought against them. They exercised the prerogative right of the crown in refusing, in many cases, to allow such action for the return of money they had improperly and illegally exacted from those who had made the payments. Here the government asks parliament, by passing the address, to confirm the validity of all that illegality, and asks the parliament of the united kingdom to pass such legislation as will give such confirmation as will undoubtedly validate all this past illegality, and allow the process to continue for the future. I suggest you will not be maintaining due regard for the reputation and probity of this parliament if you ask the parliament of the united kingdom to enact such retroactive legislation.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, at this time I do not wish to quarrel with the first part of the resolution, but with the second part I have a quarrel. I am deeply concerned with certain words appearing in that part, namely, the words "prescribe the terms and conditions upon which any guarantee so authorized shall be given." Those words are capable of a wide variety of interpretation, and as they stand are capable of taking away from the province accepting the agreement all the power that is worth while which the province possesses.


Robert Emmett Finn: To what section does the hon. member refer?


John Horne Blackmore: 
Charles Avery Dunning: Is it true?


John Horne Blackmore: -known as historical adviser, whose miserable degrading duty consists in advising the government of the day how to evade and suppress historical truth in the interest of the professional politicians.
Now, Mr. Speaker, I have told where I got the article. I have exercised extreme caution, which I propose to do in all my speaking before this house, to tell the people where I get the information, and let them argue with the authors and not with me. This comes from an extract from New Democracy, January 1 to 15, 1936.


Charles Avery Dunning: Who takes responsibility for it? Does my hon. friend?


John Horne Blackmore: The author is Doctor Joyce B. Mitchell, and the extract is from a series of three articles on Social Credit Dynamics.


William Lyon Mackenzie King: Does my hon. friend himself believe to be true the statement he has read?


John Horne Blackmore: I have no reason for
doubting the truth of this statement, and inasmuch as I have never been connected with the British government the question lies open to my mind. I point this out merely to show how exceedingly careful we need to be lest we be trapped by forces which are working in secret.
B.N.A. Act-Mr. Blackmore

In the first place there is a money power in this world. Let every individual in the Dominion of Canada and throughout the British empire know of a surety that- there is a money power working in this world, and that it is seeking definitely to enslave mankind. If we are deluded into disbelieving that, it will not be to our credit when future generations look back upon the history of these days. Now, is this great money power at the present time seeking to gain control over Canada? I am going to quote another passage. This one, of course, a great many people will laugh at because it is Major Douglas speaking, in his evidence taken before the agriculture committee of the Alberta legislature, during the session of 1934. It is printed on page 103 of the report of the investigation which was made by that body. I commend the words of this man to every thoughtful person in the Dominion of Canada. In his evidence Major Douglas said:
Well, the answer to the first of those questions I gave a short time ago, that if you have no powers

He was speaking to Alberta:
-you cannot do anything; but I feel fairly certain that the logical result of saying, "We must refer this thing to Ottawa," would be in effect, if not in words, "We must refer this thing to London." We are so interlocked with the international finance system that we cannot do anything in Ottawa. We must do it through London. And when you get to London you would be told, "Ah, yes, hut we must do that in conjunction with the Bank of International Settlement." There is absolutely no point at which you are going to stop if you are going to surrender your liberty; that is about what it amounts to, absolutely no point at all. And in these financial questions, the definite strategy of the existing financial powers is to make this a world so that no section of the world will ever be powerful enough to have it altered. All I can say in regard to all these questions about Alberta is that if you want to get anything done the best way to get it done is to begin at home and find out how you can do it, and I believe that if you tackle it in that spirit you can do it, but you certainly are not likely to do it by referring it to Ottawa.
I regret to say that my experiences since I have arrived in Ottawa have all led me to agree absolutely with the truth of that statement.


Robert Emmett Finn: With the consent of the hon. gentleman, might I ask him if he has read the statute of Westminster?


John Horne Blackmore: I will deal with any and all comers just as often as they come, including the hon. gentleman, if he will just let me deliver my speech first.
Is this power definitely aiming at the present time to destroy British freedom? 1 {Mr. Blackmore.]
am going to quote now from the Ottawa Citizen of Wednesday, February 26, 1936. I am reading from its editorial column on Bank of England imperialism. I believe that this has a serious message for all Canadians. The editorial says:
Statements by some of the highest authorities at imperial headquarters in the city of London leave no doubt about the will to bring Canada into the hegemony. The governor of the Bank of England. Montagu Norman, gave more than a hint of the aim of imperial finance when he spoke as reported in the Times, March 21, 1930. A previous speaker, Mr. Hargraves, had said: "They held the hegemony so far as this country was concerned in finance and he thought he might say, considering the way in which they were regarded in foreign countries, that they also held the hegemony of the world." The governor of the Bank of England commented as follows: "He was glad to note what Mr. Hargraves said about the hegemony in one place and another. He believed it was largely true so far as overseas were concerned, and if it was true it was largely the result of work which the bank had devoted, first of all to the stabilization of Europe, and secondly to the relatonships between the central banks, which were originally advocated at Genoa."
The editorial goes on to say:
On a later occasion at a banquet in honour of the Right Hon. Neville Chamberlain. Chancellor of the Exchequer, given by London financiers and merchants, the governor of the Bank of England, Montagu Norman, grew lyrical in drawing a picture of plums waiting to be plucked under this inspiring policy of imperial central banks. He said, as reported at the time by the Evening Citizen's London correspondent, A. C. Cummings-


Mr. VIEN:: What date please?


John Horne Blackmore: These words are exceedingly important. I continue with the quotation:
"1 want you to cast your minds back five or ten years to a time when in the dominions there were no central banks. I wish you to realize that beginning with Australia and South Africa, there have now been added to those, eight central banks actually in being or in course of being started in New Zealand, India and Canada.
Anybody a few years ago who expected to see that or who attempted to hope for that would have been looked upon as a visionary.
I hoped to see it. I was not called a visionary; I was called a fool.
I should like to assure you, and in particular the chancellor, that those banks and others for thatvmatter, will have a common object.
Note the words. The editorial continues:
The desire, I know well, towards the community is to be of service-
What kind of service? We in Canada are already realizing what kind. I continue quoting:
-and towards governments to give advice, cooperation and loyalty. Take that from me. It is not much to take, but it is an important question and an important point.

B.NA. Act-Point of Order
Dofes that or does that not bear out what Major Douglas said in Alberta in 1934? I leave that to the members of this house to decide. We may smile at this thing, but the day may come when we shall regret those smiles in something deeper than tears. It would not be the first time the people have been utterly deceived and have regretted it in their sorrow. Onlookers are certainly filled with great concern about this matter, whether or not members of this house are. For example, these are a few words from a man who, I very much fear, knows a good deal about his subject. They bear directly on this matter we are considering in parliament right now.
(Quotation immediately following stricken out. See ruling of Mr. Deputy Speaker at page 2812.)
Whether or not that man knows what he is speaking about-


Charles Avery Dunning: Who is the man, please?


John Horne Blackmore: I do mot propose to give the name.


Charles Avery Dunning: The hon. member should give the authority which he is quoting or accept responsibility for the statement.


John Horne Blackmore: I am simply stating that I have these words. Is that contrary to parliamentary procedure?


Charles Avery Dunning: When my hon. friend is quoting, he must state from what he is quoting.


John Horne Blackmore: I am not free to give the name of the man whom I am quoting.


Mr. DEPUTY SPEAKER:: When the hon member for Lethbridge (Mr. Blackmore) is quoting from an article, he must give the name of the author.


John Horne Blackmore: In case you do not wish to give the name, then what?


Richard Bedford Bennett: Mr. Speaker, I rise to a point of order. This is not the view which the present government took when they were in opposition. I do not think there is any authority for saying that an hon. member is bound to give the name of the author whom he quotes. I think all he is bound to do is to say that he is quoting. This would alter materially the position of hon. members who quote from the remarks of other hon. members. Sometimes these remarks contain quotations, the authors of which are not named, and for a member to be obliged to give the name of the person whom he is quoting would place
him in an almost intolerable position. I have always contended that hon. members should not read from newspapers because to do so is to attempt to influence the 245 members of this house, which is not in accordance with the principles of good government.


William Lyon Mackenzie King: My right hon. friend has referred to a position taken by the present-government when in opposition, but I cannot recall any time when the members of the present government took the view that an hon. member was not obliged to give the name of his authority when he brought into a debate an article or quoted from a communication with a view to making it an authority in support of what he was saying. An hon. member may not -thus bring into a debate any document or quotation without giving the house full information as to the source from which he is quoting.


Richard Bedford Bennett: With your permission, Mr. Speaker. If the right hon. gentleman had received a communication from an unnamed person and lie read it as something he had received, the question might be raised whether he was bound to lay it on the table, on the one hand, or give the source of it, on the other. He would not be quoting from a public authority or document. A private member would not be bound to lay such a document on the table, but if he took the responsibility of reading from a letter which he had received from some person, whether from a constituent or otherwise, the view taken was that he was not bound to give the name of his constituent; he was permitted merely to say that he had received a communication reading as follows. That was the view then taken.


Ernest Lapointe: Did my right hon. friend agree to that?


Richard Bedford Bennett: I am not saying that;
I am only pointing out that that is what prevails in the house at the moment. Whether or not it is sound, I am not prepared to discuss at this time. I think the Prime Minister (Mr. Mackenzie King) will find that we have permitted letters and telegrams to be read without giving the names of the persons who sent them. I am quite familiar with the terms of the rule that covers this particular point.
Hon. CHARLES A. DUNNING (Minister of Finance): Mr. Speaker, on the point of order. Without quoting the rule to which my hon. friend has just referred, there i3
B.N.A. Act-Point oj Order

still another very important point of order. Is an hon. member, under the shelter of that rule, permitted to read a communication or an alleged communication containing statements which he would not make on his own responsibility as a member, statements which by innuendo reflect upon this house or some member or members of the house, particularly when the extract read indicates a conspiracy against the wellbeing of this country? In the quotation the hon. member has named two or three parties and then leaves a blank. Apart from your ruling, Mr. Speaker, I appeal to the hon. member in the interests of the decency of debate not to follow such a course.


Richard Bedford Bennett: The limitation is that he assumes the responsibility of his statement.


Charles Avery Dunning: He did not eay so.


John Horne Blackmore: Am I permitted to go on, Mr. Speaker, or is it your ruling that I must withdraw the statement?


Ernest Lapointe: Unless you take the responsibility for it.


Frederick George Sanderson: The hon. member for Lethbridge (Mr. Blackmore) must reveal the name or take the responsibility himself for the article.


John Horne Blackmore: I must give the
name, take the responsibility, or what? You see, Mr. Speaker, we do not know the rules by which you people play these games. All we want to know is what are the rules and we will play according to them. As soon as we learn them, we will play according to them pretty hard. I will withdraw the statement, if you say I must. Naturally, I do not propose to take the responsibility for the statement nor do I propose to give the name of the person who wrote it. It cannot be revealed at the present time, so I will withdraw.


Charles Avery Dunning: The hon. member must withdraw or take the responsibility for it.


Frederick George Sanderson: My ruling is
that the hon. member must withdraw the statement or give the name of-the author.


John Horne Blackmore: I accept your ruling
and withdraw the statement. I am glad the members of this house have had a chance to hear it.


Robert Emmett Finn: Strike it out of the record.


John Horne Blackmore: The next thing is
whether there is anything in this thing.


Charles Avery Dunning: I rise to another point
of order. The hon. member has just made a very qualified withdrawal which is in entire contradiction to the spirit of the rules of this house. In withdrawing his previous statement, which he was bound to do under the rules, he said, "I am glad the members of this house have had a chance to hear it." I submit that that is contrary to the rules; that the withdrawal must be absolute and unqualified.


Frederick George Sanderson: The point
raised by the Minister of Finance (Mr. Dunning) is well taken and the hon. member for Lethbridge (Mr. Blackmore) must withdraw the statement completely.


John Horne Blackmore: I withdraw completely.


Frederick George Sanderson: The withdrawal must not be qualified in any way.


John Horne Blackmore: I withdraw completely. May I go on now?


Richard Bedford Bennett: Since we are discussing
this matter and since the hon. member will not accept responsibility, I submit that the statement should be struck out. If the statement is made and no responsibility is accepted, it is obvious that it never should have been read. As it never should have been read, it should not appear in the record.


Frederick George Sanderson: The point of
the leader of the opposition (Mr. Bennett) is well taken.


John Horne Blackmore: That is quite satisfactory to me.


Frederick George Sanderson: It will be
stricken out of Hansard.


John Horne Blackmore: Must I ask that?


Mr. ELLIOTT (Middlesex):: It will be
done without request.


John Horne Blackmore: There are several
sections of our own press that are distinctly apprehensive. May I quote again from the Ottawa Citizen of February 5, 1936, from the editorial column, in which there appears an article under the heading "Secession in Australia." -
The loan council plan undoubtedly originated outside of Canada. The government of Australia adopted it after Sir Otto Niemeyer, from the Bank of England, had reported on the financial credit situation in the commonwealth. The same authorities at the seat of financial imperialism in London last year were urging the necessity of a so-called national government in Canada. They believed that national government would act as they desired,

B.NA. Act-Point of Order
to curtail the autonomy of the provinces... Secession is being discussed in Australian States: they were prevailed upon to submit to the centralized control of money power through a federal loan council.
I have another comment along exactly the same line. I quote these articles simply to show that there is really grave cause for concern. I am not in any way intimating that anyone in this house is insincere or has in any way been really guilty of any reprehensible act, but I am making this statement that there is grave cause for some concern. We find in the Ottawa Citizen of January 30, 1936, at page 28, an article entitled The Empire and the Octopus, from Overseas Notes by JJ3.D. in Social Credit, London. These notes were written before the appearance of two consecutive articles on the proposed Canadian Loan Council, published in The Times on January 13 and 14:
If Canadians like the prospect of mounting debts and taxes, increased rioting of unemployed, loss of personal liberty, and regimentation of their daily lives "for their own good" by an alien power, the whole culminating in civil or foreign war, or both, they need not do a thing about it, for it will come of its own accord. If they don't want these things they will have to demand what they do want, and stop arguing about methods; otherwise they are lost. "No argument," says the Western Producer, "can dissipate the prime fact that if the provinces yield to the dominion suzerainty over financial matters, then they will have sacrificed the last vestige of power that remains with them which is of any consequence at all. The voice which suggests this drastic change may be the voice of the federal government, but the hand behind it is the banker's."


William Lyon Mackenzie King: May I ask my bon. friend whether the matter he is now discussing could not be discussed more appropriately when we come to the Bank Act or to legislation with respect to financial councils. Has what he is discussing to do at all with the amendment to the British North America Act which is being considered by the house at the present time?


John Horne Blackmore: My impression is that this motion has to do with the introduction of a loan council into this dominion.


William Lyon Mackenzie King: No, that is the point. I did not wish to suggest that the hon. gentleman might be out of order and for that reason I put my question to him in the form I did. It is conceivable that the amendment proposed may be passed and no loan council ever be introduced in this house as a consequence thereof. There will be time to discuss the question of a loan council when a measure with respect thereto is introduced.


Richard Bedford Bennett: It is the basis of it.


John Horne Blackmore: Is the Prime Minister in any way giving a commitment that this does not mean the introduction of a loan council? That is all I am concerned about.


William Lyon Mackenzie King: It does not necessarily mean that. It is possible that in the course of this session, as the Minister of Finance has already indicated, a measure may be introduced which will have to do with loan or financial councils, but it does no,t necessarily follow that, because this amendment to the British North America Act is made, legislation will be introduced either at this session or at any other time with respect to such councils.


John Horne Blackmore: I had the impression that this had to do with a loan council. If it has not, then I agree that I had better reserve my remarks in that regard until such time as a loan council is discussed. But it certainly is the impression generally that this has to do with a loan council.


William Lyon Mackenzie King: In order that there can be no mistake as to my position in the matter, I would say to the hon. gentleman that unless the British North America Act were amended in the manner here proposed it would not be possible for the government to introduce legislation of the kind to which he is now referring, but whether the government will introduce legislation in respect to loan councils or not will depend upon the course of events after authority is given such as is asked for by this particular amendment. The point I wish to make clear is this, that if such legislation should be introduced the hon. gentleman will then have ample time and opportunity and will then be wholly in order in discussing the matters with which he is now dealing.


John Horne Blackmore: I am very much pleased indeed to learn that this of itself does not mean the introduction of a loan council in the dominion, and if a discussion of the loan council is out of order in this connection I will desist at the present time. But if it means the thin end of the wedge, as a result of which a loan council is to be introduced in Canada by slow degrees, then I wish to register my protest in the most emphatic terms that are consonant with respect for the house.


William Lyon Mackenzie King: Let me make it perfectly plain to my hon. friend. I should not like him to say, if later on legislation were introduced making provision for a loan
B.N.A. Act-Mr. Blackmore

council, that the government had given a commitment at this time to the effect that such legislation would not be introduced I made it absolutely clear that all that this motion of the Minister of Justice does is to ask for an amendment to the British North America Act giving the government power to introduce legislation which at the present time it has not the power to introduce, and to legalize some matters which it thinks ought to be legalized.


John Horne Blackmore: I am at a loss to know whether to proceed or not, because what I have to say from now on does not bear particularly upon the loan council. I wish to be entirely within the rules; I want to make sure that this is the place where I may say what I want to say. Under these circumstances may I proceed?
Now there are several other matters which I wish to touch upon. I have one more set of quotations which I should like to read into Hansard for the benefit of hon. members, but inasmuch as the Prime Minister has indicated that perhaps this is slightly out of order, I will desist. However I would make these observations bearing specifically on the wording of the resolution. "Prescribe the terms" are exceedingly dangerous words to use. I do not wish to be unreasonably gloomy, but as I have said publicly time and again both inside and outside this house, I believe that what was stated on the platform and in the press by Liberal speakers and newspapers throughout the dominion before the fourteenth of October last justified the people of Canada in expecting that there would be monetary reform. So far, as I have already indicated rather mildly, I have seen no evidence whatever of monetary reform. Under the circumstances the people could not have asked more definitely for this reform than they did last October. If, having made that pointed and emphatic request, they are to be denied that which the rank and file throughout the country are coming to see is the solution of the problem, is there any possibility of their ever getting it through the medium of a dominion election? If there is not, there emerges a fact of very great importance. If the Dominion of Canada cannot be relied upon, after such a mandate as the government has received, to institute monetary reform, the only bodies which can bring it in are the provincial governments; and if they are to be bound hand and foot through the operations of a loan council which, perhaps, they do not understand, the situation becomes

exceedingly serious. I do not know whether my time for speaking has expired, because I have been interrupted so much, but I should like to say a few more words.


An hon. MEMBER:: Put your watch
back.


John Horne Blackmore: While we are dealing with the loan council let me draw this fact to the attention of the house. In western Canada it was definitely understood that the budget speech last spring contained a proposal for a loan council, and that was one of the causes which contributed to the defeat of the Conservative administration; in other words, one reason why the people voted for the Liberal party was that they would not stand for a loan council. And now they are to have one. What does this all mean? I repeat, Mr. Speaker, that the situation is exceedingly serious.
Are the purposes of this act wholly innocent and harmless? I am prepared to go so far as to say that they are. But if the measure is innocent and harmless, it would be advisable for the government to change the wording so as to ensure that it will not be the means of introducing, under, let us say, some sort of misapprehension, a loan council, for the establishment of such a body in Canada at this time as could result in only the same kind of thing that has happened in the commonwealth of Australia.
In closing, let me add something which I have hitherto hesitated to say. I believe that the hon. member for Winnipeg North Centre (Mr. Woodsworth) yesterday struck a note which is of serious import. He made the statement that, a3 far as he could judge, the League of Nations had ceased to be of effects


Mr. WOODSWORTH:: As now constituted.


John Horne Blackmore: Yes, as now constituted; I thank the hon. member for the correction. We Canadians, as members of the great British race, are facing a future which holds the possibility of our being deprived of our protection. This is a serious matter. The greatest assurance of protection lies in our unity. The loan council as it has been introduced in Australia has already worked definitely towards the disintegration of that noble dominion. Plenty of evidence exists that that is a fact. If a loan council is introduced in this dominion the effect will be precisely th& same.


An hon. MEMBER:: Why?


John Horne Blackmore: Besides that, unless something is done, and done soon, to improve the economic conditions which obtain in British countries, those very conditions will

B.N.A. Act-Mr. Woodsicorth
disintegrate the empire. People cannot stand indefinitely what they are enduring at present. They are blaming their condition on various things, and one of those things, before long, will be the British connection. For that reason, too, in the interests of our security, our unity, and our inter-commonwealth relations, I would urge most earnestly that until such time as we can carefully discuss the matter throughout the country and know exactly what we are doing we steer clear of a loan council.


James Shaver Woodsworth: It seems to me that this resolution involves three principles: first of all, the method of amending the British North America Act; second, giving the provinces the right to impose a certain type of indirect taxation, third, giving to the dominion, under certain conditions, control over provincial finances. Undoubtedly, although the measure may not immediately involve anything of great importance it has far-reaching consequences. The Minister of Justice (Mr. Lapointe), in introducing the resolution, said that the proposal had no connection with the general question of Canada's right to amend her constitution. In this house we have not in any formal way gone so far as to suggest that Canada had any right to amend her constitution. Last year we considered before a committee of this house the question of the best method * of amending the British North America Act, so that in the words of the resolution I then moved:
... while safeguarding the existing rights of racial and religious minorities and legitimate provincial claims to autonomy, the dominion government may be given adequate power to deal effectively with urgent economic problems which are essentially national in scope.
It was found by that committee, which devoted its attention to devising a method, that there was not unanimity of opinion as to what method should be adopted. The committee itself had some difficulty in reaching something like unanimity, but apparently it was blocked by the pressure brought to bear by the different province^, or perhaps I should say, more correctly, by the refusal of a number of provinces to send in submissions or representations of any kind. So the matter was left open. To-day the minister slides over the real difficulty fairly easily and suggests that in this case, at least, we might bring about the change merely by an address of both houses of parliament. I find myself in a difficult position in criticizing this matter. The minister comes of a race that is said to be logical and consistent in its methods of doing things. I come of
a race that is said to adopt expediency and to muddle through somehow. In this particular instance it would seem that we have exchanged roles, and the minister is going to adopt this particular expediency and so to muddle through in some way while others of us are put into the position of insisting that we should have some sort of logic and consistency in dealing with questions of this kind.


Ernest Lapointe: My hon. friend is flattering himself.


James Shaver Woodsworth: I should think the right way to proceed would be to adopt some method of amending the constitution. Of course if we are to adopt the "muddling through" process possibly I should keep very quiet about this measure and let it slip through without much notice. Then, when this particular measure slips through without any general notice being taken, we might 'be in a better position to slip some other matters through, because, forsooth, this will have created a precedent. Really what I am afraid of is that though a financial measure of this kind may go through, it will not be regarded as a precedent by which we may guide ourselves with regard to other matters of great importance.
The fact is that it is proposed to change the British North America Act fundamentally merely by an address. We are told that representatives of the provinces have been consulted. The provinces themselves have not officially stated that they are willing to have this measure go through. As far as I know the matter has not been before any provincial legislature.


Robert Emmett Finn: Yes, New Brunswick.


James Shaver Woodsworth: I do not think it
has been before the provincial legislature of New Brunswick.


Robert Emmett Finn: Yes. the question of amending the British North America Act.


James Shaver Woodsworth: That is another
matter; I am speaking of this particular resolution. As far as I am able to learn it has not been endorsed by any provincial legislature. Here, then, we are proceeding to .pass a fundamental amendment to the British North America Act merely by means of an address by the two houses.


Ernest Lapointe: That is what my hon. friend has been preaching in the past.
B.N.A. Act-Mr. Woodsworth


James Shaver Woodsworth: I am not saying
what I have been preaching; I protected myself a few moments ago by saying that I was in a very curious position.


Ernest Lapointe: My hon. friend is muddling through backwards.


James Shaver Woodsworth: No, to-day I am
just pointing out what is involved in this resolution, and I am doing so because I want to plead that if we go this far we ought to go a great deal further. Surely the consent of representatives of the provinces is not enough. So far as I can learn, Alberta has not given its consent, and even the representatives of Alberta have not given their consent.


Charles Avery Dunning: My hon. friend is quite wrong; A'lberta has consented to the introduction of this resolution.


Richard Bedford Bennett: Where is the evidence
of that?
Mr. DUNNING. It is there.


James Shaver Woodsworth: I should like to
have a statement from the minister on that point. Can the hon. gentleman give us any evidence that Alberta has consented to the introduction of this resolution?


Charles Avery Dunning: I will find it in a
moment. In the meantime perhaps my hon. friend might continue.
Mr. WOOiDSWORTH: Very well, but even the consent of Alberta's representative does not affect my argument.


Charles Avery Dunning: In a telegram from the
premier of Alberta, dated March 27, the following words appeared:
... we have no objection dominion government proceeding with constitutional amendment bill.
That is in the opening sentence, and it is the only reference contained in that telegram to this matter.
Mr. WOQDSW'ORTH: Then we are clear, are we, that representatives of all the provinces have consented to this? I would still point out that the provincial legislatures have not consented to it. I think that is correct.
There is another point to which I should like to refer. This amendment provides for a voluntary arrangement. It is exceedingly magnanimous, we will say, for Quebec or Ontario, which provinces are fairly well to do, to consent to a matter which will not immediately affect them. That is magnanimous, because under the resolution it is left to the individual province as to whether or not it 
may come under the provisions of this act. That is something we ought to consider carefully. It may very well be that by the representatives of certain provinces giving their general assent to the introduction of legislation of this kind they may maintain their own freedom while placing a very great burden and a very great handicap upon certain of the other provinces. The minister says that this amendment is introduced to meet an emergency, to meet a practical situation. I think those were almost his exact words.


Ernest Lapointe: And to
help the provinces, not to burden them.


James Shaver Woodsworth: Quite so; to help
the provinces. But I would point out that there are other emergencies, other practical situations, yes, and other kinds of help which the provinces need. Let us take the question of unemployment that has been before us for years. We have been told again and again that the dominion government, because of the British North America Act, cannot directly handle this problem, at least in a certain way as, for example, by unemployment insurance. We have been told that we cannot possibly do anything about unemployment insurance without fundamental changes first being made in .the British North America Act. Will the Minister of Justice say that it is only necessary for us to pass an address of this house and immediately the dominion government will have the right to undertake unemployment insurance?


Joseph Thorarinn Thorson: He did not say that.


James Shaver Woodsworth: I do not think the minister would say that.


Joseph Thorarinn Thorson: He did not say it.


James Shaver Woodsworth: I quite agree; I
do not think he did say it, but he will say that we can settle great financial problems involving the relationship between the dominion and the provinces merely by an address being passed by the two houses of parliament.


Joseph Thorarinn Thorson: No, he never said that.


James Shaver Woodsworth: All that it is necessary for us to do is to pass this resolution, and by an address the amendment can be brought about by action of the British parliament.


Charles Avery Dunning: Oh, no.
At six o'clock the house took recess.

B.N.A. Act-Mr. Woodsworth
After Recess
The house resumed at eight o'clock.


James Shaver Woodsworth: Mr. Speaker, when the house took recess I was congratulating the Minister of Justice upon his having discovered an easy way of amending the British North America Act. At one stroke we have swept away the old compact theory of confederation, and the knotty question as to whether we should have the consent of all the provinces, of a majority of the provinces or even of one province. We now recognize that all we have to do is to pass an humble address of this house and of the senate, and we may hope to obtain the desired changes in the British North America Act. But I would like to ask why it is that it is not possible to obtain similar amendments with regard to questions, such as, for example, unemployment insurance, the eight hour day, old age pensions, the minimum wage or, in fact, the right to amend our own constitution. If we can secure an amendment when it suits the policies of the financial people,
I cannot quite see why we should not do it when it is in the interests of the great masses of our people. If I am not asking the house to stretch its imagination too far I may say that if ever the Cooperative Commonwealth Federation came into power and the Labour party again formed the government of Great Britain, about all we would need to do would be to pass a resolution by parliament. Of course we could put it into the form of an humble address. Such a resolution would be sufficient to Obtain for us whatever we needed by way of amendments to the British North America Act. I am not quite sure whether, in such event, we would even need a resolution passed by the senate.


Charles Avery Dunning: If you had the provinces agreeing with you it would be all right.


James Shaver Woodsworth: Representatives of the provinces have agreed that this address should be introduced. That is a different thing, as the minister must know, from provincial legislatures agreeing, which they have not done. In any case, if the minister would allow his imagination to stretch, probably the provinces would be with us at such a time as I have suggested.
I have said the second principle involved is that of giving the provinces the right to impose a certain type of indirect taxation. No doubt something must be done to help the provinces; I think that is clear. There have been references to reckless expenditures on the part of some of the provinces. As a westerner I may say that I resent these little
sermons we have preached to us by representatives from eastern provinces. On the whole I do not think expenditures in the west have been any more reckless than those in the east. It is true that the western provinces have developed under circumstances greatly different from those under which the eastern provinces developed. A new type of expenditure was necessary, if we were to open up the west, as the rest of the country thought it ought to be opened up, and if we were to prosecute the great war-if I may carry the argument that far-in the way in which the rest of the country thought it ought to be prosecuted.
Hon. members talk about economy, but without going into detail I would point out that the western provinces have cut their expenditures to the very limit, in fact, to the detriment of the ordinary people and to the serious disadvantage of our young people and even of our children in those provinces whose services have been cut down.
Several years ago pressure was brought by the present leader of the opposition upon the western provincial governments, urging them to balance their budgets. Hon. members will recall a letter sent to the provinces at that time. They have been trying to balance their budgets, at very great cost. Manitoba not only has an income tax but also had to enact a two per cent wage tax. Alberta has had to resort to the sales tax. Undoubtedly something will have to be done to help the provinces. For some time I think it has been recognized that the subsidy arrangements were far from satisfactory. But may I point out that this is not a recent development.
As the debate went on I recalled an article I read several years ago. It appears in the Canadian Forum for December, 1934, and is written by Mr. Norman McL. Rogers who, I am glad to note is the present Minister of Labour. In a carefully prepared statement he said this:
The failure to develop a satisfactory scheme of federal public finance in Canada was due in the main to certain erroneous assumptions in the original settlement of 1867, which were carried over with minor qualifications into the revised settlement of 1907. These erroneous assumptions may be enumerated as follows:
1.	That increased expenditures by the provinces would arise from expanding population rather than from the acceptance of new governmental obligations;
2.	That the expanding provincial services could be supported adequately and equitably by territorial revenues and direct taxation;
3.	That the ends of federal justice would be served by a uniform scale of per capita payments to all the provinces of the dominion;
4.	That subsidies payable by the dominion to the provinces should be stabilized on the above basis of per capita grants.

B.N.A. Act-Mr. Woodsworth
It is not too much to say that the error of these assumptions and principles of the existing scheme of federal public finance would be exposed conclusively by any impartial and scientific investigation. A proper survey of dominion-provincial financial arrangements must now take account of the incidence of tariff policy as an integral part of the tax system of the dominion. It must be recognized, in other words, that the unequal effects of the tariff upon the wealth and income of the various provinces of the dominion should be neutralized by direct subsidies or developmental expenditures, or in the alternative that differences in the taxable capacity of the provinces should be recognized as an essential feature in any scheme for the readjustment of provincial subsidies.
I think that is a fair statement. The hon. gentleman then goes on to show that it is highly desirable that under these developments which have taken place the dominion should assume greater responsibility. In the next paragraph he says:
Broadly speaking, a reform program of federal public finance in Canada should include in the first place the assumption by the dominion of full financial responsibility fox-certain social services which now fall under the constitutional jurisdiction of the province. The services thus taken over by the dominion should be old age pensions, unemployment insurance and health insurance if and when the financial resources of the dominion will permit of this further extension of common minimum standards of social welfare. The assumption of these responsibilities by the dominion is x-ecommended by a number of considerations,
(a)	They are services which were not in contemplation when the financial arrangements between the dominion and the pi-ovinees were established originally at confederation. (b) They are services which should be developed in accordance with common standards throughout the dominion, (c) They are services which ought to be established and controlled by the political authority which has access by taxation to the profits of industry and commerce throughout the entire dominion. It is evident that unless these services are assumed by the dominion with its unrestricted taxing powers the provinces with low taxable capacity will be compelled to maintain standards of governmental services inferior to those supplied by provinces which have been the chief beneficiaries of the fiscal policies of the dominion during the past sixty years. Their assumption by the dominion is one means of alleviating the continuing effects of the unequal incidence of the tariff upon the financial position of the provinces.
Again I commend that statement to the government, and I am glad that we have in the cabinet one member who has thought his way through some of these problems and will,
I have no doubt, use his influence there to see that this program is carried out.
In the last line of the paragraph which I have just read, reference was made by the Minister of Labour to the unequal incidence 
of the tariff, and perhaps that should enter into the consideration of the legislation now before us. In a preceding paragraph he has this to say:
The tendency of the tariff system of Canada lias been to concentrate manufacturing activity m the provinces of Ontario and Quebec, whereas the burden of maintaining the protective tariff has been distributed throughout all the provinces and falls with particular weight upon those provinces whose income is derived chiefly from primary production and export markets. The abnormal concentration of manufacturing activity in the central provinces has had important effects upon the productivity of income taxes and corporation taxes in the various provinces. It has increased to a marked degree the number of companies subject to direct corporation taxation in the provinces of Ontario and Quebec. It has also contributed materially to the larger corporation and individual incomes of these provinces. It is not too much to say that the protective system lias fertilized the income tax field in Ontario and Quebec by a process which has resulted in the partial impoverishment of this field of taxation in other provinces whoso economic development has been prejudiced by the effects of the fiscal policy of the dominion. When, therefore, the provincial distribution of income is considered in relation to the effects of fiscal policy, it is apparent that the withdrawal of the dominion from the individual income tax field would benefit most those provinces which stand least in need of additional revenues. It would exaggerate the disparities in provincial finance which already exist and which have been aggravated by the-unequal effects of national fiscal policies.
I thought of this particularly when the hon. member for St. Lawrence-St. George (Mr. Cahan) was speaking. He suggested that it was quite open to the provinces to raise their revenues by income tax, but the trouble is-they have a very poor field, especially in the most needy provinces.
One more brief sentence from this article by the present Minister of Labour:
A study of the income tax collections from the various provinces of the dominion will indicate that on the basis of existing rates the provinces which are mainly dependent on agricultural production would gain very little by an arrangement which would give them the proceeds of individual income taxes within their boundaries.
What are we actually doing by this legislation? Are we in reality helping these poorer provinces? It is true that we are giving them powers over a very limited field of indirect taxation which powers, if applied, will, I am sure, accentuate -the evils of the sales tax.. The main sources of revenue are still available only to the dominion government, and further than that, as the minister in this article has so well pointed out, are located very largely in the wealthier provinces and are thus not available to the western provinces.

B.N.A. Act-Mr. Woodsworth
It is in my judgment a serious question whether the first part of this proposed amendment will be in reality a help to the provinces; certainly it is more than a question in my mind whether this is the best way to afford help to the needy provinces.
The third principle which I mentioned was that of giving the dominion under certain circumstances control over provincial finances. Mr. Speaker, if the Sergeant-at-Arms could manage to exclude the noises coming from the exuberant Liberals in the lobby-


Ernest Lapointe: The hon. member is opposed to military methods, is he not?


James Shaver Woodsworth: I suggest that the Sergeant-at-Arms is very much a civil official in this house.
I was going on to say that I agree with the hon. member for Lethbridge (Mr. Blackmore) when he suggested that the second part of this resolution, if adopted and carried out into legislation, would mean the surrender of the sovereignty of the provinces. We are faced here with the old question of political versus economic freedom. Perhaps a good many members have hardly stopped to consider that political freedom without economic freedom does not amount to a very great deal. If an ordinary workman finds himself in the position where his house is very heavily mortgaged and he is dependent for his job upon someone else, I suggest that there is very little freedom left to him. He must simply obey the orders of someone else in almost every sphere of his activity. He may have the right to vote and he may be induced to vote Liberal, but even if he does I submit that he has not achieved economic freedom.
Take the business man. If the business man is dependent upon the banks for a loan; if he cannot enlarge his business without going to the bank and having practically his every action under the dictation of a bank, or, if you will, if he is faced with the possibility of the bank vetoing whatever he does, I submit that although he may have political freedom he has not a great deal of economic freedom.
Further than that, I am quite confident that we cannot very long deny economic freedom without taking away political freedom. What did we have in Newfoundland? A few years ago that colony was declared bankrupt.


Charles Avery Dunning: Dominion.


James Shaver Woodsworth: Yes, it was a dominion at the time. A board was put in to administer its affairs. I think none of us would say that Newfoundland under those circumstances had any very large measure of selfgovernment.
What is happening in a number of our municipalities across the country? They have become bankrupt and the provincial governments are having to put in administrators or supervisors-I think they go by different names in different provinces-and then what happens? The administrator or supervisor looks at the question very largely from the standpoint of those who hold the debentures or bonds of the municipality. The bondholders have a prior claim, and what is the result? I could point to muneipalities where the schools have been starved, and in some cases high schools completely closed. I do not need to have to go out of my own constituency, for an illustration of that. Municipal services are cut down to the very limit, and adequate fire service is not maintained. In fact, I was given the instance last summer of a man who had a little shack at the lakeside-his home in the village was small enough-who thought he would spend a week of the summer in his little shack by the lake. He was told by the administrator that he could not do that; that if he did he would be cut off relief. He was told they would declare that he was no longer a resident of the village. That I think is ah. intolerable situation. Where is our boasted freedom when a man cannot take a week's holidays without being told that he will lose his residential qualifications and no longer have a claim for relief on the town in which he was living and in which he has invested his little all?


Mr. ROGERS:: Will my hon. friend give me the particulars of that case some time?


James Shaver Woodsworth: I shall be glad to do so. I think I mentioned it in the house a year ago. This happened in the village of Brooklands. I am not quite sure whether in my records I shall be able to find the name of the man.
As I have said, it is very difficult to preserve even a semblance of political freedom when economic freedom goes. What will be the effect of this resolution passing this house? I do not object particularly to the method of its introduction, but if it passes there will be an amendment to the British North America Act, upon which no doubt will be based some legislation to create a loan council. Otherwise there would be no purpose in introducing legislation of this kind. What does the resolution say It says:
The parliament of Canada may authorize the government of Canada to guarantee the payment of the principal, interest ind sinking fund of any securities (hereinafter called "guaranteed securities") which any province of Canada may from time to time make or issue, and, subject to the provisions of this act may prescribe the terms and conditions upon -which any guarantee so authorized shall be given.
B.N.A. Act-Mr. Woodsworth

Section 4 gives further details, the second reading:
4. (1) For the purpose of securing Canada against loss resulting from the giving of a guarantee under the authority of this act, the government of Canada, whenever in its opinion any default has occurred in respect of any payment on account of principal, interest or sinking fund of the guaranteed securities, may:
(a)	withhold any payment to the province on account of any grant payable by the government of Canada to the province for its local purposes or for the support of its government and legislature or on account of interest in respect of its public debt or in lieu of public lands or on any other account whatsoever;
(b)	effect payment in whole or in part of any such grant by payment direct to a creditor of the province of any amount owing to such creditor on account of the guaranteed securities. In this and the next succeeding paragraph "creditor" shall include a trustee of a sinking fund;
(c)	out of any revenue received or collected by the government of Canada or any department of officer thereof for or on behalf of the province, make payment direct to a creditor of the province of any amount owing to such creditor on account of the guaranteed securities.
I submit that if that comes into force, a province would be practically in the hands of a receiver. If I have learned anything from the way in which business has been conducted in this house ever since I have been a member, it is that the financial interests predominate. Pressure will be put upon the province to cut still further its expenditures, more nearly to balance its budget, all of which means inevitably a starving of social services. Where then will be our schools, our hospitals and our various pension schemes which have been built up through the years?
I cannot say that I agree fully with the hon. member for Lethbridge in his conception of how the money power works. However I can assure the house that I am under no delusion as to the money power being dominant in our public affairs. I do not think it is quite so simple as the hon. member for Lethbridge puts it; I do not know that the influences will be recognized as being quite so sinister, but they are none the less real for all that. We see how they operate in this house. We have the money to pay huge interest charges which take ' thirty-six per cent of our revenue, but we have no money to help a few blind people who need help so much. That is so in this house where the members have an opportunity of exercising a certain amount of pressure on behalf of some of these needy people. What will be the effect in remote districts and in the provinces where boards of administration removed from popular control will be chosen to see that the financial obligations are lived up to?

I have just one more word to say. I assume that this resolution will go through, as I cannot conceive of a message of this kind being thrown out by the senate. The government has a sufficient majority in this house to pass anything and I do not know that there is likely to be very strong opposition from the official opposition. If this goes through I do not know that the result will be so much more disastrous than the present state of affairs. I would say that we are simply making statutory, conditions which now exist in fact. Whether or not the financial power exercises itself directly through the forms of this house, or indirectly through the pressure that may be put upon the legislatures of the various provinces, or upon various individuals, the power is there and, so I come to the conclusion that by this legislation we are simply making statutory a condition which has gradually developed and which is proving to be a very disastrous one to the large masses of the people of Canada.


Mr. T. L. CHURCH (Broadview):: Mr. Speaker, the principle involved in this humble address to be presented to His Majesty is an amendment of the provisions of the British North America Acts, 1867 to 1930. This amendment refers to taxation and enables the government of Canada to guarantee the debts of the provinces. This is a most unfortunate departure from the basic principles upon which the British North America Act was consummated. It has been said that charity cover-eth a multiude of sins, but, so does taxation. This resolution covers nearly all the subsections of sections 91 and 92 of the British North America Act, which are correlated according to all the decisions given so far by the privy council. Practically all the subjects referred to in these sections and subsections require taxation to raise revenue to carry them out.
So far the provinces up to 1930 were able to get along and carry on with the cash subsidies allowed under the British North America Act plus direct taxation within the provinces for the purposes of raising revenue. What is proposed under this resolution? The provinces are now to be given the additional right of indirect taxation within the provinces. This indirect taxation is to apply to all kinds of commodities except what is set out in this resolution, liquor, tobacco, cigars and cigarettes. In my opinion the privy council is the one court in which a litigant under the British North America Act can get some justice and relief. We owe a great deal of the good work from confederation in our parliamentary government to the wisdom of the decisions of the

B.N.A. Act

Mr. Church
imperial privy council. There is no doubt that the British North America Act constituted a pact along certain lines. The answer to the question whether the British North America Act is or is not a contract is given in five or six leading decisions; in certain respects the answer is in the affirmative and in other respects in the negative, and these answers are correlated.
The proposed resolution is a grave invasion of the rights of the provinces, and so far there has been no petition for legislation of this kind. In the case of other amendments from 1867 to 1930 there were petitions. The foundation of the act itself was a petition from the old provinces of Canada. The courts will restrain this parliament if it goes too far. It can go so far and no further because under section 91 it must legislate as a national parliament. The four old provinces in 1867 gave up their sovereign rights with respect to certain matters in order that confederation might be consummated. They turned over to this parliament jurisdiction with respect to those matters while they retained sovereignty in respect of matters of local interest. In those days there were no large cities in the dominion and it was never imagined that Canada would some day have a population of 10,000,000. At the time of confederation the provinces handed over their rights to the dominion in trust, because it was a trust; and that trust is twofold: One has reference to the rights of minorities as of 1863, which rights must be preserved, but not extended. What was then done is final. In my opinion this parliament cannot invade those rights. But there were other rights and privileges which the provinces handed over to the dominion of a business nature and these contained no contract. They were passed on forever to federal power.
Now this parliament has itself the power to accomplish the objects which under the present British North America Act the minister has in mind, and it does not need to go to the mother of parliaments for any amendments. Last year I attended the committee that studied the question of amendments to be made to the British North America Act, and the question was then considered, how amendments could be made to sections 91 and 92. The deputy minister of justice Mr. W. Stuart Edwards, appeared before that committee and gave a summary of leading cases. At page 2 of the committee's report, speaking with reference to the powers of the dominion parliament, he made this statement:
It will be observed that the purpose is to enable this parliament to deal effectively with urgent economic problems which are essentially national in their scope. Well, in my view, problems of that kind are now within the
competence of parliament under the British North America Act as it stands. A good deal has been said about the failure of the fathers of confederation to anticipate the necessity which might arise for the amendment of the constitution. Personally I do not think that they failed to anticipate such necessity; but I think they deliberately framed the constitution so as to make it subject to expansion by its own terms as the needs and as the problems of the country developed. In some of the selfgoverning dominions and in other countries where a federal system prevails, there are fixed provisions for the amendment of their constitution; but in most, if not all, of those countries, their constitutions are not similar to ours in this respect, that the residuary powers rest with the state, and not with the central authority as it does in Canada. Therefore I think that the fathers of confederation deliberately provided a scheme whereby all matters that are essentially national in their scope would be within the exclusive competence of parliament. They did that by vesting in the dominion parliament the residuary power, and in giving to the provinces their legislative powers they were very careful to make it clear that the legislative jurisdiction of the province was not, in any case, to extend beyond matters and rights situate in the province itself, matters of purely provincial or local concern.
There is a difference between a federation and a confederation, and by section 91 there are certain residuary powers retained by the federal power when not given the provinces in section 92. I contend, therefore, that there is no necessity for going to the mother of parliaments to have our constitution amended so as to give effect to the objects which the government has in view, for the reason that we now have all the powers we need for loan councils. Perhaps I should read one or two other paragraphs from the evidence given by Mr. Edwards:
By Hon. Mr. Veniot:
Q. In a consultation with the province in an amendment of the kind you refer to, do you need to have the consent of the province, or all the provinces?
A. Well, I wish to make it clear just before I answer that question; when I spoke a moment ago I meant that the protest is made by the provinces with regard to matters of provincial concern.
Q. By the provinces?
A. Yes. I would desire to negative any idea that any matter which relates to all the provinces, the mere fact that certain provinces object, would entitle them to have a voice at London or at Ottawa, wherever the constitution is being amended. That would be a matter of purely dominion concern which should be settled in this parliament; but where the amendment would affect what we would call actual provincial rights, and there is a body of provincial opinion opposing the amendment, I would say this parliament should consult the interested provinces.
Q. rovincial rights, common to the provinces as a whole?
A. Well yes. That is, common in the sense that each province has jurisdiction to deal with that matter in its own field.
B.N.A. Act-Mr. Church

Therefore, I repeat, there is no necessity for the proposed resolution to guarantee loans or bonds or debenture.'! of provinces in so far as it refers to guarantees of these securities of the provinces and as it proposes also to create a regulatory body known as a loan council in respect of these matters. They have that power here now. There is one other answer which I should like to read from another page, with respect to the question whether or not a contract was entered into. The answer which the witness gave indicates, I think, what I have pointed out here, namely, that there is no necessity for this parliament to go to the British parliament to amend our constitution. I would point out that the proposed legislation is ultra vires of the parliament of Canada.
- Under section 92 of the British North America Act the provinces have exclusive jurisdiction with respect to municipal institutions, property and civil rights, direct taxation in the province in order to the raising of a revenue for provincial purposes, the borrowing of money on the sole credit of the province, and generally all matters of a merely local or private nature in the province. I object to this gross invasion, as contemplated by the resolution, of the rights of the municipalities. If we passed this resolution it would be a grave encroachment upon the municipal institutions of the country. A few years ago, I remember, the Lemieux Act was upset in the privy council. It attacked a certain municipality or two which had guaranteed and sold bonds on the basis of a large public undertaking of $100,000,000 almost on cheap light, power and transportation, and this parliament thereupon proposed by the Lemieux Act to impose regulations upon them. Lord Haldane held that the Lemieux Act was ultra vires because it interfered with municipal institutions in the province, with employers and employees, with the right of contract and, in addition thereto, with property and civil rights in the province. It was attacked also on the grounds of public policy and vested rights.
It will be noticed also that in many respects this particular resolution collides with section 91. The provinces are assuming the right of taxation over whom? Over all business men. In the retail streets of my riding, every retail merchant is going to have new and duplicate taxation imposed upon him in an arbitrary way by federal and provincial authorities. I am surprised that a government which professes the principles of Liberalism should propose such an amendment as this, which in the first place interferes so much with the liberty of the subject
[Mr. Church. 1
and municipal institutions and their revenue, and, second, is so gross an invasion of the basis of confederation, namely that the provinces shall be satisfied with direct taxation plus a federal subsidy. Now the government has handed over to them assistance by way of relief measures, national emergency measures; many of the provinces are getting these grants, to help them balance their budgets at the expense of the municipalities, while other provinces do not receive any. The municipalities of the two central provinces are dangerously affected in their financial position and the stability of the bonds and securities which they have sold. By the decision of the privy council in the Alberta case, the Snider case, the Through Traffic case, the Aerial Navigation case and many taxation cases it was held where bonds and securities are sold and contracts have been made, under section 92, the rights of the provinces and of municipal institutions in the provinces shall not be interfered with as they have vested rights and contracts; they are safeguarded by both section 91 and 92, as I read the decisions of the privy council and the answers of Mr. Edwards and the other witnesses before the committee last year. The privy council, when a section is under review, considers the whole story of the British North America Act from beginning to end.
Supposing we pass this legislation and somebody appeals to the courts. Under our constitution the courts are subservient to the legislature as long as the legislature stays in its own field. Over here you have the federal field; over there you have the provincial field and the municipal field. More than two-thirds of the provincial field of legislation relates to the municipalities. There never should have been any provincial legislatures. They were created for political and not for economic purposes with overgovem-ment and overtaxation. They have been at the root of all dissension in this country; they have imposed untold taxation, with the result that we have overgovernment and overtaxation in Canada. Business men have a right to protest when you are going to hand over to the provinces indirect taxation, when you increase the imposts on retail merchants, when a few months ago the provinces took over the income tax-by what right I do not know; I doubt whether the legislation is legal-when this parliament imposes a direct tax in the manner they did a few months ago, though the decisions show that if the levy is made by a legislative body it is a direct tax. Now here you are imposing

B.N.A. Act-Mr. Church
a provincial income tax on a city, though the municipalities have had this whole field of taxation exclusively from confederation to 1918, and the income tax was reserved from confederation to 1918 for the municipalities to enable them to pay their debts. As soon as a municipality finds a new source of taxation under the British North America Act, the provinces grab it, and the federal authority takes away -another source of revenue to which the municipalities are entitled under the act of confederation. Not satisfied with that, the provinces have taken away from the municipalities the exclusive field which they have always had of income tax by virtue of the British North America Act, and are collecting duplicate income taxes to which the municipalities are entitled. I never like to oppose a tax; I try to pay my taxes, if I may say so, gladly and willingly, but I assert that the imposition is an unjust one as far as the municipalities are concerned. Further, the method of this collection is indirect. There was no notice to the municipalities, and I predict that in a year those who passed it will be glad to rid themselves of it, because it is going to lead to a lot of trouble.
This resolution in its taxation feature is illegal and ultra vires of this parliament. Under this resolution parliament proposes not only to allow federal taxes to be imposed but to permit the provinces to impose duplicate indirect taxes on business men, and dear knows that the business men are struggling enough now to pay their bills. With all the artificial barriers and burdens they have to contend with, I do not know 'how they conduct their business. This provision is to help the bankrupt provinces out, not every province in the dominion. The western provinces, with the exception of British Columbia get this handout. The provinces can now impose a direct tax on business men; yet the government is proposing to give the provinces the right, with the exceptions named in the resolution, to levy an indirect tax on retail sales other than of all alcoholic beverages, spirits, malt, tobacco, cigarettes and cigars which are subject to customs and excise duty or tax in Canada or other than all goods and articles for delivery without the province. Of course, that is a federal provision. Wait till I show you how they are going to rob municipalities. They are robbing Peter to pay Paul; that is what the principle amounts to. .
This resolution never should have come before the house. If the government wants to amend the British North America Act, let us have some petitions for it first. Let us start with getting social legislation for the 12739-180
workers. Who is asking for this legislation? Some of the bankrupt provinces that cannot pay their debts. Why should the central provinces, which are endeavouring to pay their debts, and pay eighty per cent of cash federal taxes, be imposed upon in this manner, by our conferring the right of indirect taxation so that every business one can think of will be taxed. Why should the powers of this parliament be diminished in this manner? There are many former members of municipal councils in the House of Commons to-day. I am surprised that they will sit idly by and see these barriers put on business and revenues taken away from the municipalities. What it amounts to will be confiscation of property. By the third clause of this resolution the government is handing over to the provinces the right to take municipal revenue. We have to maintain a city police force to protect life and property. This parliament is going to take away a lot of revenue in the way of licence taxes set out in clause 3, a source from whidh the city of Toronto raises a large revenue by means of the police commission and licensing. That is how we are helped to help maintain the police force. In Australia and New Zealand the capital cities get a subvention to help them maintain their police forces. In this country we are about to take all the money that is derived from the licence fund, from amusements, hotels, beverage places, all kinds of retail establishments in which various articles are sold, and which yield a large revenue to the cities, and hand it over to the provincial authorities in order to raise revenue for provincial purposes, and to help the province balance its budget at municipal expense. I cannot speak officially for the municipalities, but I am safe in saying this, that this matter will go to the privy council; it will be and should be contested, like all past legislation along this line. I do not know how business men, retail and wholesale merchants, with all this indirect and direct taxation that is being handed over to the provinces, will be able even to pay the rent of their stores.
I may add, having looked at the decisions, that the municipal scope of taxation is so seriously interfered with that the municipal institutions of this country might as well be abolished. If the provincial governments are ready to take over and run the municipalities of Canada, it will be a sorry day for Canada. A vote should be taken to abolish provincial legislatures. Altogether it amounts to this, that by this resolution the government of Canada is going to be transferred to the capital cities of the provinces. That is how the country is being governed to-day. Be-

B.N.A. Act-Mr. Church

cause every provincial government is friendly to the dominion government of the day, it is proposed to transfer, against the spirit of the British North America Act, to the provincial capitals the absolute power to impose indirect taxes, and the entire government of Canada is being run from provincial capitals. I wish to protest against this course, and I do so as the representative of a riding in which there is a very large number of retail merchants. Not satisfied at the first session with taking away from the municipalities the right to impose income tax, the government now goes further and is intending to give the provinces, by this resolution, the power to impose the indirect taxes I have referred to.
I do not believe that this parliament can interfere with bonds and guarantees and debentures signed on behalf of the municipality by the mayor and the treasurer. I have signed thousands of these debenture bonds and guarantees and treasury notes in advance of the taxes being collected. They are endorsed by the mayor and treasurer of the municipality, and have been sold all over the world. In the bond agreement is given the assessment of the municipality and the revenues with which the fixed charges are to be paid; yet without this matter ever going before a committee, what are we doing? We are going over the heads of the municipal institutions of this country, trying to make nothing more than scraps of paper out of these bonds and debentures which have been sold for hundreds of millions of dollars and which involve light, power, transportation and other utilities.
I wish to protest against this sort of thing. If this is what Liberalism in Canada amounts to to-day, the sooner there is a change the better. The people owning these bonds are located all over the world, in New York, London and every other city of any size. They will be an added complaint in the old country to-day over this kind of thing when it affects municipal securities and depreciates them. Now we are going to hand over to the provinces the right to levy both direct and indirect taxes. As I see it this is remedial legislation of the worst sort. We have never had legislation of this kind before, upsetting as it does the whole principle of confederation. The provinces have been getting along very well with their subsidies, their power to impose direct taxation and the federal hand-out of $111,000,000 to four western provinces. So I do not think this resolution should be passed until we have the opinion of the Supreme Court of Canada as to whether or not parliament has the power to pass this resolution in its present form.

Then, Mr. Speaker, I think the people should vote on this question. No mandate has been given in connection with it. The provincial premiers came here to see the government, and they got out a blue-book of that so called conference. The premiers asked for indirect taxation also. What right has the provincial cabinets of any province without the consent of the nine legislatures to barter away the bonds, guarantees and securities of municipalities and depreciate them? Does the provincial legislature consist of only one or two members of the cabinet? Are we back to the family compact of a hundred years ago, not only in Ontario but also in British Columbia and the maritimes? What right have provincial cabinets to come here and try to make a bargain with the government of the day in a conference room, over the head of the sovereign legislature and contrary to the wording of section 92 of the British North America Act, in which the sovereign powers of the provinces are set out to get added indirect taxation powers. I say the provinces have no right to do that, and it seems to me the sooner that sort of family compact with federal power is broken up the better it will be for the municipalities of this country. This indirect taxation is just about going to abolish municipal institutions by abolishing and grabbing their revenues and render them more bankrupt. Why does not federal power help the municipalities?
I also contend that this resolution is irregular, though I do not wish to urge this point strongly to-night. I am sorry that I was misunderstood yesterday. I always like to abide by your rulings, Mr. Speaker, and by the will of the house. I appreciate the difficulties of the government to-day in dealing with the many important problems before them, some of which were not of their making. Some were not of the making of the preceding government but were created by the war and the disturbance of industrial equilibrium which followed. I sympathize with any man who is premier or a cabinet minister to-day or at any time and who is trying to bring about harmony and order in this dominion, which is loaded up with provincial legislatures that we never should have had at all. That is where the mistake was made in the first place at confederation. However I wish to say that under the anticipation rule I fail to see how a part of the resolution of a private member can be incorporated in a government measure. As I read the rules of the house, and the authorities, even though government business

B.N.A. Act-Mr. Church
has precedence that cannot be done; you cannot take away from a private member the rights and privileges which he has enjoyed for two or three hundred years. I am not going to urge that, however, because I sympathize with the government in their endeavour to restore order to the finances of the country.
As I see it this resolution is also unfair to His Majesty's government in the old land, in loading them up with the settlement of this involved question without a petition from the provinces to the Governor General of Canada, setting out the exact terms on behalf of each province. I am not aware that any petitions have been presented so far this session, and there has been no conference with the municipalities to protect their rights from this invasion. Before this resolution was proposed why was it not considered by the banking and commerce committee or some other committee of the house? Last year a committee was appointed to consider the British North America Act, and this resolution runs contrary to the principles laid down by that committee and the opinions of its witnesses, which reviewed all the authorities and decisions I have already named, regarding sections 91 and 92.
If this resolution is followed by an act of the imperial parliament I say that not only will it destroy the municipal institutions; it will also constitute a gross invasion of the property and civil rights of the provinces. It is against the ordinary principles of British justice to take away all these powers of taxation from the municipalities without their knowledge, consent or advice, because any act passed by any parliament in the British dominions must not be contrary to the ordinary principles of natural justice without a municipality hearing first of how it will affect them. What is going to become of the municipalities? How are they to be reimbursed for the amount of money that is to be taken from them and handed over to the provinces, that do not need it and that have natural resources, lands, mineral wealth, corporation taxes and so on, which the municipalities do not have? I wish to protest against such a gross invasion, because, as I see it, it is taxation without representation. This resolution hands over the right of indirect taxation to the provinces. I say that is taxation without representation, because the government of the day have no mandate from the people to upset the act which has been in effect ever since 1867. The government of the day, whether dominion or provincial, has no mandate to do this, and it should not be done without the knowledge 12739-180J
and consent not only of the legislature but of the people as expressed at the polls. Here it is being done without even a conference with the municipalities.
As I have already stated, in connection with matters such as these the courts of the land will not deal with abstract cases. They want concrete questions. We found that out before the Beauharnois case in the reference to our supreme court, in connection with the rights of navigation as against power, as between the provinces and the dominion. We on this side of the house objected to some of the questions that were submitted. Those questions went to the supreme court, which decided they could not answer the questions categorically, in the abstract, that they would require some concrete evidence. Here, without any concrete evidence as to how this taxation clause is going to affect the municipalities, we are going over their heads in an abstract way. My hon. friend the former mayor of Hamilton can tell the house what is going to happen there. I would refer particularly to paragraph (ii), having to do with the patronage of hotels, restaurants and places of amusement or entertainment. These are very large features in the income of a municipality, so much so that the municipalities are required to maintain large police forces to regulate and protect them. In one of the rinks of a large municipality I know they have numerous policemen on duty, as well as firemen to enforce the fire regulations. Are the municipalities to be required to maintain all these free services without getting a copper from the present licence system towards their cost? I say that should not be done, and I believe this is a direct invasion of the principles of confederation. As I have said, we have all the power we need if we would only exercise it. Just because certain officials tell the Minister of Justice and Attorney General of Canada that they think we have not the power to create a loan council and need legislation does not make it so. I can find no decision of the privy council to support such an attitude, and I do not think any court of law would say so. I do not think any amendment is necessary in order to give effect to the policy of creating a loan council, if the government of the day wish to do so.
Mr. Edwards' opinion, as I have read it, indicates that the federal power has residuary powers which the provinces have not. That is one of the main differences between our constitution and those of some other federations and confederacies such as I mentioned before. The question is: Was confederation a contract or not with the provinces when

B.N.A. Act-Mr. Church
they gave federal authority power to rule them? The answer of the privy council is yes and no. I say yes, so far as the protection of the rights of minorities is concerned regarding certain schools in Ontario as of 1863. They retain this but these rights cannot be extended, and what was done in 1863 is final and any extension of it is ultra vires. I am in favour of a strong federal power as the British North America Act provided in disallowance to protect not only minorities but majorities. The time is coming in Canada when majorities will have to assert their rights and privileges under confederation as laid down in 1863-67. I believe that, when I see some of the legislation being passed over the head of the British North America Act and over the head of what Sir Wilfrid Laurier said in 1905 about the rights of minorities and majorities under confederation. I believe the Minister of Justice referred to that statement to-day, so far as I understand it, when he said confederation to that extent was a contract along those lines. It has been set out by many of the Lords of Appeal in the privy council what their views were or dictums were as to whether confederation was a contract or not. I contend federal authority should be up and doing to protect whom?-ito protect municipalities from the taxation invasion of the provinces; to protect all those municipal institutions for which bonds and debentures are sold; I refer to hospitals, schools, court houses, harbours, parks, public schools, and those buildings for which municipal taxation is raised. If some federal or provincial authority over their heads tries to take rights and privileges away from them, as Sir Wilfrid Laurier said in connection with the 1905 Alberta and Saskatchewan acts, it is the duty of a strong federal power to offer some protection to the rights guaranteed at confederation, but there must be no extension of such minority legislation. This legislation may be attacked in the courts for many other reasons. In my opinion the bankrupt provinces of Canada are going to be allowed to act the part of the ungrateful son who agrees to take all from his parents and to give nothing in return. Ontario is a solvent province. In this instance the parent is the federal authority. That is the position in which we shall be placed. Who is going to pay for all these loans and guarantees, outside the British North America Act? The central provinces of Canada will pay for them. They now pay eighty per cent of the cash taxes. If a sinking fund is to be provided, as no doubt the loan council would arrange, these grants and interest would have to be made out of direct revenue, pr out of income. From where do we get

the income? Eighty per cent comes from the two central provinces, and I hope the authorities will look into that point.
The resolution indicates that a rider will be added to the effect that the dominion will be recouped, in case of loss. The loan council would have the powers set out in the second page of the resolution. Did hon. members ever hear of parliament collecting any loans or guarantees on bonds from railways? Canada has four billion dollars invested in railways, private and public. Did hon. members ever hear of the government collecting guarantees from loans to harbours or publicly owned railways? Has the Quebec harbour paid its interest? This has not been paid; yet the government puts into this resolution the very same principle they have had for the last fifty years regarding loans, guaranteed bonds, cash grants and hand-outs of all kinds, which, from experience, will not be repaid.
We talk about a loan council; I say that parliament has been looted enough, and the time has come to put the brakes on in connection with loans, loan councils and all sorts of loans, running into hundreds of millions of dollars. Is it any wonder we have the great taxation under which the country is groaning? As I say, we should have some regulatory power to put a check on it. The tnly regulation the federal power has is that of disallowance. We disallowed some British 'Columbia statutes, to some of which I referred. Are we going to have any protection at all for municipalities?
The hon. member for St. Lawrence-St. George read an opinion in this house on one occasion during 1930, the last year I was in the house. The learned and eloquent member read the opinion of Sir Wilfrid Laurier as given in 1905 concerning the two prairie provinces of Alberta and Saskatchewan, having to do with the lack of right of minorities to schools in Alberta and Saskatchewan in 1905. They had no right to them under the law as it was then to them. The only regulation we have under which we may get our money back is what? -a scrap of paper. How can a bankrupt province pay any money back on this guaranteed bond? If an individual is bankrupt he is put out on the street. He has to start all over again, but under the proposed amendment hundreds of millions of dollars can be paid out to bankrupt provinces. In my opinion that new legislation is not necessary; it is just a sop to the four western provinces. In that statement I except British Columbia, to some extent. In my opinion that is all it is.

B.N-A. Act-Mr. Finn
I wish by some regulation of Mr. Speaker the learned treatise I have before me of the British North America Act of 1935, could be handed to each hon. member; I refer to the report of the committee which considered the British North America Act. Every hon. member should have a copy of this before the resolution is passed. The municipalities are becoming alarmed. In my opinion, instead of passing the resolution, we should have the vote of the people of Canada to abolish, if possible, provincial legislatures altogether. That would be a godsend to the Canadian people, and if it were brought about we would have some harmony throughout the country. Their creation has led to racial and religious jealousies in Canada, and overgovernment and overtaxation.
Confederation was brought about by compromise, because the history of the world has been one of minorities. The history of Canada has always been the history of compromises. Confederation was a compromise. When confederation was passed the rights of minorities in Ontario were settled for all time in 1863-67, and the people in the province of Ontario thought the door was closed forever and that certain school questions were settled which we now find are not settled, and which could not be extended.
The fathers of confederation handed over the regulatory power of disallowance to federal power, though, to protect Ontario.


Mr. SPEAKER:: The hon. member has spoken forty minutes.
Mr. R. E'. FINN (Halifax): Mr. Speaker, it seems to me that perhaps the most important document in our dominion is the British North America Act. Its provisions respecting federal and provincial rights are sacred, as are the powers of the parliament of Canada and our legislatures as set out in sections 91 and 92. When this afternoon I listened to the hon. member for St. Law-rence-St. George (Mr. Cahan) a fellow Nova Scotian, a gentleman of years and of fine texture of mind, well able to interpret statutes, I was impressed by the statements he placed before the house. I was pleased, further, to listen to the observations of other hon. members, including the leader of the social credit party (Mr. Blackmore) from the province of Alberta.
It seems to me that to some extent we are losing sight of an act which to a certain extent supersedes the British North America Act. I refer to the act of 1931, passed by the imperial parliament, entitled the Statute of Westminster. If I recall rightly, the present Prime Minister of Canada (Mr. Mackenzie
King) was the one who first at a conference in London outlined the position of Canada and stood for its status as a component part of the British empire, daughter within her mother's house but mistress in her own, and it fell to the lot of the right hon. the leader of the opposition to-day (Mr. Bennett) who, as Prime Minister of this country attended the conference in 1931 to approve the draft statute of Westminster which became law. Therefore all the clauses contained1 within that statute bear his imprimatur, so to speak, more than that of my right hon. friend the Prime Minister because the proposed statute was only in posse in his time and was in esse when the present leader of the opposition was Prime Minister. The statute of Westminster gives an entirely new status to Canada and to the other component parts of the empire which are looked upon as independent, self-governing and absolutely free, save in the one respect, and one only, as regards Canada that the British North America Act can be amended only by the parliament of Great Britain upon, request of the parliament of Canada through the government of Canada, and the provisions of section 92 of the British North America Act only with the consent of all the provinces of Canada.
This afternoon I heard the leader of the social credit party, the hon. member for Lethbridge (Mr. Blackmore) make the statement in this house, honestly, I believe, but without knowledge, that we were subservient; that there was in existence to-day a sort of combination between the Bank of England and the independent parliaments of what are called the dominions, which are defined under the interpretation clause of the British statute of 1931, and that these parliaments through some sort of understanding were attempting to keep behind the screen, to keep away from the people whom they represent things that they would not like to come out in the open to do.
I desire to compliment the hon. member for Broadview (Mr. Church) upon his reference to the late Right Hon. Sir Wilfrid Laurier, and I say to hon. gentlemen opposite of the great Conservative party of the past and of the present as it is-and I hope, Mr. Speaker, that its day will be greater still some time when the people of Canada so decide-when I heard the hon. member for Broadview complimenting Sir Wilfrid Laurier upon the stand he took with reference to the carving out of the new provinces of Alberta and Saskatchewan and the preservation of the rights of minorities, I felt that that compliment should re-echo from one end of Canada to the other because it is in such contrast with the attitude of the right hon. the leader of the opposition of that day,
B.N.A. Act-Mr. Finn

Sir Charles Tupper, who sought to force upon the parliament and people of Canada, through his influence and that of his government, something that would have brought about, in my judgment, the disruption of confederation. But the fine texture of mind and the noble vision of Sir Wilfrid Laurier stood out preeminently and he said, "Put me in potver and I will settle this question by a happy compromise." And did he do it, Mr. Speaker? The question has never been heard of since; the mantle of that great French-Canadian has fallen upon the shoulders of the right hon. leader of the government to-day, and as I survey the situation, I know of no man in Canada who stands more firmly for the broad principles of democracy, who stands and hews more closely to the line of the rights of the people as expressed through their representatives in parliament here and in the legislatures of the respective provinces, than the right hon. gentleman who leads this government in the Dominion of Canada to-day.
In the light of these facts it is well to look down the vista of the past; it is delightful to be reminiscent and to be able to feel that you stand behind a leader who has nothing to apologize for in respect of the positions he took, as I believe the right hon. leader of the government to-day will have no apologies to make to the people of Canada when he again appeals to them for their support and comes back to give Canada a second five years of prosperity as he gave us when he was in power from 1921 to 1930. I do not disparage for one moment the right hon. leader of the opposition or the hon. gentlemen who sit about him. I believe he tried to do his best, but minds sometimes run in grooves, and when they do it is often pretty hard to get them out. That was the trouble with the leader of the opposition. His mind got into a groove and he could not get it out. That is the reason-and I say it kindly-that the people put him out and gave him the honourable position of leader of the opposition in this parliament to-day.
As to the statement of my hon. friend the leader of the social credit party, I noticed this afternoon that he quoted from newspapers, and evidently he is looking at one now as I see him passing it over to one of his confreres. I should like to call his attention to the preamble of chapter 4 of the statutes of 1931 of the British parliament at Westminster, intituled the Statute of Westminster. What does the preamble of that act say?
And whereas it is meet and proper to set out by way of preamble to this act that, inasmuch as the crown is the symbol of the free association of the members of the British

commonwealth of nations, and as they are united by a common allegiance to the crown, it would be in accord with the established constitutional position of all the members of the commonwealth in relation to one another that any alteration in the law touching the succession to the throne or the royal style and titles shall hereafter require the assent as well of the parliaments of all the dominions as of the parliament of the United Kingdom.
Does any hon. gentleman in this house whether he belongs to the social credit party, the Conservative party or the party led by the hon. member for Winnipeg North Centre, think for a single moment that England did not extend to the full to Canada and her parliament the greatest autonomy ever given, in connection not only with matters that go to the foot of the throne, but with matters that go to the very throne itself? This cannot be altered unless the dominions which make up the commonwealth of nations are consulted and agree thereto.
The leader of the social credit party is smiling. I am glad to see him smile. This afternoon he made reference to a certain gentleman who has gone to a bourne, not below the ground but across the seas. He is one of those travellers who will never return, Mr. Douglas who was the chief adviser ,of the Hon. Mr. Aberhart. I suggest to my hon. friends that when they return to their native soil in Alberta they induce some of their friends in the provincial legislature to introduce a bill entitled an act to change the name of the premier from Aberhart to Have-a-heart. Hon. gentlemen of the social credit party undertake to tell this government that they are overstepping the mark; that they are overreaching and doing things not within the constitutional right of this parliament to do, but I think they should put forth their efforts to see to it that Have-a-heart has a heart for his people and gives them that $25 a month which he promised them instead of coming to Ottawa to seek it from the government of the present Prime Minister. They are ready to criticize that right hon. gentleman because he desires to guarantee the - bonds of the provinces of Canada in order that the credit of Canada may stand higher.


Mr. FAIR:: - The bondholders are taken care of, but the poor of the provinces are to be allowed to starve. What about them?


Robert Emmett Finn: If my hon. friend means to tell me, or to tell the Prime Minister, or to tell any minister of the crown, or to tell any hon. gentleman who sits on this side of the house, that we stand for any legislation to help the rich and starve the poor, then he is

B.N.A. Act-Mr. Finn
speaking out of turn. That is not written in the book; it is written only in his imagination. When he wakes up in the morning it will not be there. I do hope hon. gentlemen opposite will have a heart.
W e come now to the resolution as presented to this house by the hon. Minister of Justice (Mr. Lapointe). It has to do with certain amendments to the British North America Act. It confers upon the provinces a new power of indirect taxation of a certain kind. No one disputes their right to impose direct taxation. Section 92 refers to works of a local character and surely we should not start to split hairs in connection with this resolution and what it stands for. May I recall the fact-and I do it kindly-that hon. gentlemen opposite, not of the Social Credit party, not of the Reconstruction party, not of the Labour party, but of the Conservative party, have stretched the constitution and its provisions to the breaking point. It did not break because they knew the right hon. Prime Minister was going to come into power. I believe it was through providence that they held-although by a great effort-to our constitution because they stretched it to the utmost under the peace, order and good government provision. They did every thing *but murder the people of this country. They issued their blank cheques and carried on by order in council. Parliament was told: Take it or leave it; I am a dictator. I was surprised to hear my right hon. friend stand up in this house the other day and admit that he was a dictator. He said bluntly, plainly, openly and sophisticatedly-


Richard Bedford Bennett: I shall have to ask the hon. gentleman to withdraw that. No such statement was made; it was quite the opposite.
_ Mr. FINN: If I recall the words of my right hon. friend correctly, he said: Dictator as I was, I was unable to get hon. gentlemen who sat with me-


Richard Bedford Bennett: I shall have to ask the hon. gentleman to withdraw.


Some hon. MEMBERS:: Hear, hear.


Robert Emmett Finn: They say: "Laugh and the world laughs with you; weep and you weep alone." They do that in the quiet of their chambers. I believe that statement is correct although the right hon. leader of the opposition may say at this moment that he did not say what he did say and what I heard him say. His words were to this effect: Dictator as I was,
I was unable to place upon the statute books the legislation I desired based upon the Sir
Alexander Gibb report because my followers would not follow me. He blamed the former Minister of Marine, Mr. Duranleau. What did he do with him before he went out of office? He placed him on the superior court bench of the province of Quebec because of his disobedience to his leader and his dictator. These are great days. These are the days of happy recollections and pleasant memories.
Hon. gentlemen opposite, members of all the parties who represent a public opinion different from that of the people of Canada, different from the opinion represented by the right hon. the Prime Minister and by those hon. gentlemen who sit immediately behind and around him, have expressed their opinions. We support our leader because he is always right. Make no mistake about it; he has never made a mistake. There is an old adage, that by our mistakes we learn; therefore the right hon. leader of the opposition and his party still have a chance.
To return to the statute of Westminster. There is not on the statute books of England to-day a law save one which can stand if it conflicts with an act of the parliament of Canada. Is that doing something behind the curtain? Is that being dictated to by the head of the Bank of England? No wonder somebody coughs! But not only that. So far as the provinces are concerned, any imperial statute which conflicts with any provincial law-and that includes the Colonial Laws Validity Act-must go by the board, for all the legislatures stand supreme. The only act that is excepted, the only act that has absolute independence of Canadian parliamentary rights is the British North America Act. Subsection 1 of section 7 of the statute of Westminster of 1931 provides:
1.	Nothing in this act shall be deemed to apply to the repeal, amendment or alteration of the British North America Acts, 1867 to 1930, or any order, rule or regulation made thereunder.
It further provides:
2.	The provisions of section 2 of this act shall extend to laws made by any of the provinces of Canada and to the powers of the legislatures of such provinces.
3.	The powers confered by this act upon the parliament of Canada or upon the legislatures of the provinces shall be restricted to the enactment of laws in relation to matters within the competence of the parliament of Canada or of any of the legislatures of the provinces respectively.
Therefore the hon. member for Broadview has his remedy. Therein lies the remedy for every person of whom the ex-Secretary of State (Mr. Cahan) spoke this afternoon with
B.NA. Act-Mr. Finn

respect to the carrying on of business and the various taxes that might be levied upon it by the provinces under the new authority for indirect taxation. They have their rights, as the leader of the opposition well knows, and as the ex-Secretary of State well knows, for they are both members of the legal profession, in which they stand high. If there is an attempt on the part of the legislatures to pass legislation which does not come within that section and the section that is proposed by way of amendment, there is recourse to the courts. My hon. friend from St. Lawrence-St. George this afternoon read extracts from judgments of the privy council in reference to the question whether various acts were ultra vires or intra vires, which were taken there on appeal either from the Supreme Court of Canada or directly from the supreme courts of the respective provinces.
All men are human. Every hon. gentleman in this house, the premier of every province, the governments of the provinces and the members who support them or who sit in opposition, are all apt to make mistakes, and if they do the courts are there to decide whether or not anything that has been done by a province with respect to indirect taxation comes within the purview of the rights and privileges of the provincial legislature, or within the rights and privileges of the parliament of Canada or under the new authority to be given through the imperial parliament, on petition of the parliament of Canada as set out in this resolution.
Certain new powers are being extended to the provinces in these dark days, though they are not so dark as they were; they are getting brighter every day. As Coue used to say: Every day in every way I am getting stronger and stronger. There is a lot of Coueism on this side and a lot of hooeyism on the other side, and the only thing is for hon. gentlemen opposite to have courage and faith. I say to them: Believe in the Prime Minister of Canada; believe in the great and sturdy stock from which he came; believe in his hopes and ambitions and in his fine desires, which are not selfish even to an infinitesimal degree. It is men of this calibre who will lead the country back to prosperity and have Canada take her place in the galaxy of nations that make up the great British commonwealth.


Richard Bedford Bennett: What about the resolution?


Robert Emmett Finn: I would say to the right hon. gentleman that it may be a case of sour grapes with him, but I am paying a well deserved compliment to the Prime Minister of Canada.

Caesar spoke once, and Mussolini spoke also; but there was a Mussolini who was not across the water, and he is not so far away that, if I had a few yardsticks, I might not be able to touch him on the shoulder.


Richard Bedford Bennett: What about the resolution?


Robert Emmett Finn: When my right hon. friend
asks me, "what about the resolution?" I put that very question to him: What about the resolution? Is he going to vote for it? My right hon. friend has been silent and silence gives consent.. The hour is growing late; the time for voting is near at hand, and while the burning candle holds out the right hon. gentleman has still an opportunity to express his views on this subject. I shall be pleased to listen and to follow, and in- so far as I can will agree with him. And that is saying a great deal. A gentleman who owns one of the great newspapers, or rather a chain of newspapers, in the United States, said that the world would be a happy place if it were not for the "ifs" and the "buts," and it seems to -me-I hope -this is not unparliamentary- that the "if-ers" and the "butters-in" are not on this side of the house. I will not say where they are, but I see quite a few of them around me. It is well to have a little bit of reve-lry, a little sunshine and pleasantry, but it is splendid to be serious, as I believe my right hon. friend the leader of the opposition desires me to be, and as I hope he will be if he speaks this evening.
As regards -this power that will be conferred upon the provinces by amendment to section 92, subsection 2, "indirect taxation within the province in order to the raising of a revenue for provincial purposes," there is no provincial premier who is sane who will undertake to do things under that clause as amended, unless he feels sure that the people of -the province are behind him, and has consulted his legislature before he undertakes to do it, and he cannot do it without legislation. And if the legislatures, composed of members sent there for that purpose, -pass upon the amendment and the purpose to which it is proposed bo apply it, can any person complain of that course? Is there anything w-rong about that? Is there any sinister motive in the resolution as brought down in this house by the Minister of Justice in order that there diall be free discussion on all sides of the amendment it is proposed to submit to the imperial parliament to give wider authority to the provinces? If in the judgment of -this house or of any future parliament this power is used by any province -to an extent that was not intended, it is competent for the people of Canada to

B.NA. Act-Mr. Spence
ask that the British North America Act be again amended to .provide for such a situation. My right hon. friend smiles. I know he was going to say, if he could interrupt me, that once the power is conferred upon a province it comes within, section 92, and the parliament has lost control over the power. That is true. But the people have the right to speak, and if they do, any government they put into office will ask for an amendment with reference to this or any other amendtnent.
This is not the first amendment to the British North America Act to go to the imperial parliament. I heard the leader of the opposition recite some of them a few days ago, and I say to-day-and in so doing I compliment him-that the statute of Westminster was breathed forth first by Sir Wilfrid Laurier and then by his eminent successor the present Prime Minister, but it happened to be passed when the leader of the opposition was Prime Minister; not one section or subsection of that statute would have been placed upon the statute books of the imperial parliament if the leader of the opposition, when Prime Minister, had not said to the British government that Canada wanted it passed; and because of that it was passed. So, when hon. gentlemen of the social credit party say that there is a dark lantern brigade or something of the sort looming above the horizon, I reply that if there is, then let them look to the right of themselves; let the right look to the left of themselves, and we will look after ourselves.
That is all I desire to say, and I would not have injected myself into this debate but that I did not wish to allow a wrong impression to go abroad in the country at this time, when governments are at their wits' end to know what to do and how to do best those things that are necessary to keep the wolf from the door and provide for the poor people who to-day and during the past few years have been unable to find employment in the industries or the vocations with which they have been associated all their lives. This government has undertaken to grapple with that great problem, and in the midst of its endeavour is seeking, not to control the credit of Canada or the parliament of Canada, nor to evolve new banking institutions which would be superior to parliament, but to have placed upon the statute books at this session legislation that will permit them, in a democratic open way, to do their duty and live up to the promises made by the Prime Minister when in opposition and on the platform from Halifax to Vancouver. I believe that before this session closes every promise he made will be fulfilled, except that perhaps
time will not permit one or two of them to be carried out at this time. But at the very earliest opportunity-I speak without authority or knowledge, but with confidence-the Prime Minister will implement every promise he has made, promises which to him are as sacred as his beautiful memories of those whom he loved and who have gone before. My last word is to ask hon. gentlemen opposite to help him in his awful task of trying to revive this great young Canada of ours, and not to cling to that retardism which happened during the days of the leader of the opposition, and for all of which he was not to blame, because there were conditions over which he had no control. For those he could control he was taken to task, and for those he suffered; and now I sit down.


Mr. DAVID SPENCE (Parkdale):: The
hon. gentleman from Halifax (Mr. Finn) who has taken his seat always entertains the house. We are all delighted to hear him, but I really cannot follow what he has been saying, so he will excuse me if I pay no attention whatever to it.


Robert Emmett Finn: That is a sort of left-handed
compliment. Perhaps my hon. friend may be deaf. If he heard all right I should like him to answer.


David Spence: Yes, I heard all right;
thank you. He seems to have great faith in the right hon. Prime Minister (Mr. Mackenzie King). I hope he retains his belief.


Robert Emmett Finn: I have implicit faith in him.


David Spence: I did not know that this
proposal was of so much importance to the business world when I heard the Minister of Justice (Mr. Lapointe) introduce it this afternoon. I thought it was rather an argument to be taken up by my hon. and learned friend, and I was called from the house and forgot to come back. But when I returned I heard my hon. friend1 from Broadview (Mr. Church) making a splendid argument on behalf of the municipalities and the business world, both the wholesale and retail trades. He represents a riding in which there is more retail and wholesale trade than in any other riding in the city of Toronto, or even in Montreal, and he should know something of what he is talking about. He is to be commended for the argument he advanced. Men like myself, who are engaged in business, do not like to be continually under the necessity of rising to argue against legislation which is intended to hurt or has the effect of hurting the business world.
Business has been crucified for the last good many years. Everyone has the wrong con-
B.N.A. Act-Mr. Spence

ception of it; everyone-and this is true of legislators in particular-thinks the business world is always making money and can stand anything. To-day it is becoming a golddigging proposition with all governments to get money out of the business world in every possible way, whether or not it is making money. I hope this resolution will never pass this house, and if it does I hope it will not pass the senate. If the senate does not throw it out I hope it will be thrown out by the House of Commons in England, which I think will be the case. No provincial government should be given any such power as this.


Mr. MERCIER:: You will have a tremendous amount of work.


David Spence: 
Robert Emmett Finn: Why did the hon. member not buy it?


David Spence: How could I buy it? I had nothing to buy it with. I might have had the down payment a few years ago, but I would not have enough now, due to too much interference, I will not say by whom.


Some hon. MEMBERS:: Hear, hear.


David Spence: May I tell you this, Mr. Speaker? Ever since I have been in this house the Liberal party, which is in power to-day, has interfered with business. They tinkered with tariffs; they put this industry and that, this man and that, out of business, and to-day we do not know where we are. They were the first to start interfering with business, when they came into power in 1921.
This resolution will also give the provinces the right to impose a turnover tax, as I understand it. Just what would a turnover tax mean? Does anyone know anything about it? Take the business I am in; supposing I turn over $10,000 worth of grapefruit, oranges, celery, lettuce and commodities of that kind, which would not be too much for me to turn over. Supposing I lose $1,000 on the deal. Will they come along with a turnover tax of one per cent, say, and take another $100 away from me? How would hon. members like a turnover tax of that kind? No man should make laws unless he knows something about what will be the result, or gets advice from someone who does know. Did Sir John Willison and Sir William Hearst ask one man who had practical knowledge for any information when they promoted that great warehouse on the waterfront of Toronto? If they had done so, that warehouse would never have been built, but they did not ask anyone. They did not know anything about what they were doing,

B.N.A. Act-Mr. Bennett
and it is the same with this government half the time; they do not know what they are doing. I think they are acting innocently; I do not believe they are doing this purposely, intending to hurt anyone. I have every confidence in the Minister of Justice; I think he intends to be fair, but he is like many others-


An hon. MEMBER:: Did he not ask the hon. member?


David Spence: I did not expect him to ask me. Then there is the sales tax. We now have a federal sales tax of eight per cent, and heaven knows, if we have another three per cent or four per cent added by the Hepburn government in Ontario, we shall have nothing left. They already have a gasoline tax of six cents per gallon, and I suppose they will now increase that to ten cents. There is the amusement tax which should be going to the municipality which enforces the by-laws, but that tax is all going to the province. They are getting all the money from the amusement tax, and I assume they will be allowed to increase that tax as much as they wish without any interference on the part of this government, because they are its personal friends. Then there is this tax on the patronage of hotels. That is imposed in some countries already, and I have no doubt the gold-diggers in Ontario, as well as in the other provinces, will lose no time in imposing it in Canada.
Seriously, I do hope the minister will reconsider this resolution, and will withdraw the proposition entirely. As far as I am concerned I will do anything possible to defeat it, either here, in the senate, in the old country, or in any other place.


Some hon. MEMBERS:: Oh, oh.


David Spence: My hon. friends need not display so much ignorance by laughing. Probably I have just as much influence some other place as they have, and if I cannot exert it myself I will get someone else to do so. I have that much influence, anyway. I sincerely hope the legislation will not go through, having in mind where the taxes come from to-day. These taxes are always designed to take money from the man in business, and he cannot pay any more than he is paying to-day. Already he is paying more than he can afford. This will be the last straw that will break the camel's back; it is going too far. I do not wish to take up any more time-


Some hon. MEMBERS:: Go ahead.


David Spence: I like to say what I have to say in a few minutes, and I do not want to take up any more of the time of the house, though I cannot be accused of taking it up to any great extent.


Richard Bedford Bennett: Mr. Speaker, I regard this matter as one of some importance. It is a much more important resolution than possibly some of our hon. friends realize. It is the foundation upon which the imperial parliament is expected to pass a statute, for after the statute of Westminster the understanding is that the imperial parliament will give effect to any request made in proper form by the parliament of Canada as to the amendment of our constitution.
I should like to point out that what we are in terms doing is seeking an amendment of an imperial statute. It is the British North America Act, and at the same time it is the constitution of this country. That statute was enacted by the parliament at Westminster, and that parliament only has power to amend it. The proposed amendment to the constitution is dealing with a matter which, as I shall try to point out, is of very great importance. When I recall the plea made by the Minister of Labour (Mr. Rogers) on more than one occasion as to the manner in which amendments to the constitution should be approached I wonder that this resolution is in the form in which it is.
Possibly in view of the fact that so many hon. members are not members of the legal profession it might be well to point out just a few observations made in the privy council as to the nature of our constitution. I do not propose to do so at length, but it may serve some useful purpose in our appreciation of the importance of the matter we are now considering. First of all I should like to indicate that this statute, the British North America Act, is all-comprehensive, so far as our legal and constitutional position may be concerned. Notwithstanding the fact that there were Quebec resolutions upon which it was based the fact remains that those resolutions are no longer pertinent or relative to consideration of the act, from the standpoint of legality, and that we must consider the terms of the statute as construed by the courts.
For instance, one of the earlier references to the act in a judgment of the privy council is in the words following:
When the British North America Act enacted that there should be a legislature for Ontario, and that its legislative assembly
B.N.A. Act-Mr. Bennett

should have exclusive authority to make laws for the province and for provincial purposes in relation to the matters enumerated in section 92, it conferred powers not in any sense to be exercised by delegation from or as agents of the imperial parliament, but authority as plenary and as ample within the limits prescribed by section 92 as the imperial parliament in the plentitude of its power possessed and could bestow. Within these limits of subjects and area the local legislature is supreme, and has the same authority as the imperial parliament, or the parliament of the dominion.
Later, in reference to a case from New Brunswick the court said:
The act places the constitutions of all provinces within the dominion on the same level; and what is true with respect to the legislature of Ontario has equal application to the legislature of New Brunswick.
And again:	,
In 1867 the desire of Canada, for a definite constitution embracing the entire dominion, was embodied in the British North America Act. Now there can be no doubt that under this organic instrument the powers distributed between the dominion on the one hand, and the provinces on the other, cover the whole area of self-government within the whole area. It would be subversive of the entire scheme and policy of the act to assume that any point of internal self-government was withheld from Canada. Numerous points have arisen, and may hereafter arise, upon those provisions of the act which draw the dividing line between what belongs to the dominion or to the province respectively.
In the interpretation of a completely selfgoverning constitution, founded upon a written organic instrument such as the British North America Act, if the text is explicit the text is conclusive, alike in what it directs and what it forbids. When the text is ambiguous, as, for example, when the words establishing two mutually exclusive jurisdictions are wide enough to bring a particular power within either, recourse must be had to the context and scheme of the act. Again, if the text says nothing expressly, then it is not to be presumed that the constitution withholds the power altogether. On the contrary, it is to be taken for granted that the power is bestowed in some quarters unless it be extraneous to the statute itself as, for example, a power to make laws for some part of His Majesty's dominions outside of Canada or otherwise is clearly repugnant to its sense, For whatever belongs to self-government in Canada belongs either to the dominion or to the provinces, within the limits of the British North America Act.
And again:
They adhere to the view which has always been taken by this committee that the federation act exhausts the whole range of legislative power and whatever is not thereby given to the provincial legislatures rests with the parliament.
On another occasion the courts made similar observations, notably in the decisions
[Mr. Bennett.!
pronounced by Lord Haldane, who became Lord Chancellor in the early years of the twentieth century and who, until the time of his death, was largely responsible for the construction placed upon our constitutional act. Speaking of the general powers conferred upon the provinces, he said:
The provinces were to have fresh and much restricted constitutions, their governments being entirely remodelled. This plan was carried out by the imperial statute of 1867. By the 91st section a general power was given to the new parliament of Canada to make laws for the peace, order and good government of Canada without restriction to specific subjects, and excepting only the subjects specifically and exclusively assigned to the provincial legislatures by section 92. There followed an enumeration of subjects which were to be dealt with by the dominion parliament, but this enumeration was not to restrict the generality of the power conferred on it. The act, therefore, departs widely from the true federal model adopted in the constitution of the United States, the tenth amendment to which declares that the powers not delegated to the United States by the constitution, nor prohibited by it to the states, are reserved to the states respectively or to their people. Of the Canadian constitution the true view appears, therefore to be that, although it was founded on the Quebec resolutions and so must be accepted as a treaty of union among the then provinces, yet when once enacted by the imperial parliament it constituted a fresh departure, and established new dominion and provincial governments with defined powers and duties both derived from the act of the imperial parliament which was their legal source.
That, Mr. Speaker, I conceive to be an important statement, having regard to what I shall presently indicate. I have quoted these statements as a foundation for indicating that the powers of the provinces and of the dominion were defined by our constitutional act. In view of the fact that when they dealt with financial problems they did so in the manner indicated by sections 91 and 92 of the act, I think it might be well to read subsection 3 of section 91. It will be recalled that section 91 defines the powers of the federal parliament, and the powers with respect to taxation are indicated under the third heading, which states that the parliament of 'Canada shall have exclusive jurisdiction over "the raising of money by any mode or system of taxation." That makes it clear that this parliament may and, in fact, has exercised the power of raising revenue both by direct and indirect taxation. With respect to direct taxation the reference given this afternoon, namely the income tax of 1917, affords a clear illustration. With respect to indirect taxation it is only necessary to refer to customs and excise.

B.NA. Act-Mr. Bennett
But with respect to the power of the provinces to raise revenues we must turn to section 92 which provides that each provincial legislature:
... may exclusively make laws in relation to matters coming within the classes of subjects next hereinafter enumerated, that is to say,-
2. Direct taxation within the province in order to the raising of a revenue for provincial purposes.
It will thus be apparent that when this act was enacted by the parliament at Westminster there was a clear-cut division as to the methods to be pursued by the new dominion on the one hand and the provinces on the other for the purpose of raising their revenues. While the widest power was conferred upon this parliament to raise revenues by any scheme or plan, direct or indirect, the limitation imposed upon the right of provincial legislatures to raise money by direct taxation within the provinces only was one that was thought to be in the interests of the general scheme of confederation as a whole. In that regard it is important to bear in mind an observation made in a case to which reference was made this afternoon by my hon. friend from St. Lawrence-St. George (Mr. Cahan). I need not refer to the fact that in the very earliest days the problem of dividing direct from indirect taxation became important. We had a case from Quebec with respect to stamps to be placed upon policies of insurance, a case from1 Quebec with respect to stamps to be placed upon exhibits in the courts, cases with respect to taxing the banks upon their paid-up capital, and cases with respect to succession duties and matters of that kind, and it became necessary from time to time for the court of last resort to define what was meant by direct taxation. But in the earliest cases it was pointed out that it was no longer possible to define direct and indirect taxation with that finality of definition which may be attributable to works on political economy, but rather that 'these terms must be construed in the light of ordinary understanding. So, when a case, known as the Fairbanks case, came up from Halifax, in connection with the imposition of a business tax, it became necessary to restate the position, and that was done by the Lord Chancellor of the day, Lord Cave, in the following words, dealing with the question of the distinction between direct and indirect taxation:
The framers of that act-
The British North America Act.
-evidently regarded taxes as divisible into two separate and distinct categories, namely, those that are direct and those which cannot be so described, and it is to taxation of the
former character only that the powers of a provincial government are made to extend. From this it is to be inferred that the distinction between direct and indirect taxes was well known before the passing of the act; and it is undoubtedly the fact that before that date the classification was familiar to statesmen as well as to economists, and that certain taxes were then universally recognized as falling within one or the other category. Thus, taxes on property or income were everywhere treated as direct taxes.... On the other hand, duties of customs and excise were regarded by everyone as typical instances of indirect taxation. When therefore the Act of Union allocated the power of direct taxation for provincial purposes to the province, it must surely have intended that the taxation, for those purposes, of property and income should belong exclusively to the provincial legislatures, and that without regard to any theory as to the ultimate incidence of such taxation. To hold otherwise would be to suppose that the framers of the act intended to impose on the provincial legislature the task of speculating as to the probable ultimate incidence of each particular tax which it might desire to impose, at the risk of having such tax held invalid if the conclusion reached should afterwards be held to be wrong.
What then is the effect to be given to Mill's formula above quoted?
References were made to the definition of John Stuart Mill, and when that definition was accepted by the privy council, references at that time and later were made to the opinions of Mill, Ricardo, Adam Smith and others. But counsel representing the appellants in the case came to the conclusion that Mill's definition of direct and indirect taxation was better suited for his argumentative purposes, and the court at least adopted that view in the judgment which was delivered, and these are the words repeated again in 1933 by the court in respect to the Fairbanks case from Halifax. In dealing with that definition, or, as he called it, formula, His Lordship said:
No doubt it is valuable as providing a logical basis for the distinction already established between direct and indirect taxes, and perhaps also as a guide for determining as to any new or unfamiliar tax which may be imposed in which of the two categories it is to be placed; but it cannot have the effect of disturbing the established classification of the old and well-known species of taxation, and making it necessary to apply a new test to every particular member to those species. The imposition of taxes on property and income, of death duties and of municipal and local rates is, according to the common understanding of the term, direct taxation, just as the exaction of the customs or excise duty on commodities or of a percentage duty on services would ordinarily be regarded as indirect taxation; and although new forms of taxation may from time to time be added to one category or the other in accordance with Mill's formula, it
B.N.A. Act-Mr. Bennett

would be wrong to use that formula as a ground for transferring a tax universally recognized as belonging to one class to a different class of taxation.
That is the judgment of the judicial committee in 1933.


Mr. MACKENZIE (Vancouver):: What is the reference?


Richard Bedford Bennett: 1928 Appeal Cases, pages 117, 124, 126, quoted with approval in the judgment of Lord Thankerbon in Attorney General for British Columbia and Kingcome Navigation Company Limited, reported in Appeal Cases, 1934, to which reference was made this afternoon. That exhausts all I desire to say with respect to the foundation of my observations.
Now I ask this question, Mr. Speaker: Having regard to the complex character of the financial relations between the dominion and the provinces; having regard to the acute distinction that was made by the framers of the constitution as to the powers to be exercised by the legislatures on the one hand and by parliament on the other, and having regard to the fact that only direct taxation was to be imposed by the provincial legislatures while any form of taxation was within the competence of this parliament, is it right or meet that this amendment should be made in the form in which we are now proceeding?
In the United States, if they were endeavouring to make this amendment to their constitution-and of course the powers of the states and of the federal authority are entirely different from what they are in Canada-the matter would first of all have to be dealt with by congress and then by each of the states until the adequate majority provided by the constitution was available. If in Australia they desired to deal with the matters that are being dealt with in this resolution they would have to proceed to amend their constitution in accordance with the provisions of their constitutional act, and seek the opinion of the people themselves with respect to both the amendment of the federal power and the amendment of the powers exercised by the states. That was done, as a matter of fact, in consequence of a condition which arose in Australia when in conference between the heads of states and the federal power it became clear that it was desirable to bring about very muich the same condition as is being brought about by the resolution now before this house. But I shall point out presently, and I think show conclusively, that there is no necessity at all for this amendment with respect to the exercise of some of the powers which we are endeavouring to

exercise. If we were seeking to make this amendment in South Africa, we would again, if the constitution were to be altered, have recourse to the various safeguards provided for that purpose.
An ordinary amendment to our constitution is not a matter of tremendous importance. An act to validate certain acts that were done when a province was created, as was Manitoba, an act such as that for which we sought authority in this house before 1930-all these are simple matters, but when you come to change the essential foundation of our whole financial system I submit that it should not be lightly done. It should not be done without there being at least some evidence of which one can say: Here is the evidence of the provinces having acted, or here is the evidence of the province requiring it, in the form of a resolution passed by the legislature of the province seeking the exercise of the powers sought in this resolution.
I will admit that that is not a tremendously important objection, but it is important when we come to deal with the fundamentals of the amending of a constitution in a matter of such transcendent importance as the financial power entrusted by the constitution to the legislatures, on the one hand, and to parliament, on the other. In this instance, if I seek to-day to ascertain whether or not the provinces have agreed, I can look in Hansard and all I can find is that some premier sent a telegram or some evidence of a meeting between gentlemen representing the federal government and gentlemen representing one of the provincial governments. Surely that is not the method which should be provided when one comes to deal with a matter so important as the altering by amendment of the whole financial system under which this federation came into being. That is my first submission with respect to this matter; that is the reason why I took the trouble to read 'these extracts in order that it might be apparent to even the lay members of the house that this distribution of power was not lightly made; that it represented the views as to how best the financial structure of the provinces could be maintained and within what limits they should exercise their taxing power, while on the other hand according to the federal parliament the power to tax by every means within the authority of a taxing power, namely, by either direct or indirect taxation.
Proceeding in the light of these observations, I desire now to direct attention to the first proposed amendment. This is an amendment to our constitution which will confer

B.N.A. Act-Mr. Bennett
upon the provincial legislatures a power not heretofore enjoyed. I shall not go over the argument so ably made this afternoon by my colleague, the hon. member for St. Lawrence-St. George. I shall content myself in a single sentence to point out tha't in the exercise of this power there is an effort to exercise jurisdiction which, under the constitution, belongs to the federal power. For many years the privy council has declared certain legislation beyond the competence of the legislatures or, as we lawyers say, ultra vires, and the law fell by the wayside. An instance in which Alberta sought to impose a tax in connection with coal mining was held to be bad, just as was the first fuel oil tax which British Columbia sought to impose. Other taxes in other provinces were held to be bad, because there was an effort on the part of the provincial legislatures to tax by indirect means when they had no authority or power so to do. Finally the second fuel oil tax of British Columbia came before the judicial committee for consideration in 1933. At that time it was pointed out that it was quite clear from the terms of the statute that it proposed to make the consumer of the fuel oil liable for the tax and it thereby became a direct tax, as distinguished from an indirect tax.
All taxes are paid by somebody and whether it be the last person or the first is not at the moment a matter of importance. For many years this distinction between direct and indirect taxation was the subject of much litigation, and this continued until the judicial committee decided in the fuel oil case that this power could be validly exercised in the manner and form provided by that statute. For that reason I point out 'that there is no necessity for this statute inasmuch as the principle established by that case gives the province every power it should have. In view of our exercising the powers we do, to confer upon the provinces the wider power of indirect taxation cannot but have reference to some form of taxation that one finds it difficult to conceive of in view of the judgment of the committee in that case.
A sales tax in Alberta is valid to-day, just as is the sales tax in New Jersey or New York city. If you buy a dollar's worth of goods, you have to provide two coppers or two cents as the tax imposed upon the consumer. Under the provisions of the sales tax in Alberta, a purchaser pays two cents, and so on as his purchases increase. That is a tax paid by the consumer. What indirect power to be vested in the legislature can one conceive of that could be validly exercised except for the purpose of, as I shall presently
point out, crippling the power exercised by the dominion?
Let us go a step further. I trust the house followed me when I pointed out that section 92 of the British North America Act, to which this is to be an amendment, provides the matters in relation to which the provincial legislatures may exclusively make laws. When this new section becomes effective we shall have taken from this parliament the power of indirect taxation to the extent that we have conferred it upon the provinces.


Ernest Lapointe: Oh, no.


Richard Bedford Bennett: Just let us make it clear.


Ernest Lapointe: Section 92 does not take away the powers of section 91.


Richard Bedford Bennett: We have now taken the power away. We have conferred upon the provinces a right of indirect taxation which we ourselves were exercising and of which we have divested ourselves for the purpose of enabling them to exercise it.


Ernest Lapointe: I think that is going too far.


Richard Bedford Bennett: These are the words:
In each province the legislature may exclusively make laws in relation to matters coming vvithm the classes of subjects next hereinafter enumerated; that is to say,-
Retail sales ...
If that exclusive power is conferred, that power cannot be exercised by the dominion. That power rests either with the dominion or with the provinces. If it can be exclusively exercised by the provinces-I will read it in a moment if it is so desired-it cannot be exercised by the dominion. There was before the privy council a very important case in which judgment was given by Lord Watson. This was to ascertain whether the subject matter of legislation was within the competence of the province. If it is within the competence of the province, it is exclusive and the federal power cannot be exercised. We had the power to impose both direct and indirect taxation, but after we have changed section 92 with respect to retail sales, the provinces will have exclusive jurisdiction, the federal power having divested itself of that authority. I do not think my friend the Minister of Justice followed me. I was not saying that it was broad enough to cover everything. I stated that it covered only retail sales. Under this resolution the power to tax retail sales becomes exclusively the power of the provincial legislatures.
B.N.A. Act-Mr. Bennett


Mr. ILSLEY:: What about two income taxes, one for the province of Ontario and one for the Dominion of Canada?


Richard Bedford Bennett: That is perfectly simple.


James Lorimer Ilsley: Both are valid.


Richard Bedford Bennett: Both are direct taxes. If we passed a law to exclude the exercise of that power with respect to incomes, if we changed the statute as it is being changed here, then we would no longer have authority. Will the hon. gentleman take the trouble to look at the resolution, which reads:
Section ninety-two of the British North America Act, 1867, is amended by adding thereto as clause 2A the following:-
2A. Indirect taxation within the province in respect of:
(i) retail sales,-


James Lorimer Ilsley: If my right hon. friend will permit me, he is leaving out the concluding words, "in order to the raising of a revenue for provincial purposes." That does not exclude the dominion from imposing indirect taxes on retail sales in order to the raising of a revenue for dominion purposes.


Richard Bedford Bennett: That was the very point made by the hon. member for St. Lawrence-St. George. There is no doubt about it that the federal power could do it by any form of taxation whereas the provincial power could do it only by direct taxation. Under this amendment we say that the exclusive power to impose taxation with respect to retail sales for the purpose of raising revenue within the province rests with the provincial legislature.


James Lorimer Ilsley: If my right hon. friend will permit me, he has left out a very important consideration in the words at the end of section 91.


Richard Bedford Bennett: Not in the slightest. The power to tax under section 91 is for the dominion for any purpose; but if the dominion sees fit, by its own act and at its own request, to grant to the province the exclusive power of indirect taxation for retail sales, then you change the constitution so as to deprive yourself of the right which you formerly enjoyed in that regard.


James Lorimer Ilsley: Not in view of the words at the end of section 91.


Richard Bedford Bennett: I am familiar with the words at the end of section 91. We part with them and leave the statute with that much taken from it which was previously there. Section 91 has not been changed, but we by our own act have taken out of section 91 indirect taxation with respect to retail sales within the province.

To continue the argument

and I say this only in passing-what indirect taxation on retail sales is there that is not covered by direct taxation, as finally settled by the privy council? There can be only such as were mentioned this afternoon, taxes that will, if imposed by the province in the manner and form indicated, constitute with the dominion tax a complete turnover tax. But what will be the effect, having regard to the powers thus conferred upon the provinces?-because they are sovereign within their legislative jurisdiction; they can make such distinctions as they like. Let us assume, however, for the sake of argument, that they desire to place one form of taxation on sales of their own goods within their province, and then they see fit to place another form of taxation on goods that come from other parts of the world. We have not the power to limit them.


Charles Avery Dunning: Have we now, if they place the tax on the consumption of goods?


Richard Bedford Bennett: Not on the consumption of goods; but it must be a tax paid by the consumer on the goods directly, at the time he purchases them. That is the position at the moment. I mention that only in passing, because it is important having regard to what I consider-I trust the Minister of Justice will not think this offensive-the loose way in which this resolution is drawn. There would be no difficulty if it were drawn as suggested by my colleague this afternoon; that would make it clear. But as it stands now there is a difficulty.
I go on to the next point. You have the right to taxation on retail sales, with the exceptions mentioned; then you can impose indirect taxation on the patronage of hotels, restaurants and places of amusement or entertainment. Now what indirect taxation can one conceive of on a place of amusement, when at the present time in practically every province of Canada there is imposed upon places of amusement a direct tax which is paid by every patron as he enters a theatre? What indirect taxation has any provincial premier or treasurer suggested in that respect which could be exercised, unless it be an additional tax against the earnings of the amusement hall? As the hon. member for Parkdale (Mr. Spence) pointed out, that tax would ibe taken regardless of profits; it would be taken whether or not there was any profit at all in the transaction. That indirect tax might conceivably be collected, in view of the statutes that have been passed, at least in Manitoba and one other province, imposing a tax upon the *wages received by various persons; and coupled with the tax

B.N.A. Act-Mr. Bennett
that might be levied on amusement halls- let us say, for the sake of argument, that the tax is ten cents on each ticket, then an indirect tax imposed1 upon the receipts for the day of two, or five or six or eight or ten per eenta-is that desirable? I submit to the house that every possible power which a province could1 reasonably desire to exercise with respect to theatres, places of amusement, restaurants or the patronage of hotels, can be exercised now. For instance, when a guest in an hotel gets his bill he can be asked to pay five per cent or ten per cent in addition; in the restaurant he pays five or ten per cent in addition; or it might be a place of amusement or entertainment, as I have mentioned. But the indirect power which it is suggested should be granted to the province would enable them to impose only taxes of the kind I have indicated; and I submit, having regard to the decisions made within the last two years, it is abundantly clear that such a power should not be thus exercised.
Now, as to the first point, with respect to the clause as to exclusive power, I merely mention that in passing as being open to argument. I do not think-I agree with the Minister of Justice-that the point is the strongest one in the world, but it has to do with the mechanics of the statute, and I think any difficulty on that score might be removed by a clearer statement of the position, by repealing head 2 of section 92 and substituting for it a new head which would include direct taxation and those forms of indirect taxation that are mentioned in the resolution, with the appropriate exceptions, namely, "alcoholic beverages, spirits, malt, tobacco, cigarettes and cigars, which are subject to customs and excise duty or tax in Canada or other than of all goods and articles for delivery without the province." Having regard to the fact that the privy council has decided that the province is limited in its power of taxing within the province, what suggested to me the argument with respect to the exclusive power was the fact that the draftsman had added "without the province"; that is, he had added articles for delivery without the province. It is difficult to conceive of delivery as being the test as to whether the tax should be imposed. In France, when the luxury tax was imposed, I made a small purchase in a store and was asked whether I was going to London. I said I was and was told, "Our office will deliver the goods to you in London and you will have to pay any taxation there is." I suppose it is the same principle here; that 12739-181
is to say, if goods go outside the limits of one province, there is no retail sale for purposes of the tax within that province. I assume that is the purpose which is in the mind of the draftsman.
Now, all this is in order to the raising of a revenue for provincial purposes. I really find it difficult to conceive of any case except one in which taxation is to be imposed as has been suggested in one of the provinces, and the effect of this legislation will enable that tax to be imposed. It means direct confiscation. The exercise of that power practically means that. The privy council has not directly in terms decided that a province may not confiscate; in fact, in the Florence M. mining case it decided that the province could confiscate. I will not anticipate the judgment in the case before the courts, but be that as it may, as regards some of the suggestions as to how, in Alberta, a social credit dividend is to be paid, this at least will afford the opportunity. About that there can be no doubt, and I suggest that one should pause and consider whether or not to grant such power of indirect taxation, when the powers with respect to direct taxation, in the light of the decisions to which I have referred, are sufficiently broad and comprehensive for every purpose that can now reasonably be conceived. That is all I have to say in that respect.
The second branch to which I desire to direct attention is that which makes this section retroactive. I will not traverse the argument so ably made this afternoon, but I should like to add just these words. In view of the decision to which I have referred, why should wre say that a power admittedly invalid, exercised by a legislature authorizing the doing of an admittedly invalid act, admittedly taking from a man by force that which you had no right to, shall receive the sanction of this parliament to the extent of asking the parliament of Westminster to make it valid? I think that is extremely serious. I have never been able to understand the suggestion. All the cases to which reference was made this afternoon are entirely different from this. They had to do with problems of constitutional doubt, arising out of questions of boundaries, extension of title, such as the Hudson Bay title and the Rupert's Land title; they had to do with the question of whether, on the true construction of the statute, there was any power in this parliament to have an oath taken at an investigation. They were all problems such as those. But, mark you, this resolution does not say, "to remove any doubt." When I first looked at itr-

B N-A. Act-Mr. Bennett


Charles Hazlitt Cahan: It dearly states that there
is no doubt, by stating that it is now illegal.


Richard Bedford Bennett: I am just coming to
that. It makes it clear that there is no doubt as to illegality. Is that right?
The said clause shall be deemed to have retroactive effect with respect to provincial legislation in force at the passing of this act.
Having regard to the fact that all direct taxation, within the broad definition of direct taxation given by Lord Cave, is invalid, are we doing just the right thing in asking the imperial parliament at Westminster-they having undertaken to pass statutes when we ask them by petition to do so-to pass an amendment which says that the illegal taking of money from various persons shall thereby become legal, or to pass an amendment with respect to litigation that may now be pending? I submit that nothing can be better calculated to cast a slur upon our credit than that very thing, because it indicates a willingness on our part to connive at the doing of something which we now admit is illegal. Is that right? I do not put it upon legal grounds alone. The first occasion upon which I ever appeared in the privy council was on a case just such as that. Alberta passed a statute by which it was provided that S6,000,000 lying in the bank to the credit of the Alberta and Great Waterways Railway should become part of the general 'flevenu.es of that province-just like that; the provincial treasurer issued a cheque for the amount and sent the cheque to the bank, and upon my advice the bank refused to cash the cheque. Ultimately the privy council held that the statute was invalid, because it purported to take money that had been raised for one purpose and use it for another. The .act cast an aspersion upon our legislature. I submit that it is very unwise at this particular moment for the Dominion of Canada solemnly, through the Senate and the House of Commons, to ask the parliament of Westminster to say that the will of the Canadian people is that that which was invalid shall become valid, although it constitutes taking by illegal and improper means from the citizens of the country that to which the governments of the provinces had no right.
That is the position which I put to the house. I think I understand as fully as anyone may the necessities of the provinces in the matter of increasing their revenues. But I also feel, and very strongly, that to suggest there is any analog}' between the retroactive provisions of the statutes which we have had before, and this statute, is to have a complete misapprehension as to the conditions and terms that are involved in the expression of the judg-
[Mr. Bennett.l
ments of the courts, on the one hand, and of the legislatures and parliament, on the other. I would urge upon the government as strongly as I can the desirability of considering this matter, not from any party motive or standpoint, but purely from t^e point of view of what the effect will be upon our country when it is found that we here are solemnly asking the parliament which passed the British North America Act to add to it a provision that will be retroactive, regardless of litigation, and will provide that whatever has been illegally done is now legally done, and that money extracted by illegal means, shall now be regarded as having been lawfully taken.
There is another point I desire to take with respect to this matter, as showing in my judgment why it is unnecessary that this resolution should be passed. It will be recalled that the provinces have power to create municipal institutions. Once that power is granted to a province, it can, of course, be passed on to the municipalities. The effect of that I hesitate to contemplate, knowing what I do know in connection with the grant of powers by legislatures to municipalities and what the effects have been in various parts of the dominion. I should like the house to contemplate the exercise of this power by the legislature of a province conferring jurisdiction on the municipal bodies to impose indirect taxation on retail sales within that province. It may be said that that is limited by the last words, "in order to the raising of a revenue for provincial purposes." But those words have not been held in times past to be ample to prevent a delegation of powers by a province to municipalities, and in the judgments of our courts it will be recalled that provinces have delegated to municipalities the power to licence, as long as it does not amount to a prohibition. These powers, delegated by the legislative body creating the municipality, give rise in my judgment to an almost intolerable situation. I conclude this by saying that you may have three taxes of the same kind with respect to the same matter. Bear in mind that we have in this dominion a sales tax; at one time we had a business profits tax, and we have other forms of direct taxation to which reference has been made; but now the provinces are going to exercise their powers of indirect taxation. I cannot put the situation more strongly than I did a moment ago, having regard to the declared purpose of at least one government in Canada and the methods to be used for the purpose of raising revenue. You do not have to make a capital levy, although that is what it amounts to. All you do is, by this indirect method, to make a levy which may amount to

B.N.A. Act-Mr. Bennett
confiscation; it still is legal, for the courts have no power to consider whether the tax 13 or is not a good tax; they say, "the legislature determines that; we determine only whether it is within the competence of the legislature to impose the tax," and under this section that would be so. I am not going to elaborate this point. I shall leave it at that.
We now come to the second branch of this resolution which, in my judgment, is wholly unnecessary. A moment ago I read the interpretation placed upon the powers possessed by the provinces, and if there were any doubts as to the right of the province to contract in the fullest and most ample sense of that term they were removed by the judgment of the privy council in the case of the city of Montreal and the Montreal Harbour Commissioners, in which they said that even by waiver the province might lose its rights. The judgment of the court, delivered by Lord Haldane, held:
But this by no means disposes of the case. It was undoubtedly within the power of the province of Quebec, with a view to the improvement of the harbour of Montreal, to waive her strict legal rights and expressly or by inference to sanction the works undertaken for that purpose, and it must be considered whether such a sanction is to be inferred in the present
case. In their lordships' opinion it is_________
Having regard to all these facts, their lordships are satisfied that the provincial authorities have waived any claim to interfere with the existing works, and that, so far as they are concerned, they are bound by what has been done.
Having regard to that I think the Minister of Justice will agree with me that the dominion has complete power to guarantee the securities of a province and that the province has complete power to make a contract with the dominion in respect to them. There is the decision as to the completeness of the power of a province. Does anyone suggest that this parliament needs further legislation from London to enable us to guarantee the securities of any province of this confederation? We have the same power that enabled us to guarantee the securities of the Canadian Northern, the Grand Trunk, the Grand Trunk Pacific, the Montreal harbour bridge, by which power for years we have been going on giving guarantees, even with respect to the Canadian National. Does anyone say that we require further legislation to enable us to guarantee the bonds of the province of Alberta? We have guaranteed bonds of the harbour commissions. No one questioned the legality of that act; the wisdom of it only was questioned. We have guaranteed the securities of all these railways and of other 12739-1814
enterprises. Does anyone question the legality or validity of such guarantees? Then why do we require any legislation to enable us to guarantee the bonds of a province? Just look at the words of this second proposed amendment :
The parliament of Canada may authorize the government of Canada to guarantee the payment of the principal, interest and sinking fund of any securities (hereinafter called guaranteed securities") which any province of Canada may from time to time make or issue, and, subject to the provisions of this act may prescribe the terms and conditions upon which any guarantee so authorized shall be given, and the provisions of this act shall, in the event of any such guarantee being given, apply and have full force and effect notwithstanding anything contained in the British North America Act-
Now, sir, I ask why we should cast doubt upon the guarantees heretofore given. Why should we say that this parliament has not the power to do as it pleases with respect to guarantees?


Charles Hazlitt Cahan: No one ever questioned it before.


Richard Bedford Bennett: It has never been questioned before; why should it now be questioned? Why should anyone say that we require a further grant of power from Westminster to enable us to guarantee the interest, the principal or the sinking fund of any provincial issue? I confess that I was amazed when I read that, and I put it to the minister: Does anyone suggest that this parliament has not that power now? That is the reason, sir, why I took the trouble to read, as the foundation for what I am saying to-night, the references as to the powers of this parliament. Westminster can confer upon us no powers we do not now possess. As was said by the lord chancellor of that day, there are no powers having to do with self-government that can be conferred upon the parliament of Canada that it does not now possess. Then why go and ask Westminster to grant us powers which, as a matter of fact, we already possess? Why should we ask, by a petition, for something in regard to which the learned lawyers either in the Commons or the Lords will say, "Why are we doing this? They already have the power." The answer will be, "Because they have asked for it." Is that sound? I submit that it is not.
Now let us go a step further, and I am pointing out these matters only briefly. The very provisions of that section weaken the position of Canada in the money markets of the world, because it calls in question the exercise of this power during all the years we have been exercising it. Every thoughtful
B.N.A. Act-Mr. Bennett

man must see that if we are going to deal with this matter at all we are going to raise a question as to the validity of our previous acts, what we have done in the way of guarantees and similar matters in the past. We have asked for a specific grant of power to deal with provinces when we have exercised this power without question with respect to every other body. What will be the result? Someone is going to ask: Why has the parliament of Canada thus blown upon its own credit? Why have we thus raised a question which has never been raised before, which everyone has accepted, and which even a layman who has followed what I said in the early part of my address this evening, as to the foundation upon which this constitution of ours was granted, will realize was wholly within our competence and power? If it is to be done at all then, for the reasons given by the minister this afternoon, at least it should be made retroactive to cover every power heretofore granted. Who has thrown doubt upon it? Have the law officers suggested that there was any doubt about it? I confess that I have never heard any question about it in times past. I know that if we go through the statute books we shall find that these guarantees have been given with respect to a very large number of transactions, notably in connection with transportation, sometimes with respect to interest only and sometimes with respect to principal and interest,


Charles Avery Dunning: Not with respect to provincial bonds.


Richard Bedford Bennett: Not with respect to provincial bonds, but they do not stand in any different position. We assumed obligations by statute, for instance, when we took over the harbour of Saint John, for the payment of the bonds of that harbour. We have taken over provincial guarantees in connection with railways, without any statutory power.


Charles Avery Dunning: We are merely paying them; the provincial guarantees still exist.


Richard Bedford Bennett: But without any statutory provision with regard to them, thus releasing the provinces of their debts. That was so in regard to British Columbia, which unfortunately had not a guarantee in the same terms as some of the others. We are paying that; we are paying the guarantees of Alberta and Saskatchewan. Then, in connection with Manitoba, though I have not thought of looking the matter up, in regard to the railway transactions of that province, the old Northern Pacific and matters of that kind, somewhere Manitoba is involved in guarantees, and legislation was passed here

the exact terms of which I do not carry in my mind at the moment, because it was very much involved. But this I do say: Let us get down to fundamentals. Why should there be any provision such as this when the law clearly provides that which it is sought to obtain?
Mr. FINN. I do not want to interrupt the right hon. gentleman


Richard Bedford Bennett: I assure the hon. gentleman that he does not.


Robert Emmett Finn: I only want to. know where
the right hon. gentleman gets his authority for that statement.


Walter Edward Foster: Eleven o'clock.
Ota motion of Mr. Bennett the debate was adjourned.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Friday, May 15, 1936