1944-06-26

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved for leave to introduce bill No. 147, to amend the Bank Act.
He said: The title of the bill as stated in the routine proceedings is the Bank Charters Continuation Act, 1944, but the real title is "An act to amend the Bank Act" The effect of the bill will be to extend the charters of the banks to September 1, 1944-that is, to provide for a two months' extension.
Motion agreed to and bill read the first time.


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved for leave to introduce bill No. 148, to amend the Quebec Savings Banks Act.
He said: The purpose of this bill is to extend the charters of the Quebec savings banks for two months.
Motion agreed to and bill read the first time.


[Stage Direction]
Bill No. 140 for the relief of James Russell Popham.-Mr. McIIraith.
Bill No. 141, for the relief of Norma Segal Katz.-Mr. Maelnnis.
Bill No. 142, for the relief of Harold Almond Jelley.-Mr. Douglas.
Bill No. 143, for the relief of Josephine Kurys Kulczycki.-Mr. Whitman.
Bill No. 144, for the relief of Shirley Harte Harvey Payne.-Mr. Hill.
Bill No. 145, for the relief of Pearl Anneta Benn Russell.-Mr. Whitman.
Bill No. 146, for the relief of Joseph Adelard Paul Begin.-Mr. Maelnnis.

Questions

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

Mr. BLACKMORE:: 1.	Are there any permanent civil servants who have been paid, in addition to their regular salaries, for performing, together with their official work, additional duties assigned to them, (a) by reason of the organization of new war services; (b) as a result of the absence of other civil servants who have joined the army, navy and air force?
2.	If so, what are their names and what additional remuneration was paid to each of these permanent civil servants?
3.	Are there any such permanent civil servants who have not received additional payments, and who are they?


Mr. MACKENZIE (Vancouver Centre):: I understand the hon. member for Lethbridge is willing to withdraw the last part of this question, and I should like to ask that the other two parts stand.


Mr. BLACKMORE:: That is correct.
Part 3 withdrawn; parts 1 and 2 stand1.


RADIO BROADCASTING-SACKVILLE, N.B., SHORT-WAVE STATION
Mr. HATFIELD:: 1.	Has the government a short-wave radio station at Sackville, New Brunswick?
2.	If so, when did they acquire it?
3.	What was the name of the lawyer or firm of lawyers engaged?
4.	How much did they receive in legal fees, agent's fees, transfer fees and registration fees?
Mr. LaFLECHE:
1.	Under construction.
2.	See answer to No. 1.
3.	Friel & Friel, Higgins building, Moncton, New Brunswick.
4.	Legal fees, $2,250. Disbursements, $270.46.


DOCTOR G. R. DEVEAU
[Stage Direction]
Mr. C.ILLIS:
1.	Is Dr. G. A. Deveau, of Arichat, Richmond county, Nova Scotia, an employee of the federal government?
2.	If so, what position does lie occupy?
3.	What was paid him by way of, (a) salary; (b) expenses by the federal government for the years 1935, 1936, 1937, 1938, 1939, 1940, 1941, 1942, 1943, 1944, giving the amounts of salary and expenses for each year separately?
Ian Alistair Mackenzie: 1 and 2. As the Department of Pensions and National Health has no record of Dr. G. A. Deveau, it is assumed that the questions refer to Dr. G. R. Deveau who is departmental medical representative and port physician at Arichat, N.S., and paid in accordance with schedule of fees.
3. (a) No salary, but fees paid as follows:
Year
1935	
$	12 251936	
39	001937	
602	601938	
2,288	751939	
2,003	151940	
1,696	251941	
1,881	801942	
1,857	301943	
1,559	801944	(to May 16)	
494	55
(b) Nil.


* SECRET ORGANIZATION TO CREATE SEPARATE STATE IN QUEBEC AND PARTS OF ONTARIO
Mr. ROSE:: 1.	Is the Minister of Justice aware of the existence of a secret organization in Canada, plotting to create a separate corporatist state within the province of Quebec and parts of Ontario?
2.	If so, what steps have been or are being taken to investigate such organization?
3.	What is the name of such organization?
Mr. ST. LAURENT: Perhaps I might be allowed to deal with this question orally. As the first question is framed, the answer must necessarily be in the negative. As Minister of Justice I am certainly not aware of the existence of a secret organization in Canada plotting to create a separate corporatist state within the province of Quebec and parts of Ontario. As the other two questions are predicated upon there being an affirmative answer to the first, no answer would be possible.
Assuming that the hon. member is referring to some recent assertions or rumours, I may say that the Royal Canadian Mounted Police have always investigated with the utmost diligence all assertions or rumours as to the existence of any subversive organization anywhere in Canada, and they are continuing to do so. No evidence has been found of the existence of any organization plotting to create a separate corporatist state in Quebec or any other part of Canada.


Mr. HANSON (York-Sunbury):: That is, by the Royal Canadian Mounted Police.
Mr. ST. LAURENT: Yes.


Richard Burpee Hanson: Mr. Speaker, with your permission, because of the statement made in the other place by an hon. member of that body holding a very high nnsition in the public life of Canada, and the
100-261 i
Questions as Orders jor Returns

assertions which he there and then made, may I ask whether the minister is not of the opinion that a royal commission should be set up to investigate the whole problem and report to the people of Canada?
Mr. ST. LAURENT: The Minister of Justice is not of that opinion.


Richard Burpee Hanson: That is the answer.
Total
CANADA	 3,409,911
Prince Edward Island	 30,484
Nova Scotia	 179,559
New Brunswick	 155,319
Quebec	 1,133,137
*Ontario	 988,933
"Manitoba	 204,684
Saskatchewan	   286,821
Alberta	 243,547
British Columbia	 187,427


MANUFACTURE OF ALCOHOL AND SUGAR FROM SAWDUST
Mr. FRASER (Peterborough West):: 1.	Are there any plants in Canada engaged in making alcohol and sugar from sawdust?
2.	If so, where are they located?
3.	Are they in full production?
4.	If not, when will they be in full production? .
5.	Are the plants owned by the government or under government control?


Mr. MICHAUD:: 1.	No.
2,	3, 4 and 5. Answered by No. 1.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. FERLAND:: 1.	Has the construction controller granted any permits for the construction of grain elevators and grain storage plants?
2.	If so, (a) to what persons or companies; (!b) in what localities; (c) at what dates?


SOLDIER SETTLEMENT-REQUESTS FOR CLEAR TITLES WITHOUT FURTHER PAYMENTS
Mr. FAIR:: 1. From January 1, 1943, to May 31, 1944, how many requests from, (a) organizations; (b) individuals, have been received by the Prime Minister, the Minister of Mines and Resources, the director of soldier settlement and Veterans' Land Act, or any other department of the government, asking that veterans IMr. R. B. Hanson.]



POPULATION-CHILDREN

Mr. BRUCE:: How many children are there in each province of Canada, (a) under six years of age; (b) .between six and less than ten years old; (c) between ten and less than thirteen years old; (d) between thirteen and less than sixteen years old?


Mr. MacKINNON (Edmonton West):: 0-5	6-9	10-12	13-151,256,379	837,287	661,653	654,59211,456	7,727	5,736	5,56569,083	44,371	33,516	32,58959,775	38,195	28,834	28,515422,419	278,956	218,337	213,425357,083	242,356	194,975	194,51973,853	50,030	39,780	41,021102,195	70,991	56,772	56,86390,036	60,713	47,201	45,59770,479	43,948	36,502	36,498
of great war one who now hold land under contract with the soldier settlement -board be given clear titles without further payments?
2.	During the same period, how many letters or other communications were received by the director or other departments of the government stating that if clear titles, as above requested, were granted, requests for refunds by those who have already paid up or are continuing to make payments, would be made?
3.	What are the names and addresses of those from whom such letters and communications have been received?
GENERAL de GAULLE



INQUIRY AS TO VISIT TO CANADA

[Stage Direction]
On the orders of the day:
Mr. GORDON GRAYDON (Leader of the Opposition):: In view of the fact that General de Gaulle, head of the French Committee for National Liberation, is said to be expected in Washington between July 6 and July 14, can the Prime Minister inform the house whether or not any arrangements are under way for General de Gaulle to visit Canada while he is on this continent?


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I would say to my hon. friend that thus far the government has no definite word as to whether or not General de Gaulle will be visiting the United States., As soon as word comes to that effect, if it does, the government will be prepared immediately to consider what invitation should be extended to General de Gaulle to visit Canada.

Department of Reconstruction



CANADIAN ARMY


[Stage Direction]
On the orders of the day:
Mr. J. E. MATTHEWS (Brandon):: Mr. Speaker, I wish to direct a question to the Minister of National Defence. I might explain the question by saying that some four years ago there was a large training centre known as A-4 established at the city of Brandon. A short time ago that training centre was deemed by the department to be no longer necessary and it was absorbed by the larger camp at Shilo. I have heard no criticism at all of the closing of the camp, but I have heard from reliable, responsible and fair-minded men strong criticism on another point, and it is upon that that my question is based. I would ask the minister if there has been brought to his notice the fact that a large amount of surplus supplies at that depot, supplies that obviously would not be needed at Shilo, were taken out, piled up and destroyed by an axe and conveyed to the nuisance ground instead of being turned over to citizens who could have used it?-for much of it was good material. If the matter has been brought to the minister's notice, what steps are being taken in regard to it? If not will he be good enough to make inquiries into the circumstances?


Hon. J. L RALSTON (Minister of National Defence):: I knew about A-4 being closed but I have not heard of the circumstances to which my hon. friend refers. I shall certainly see that inquiries are made forthwith, and whatever action is necessary will be taken.



SOLDIER SETTLEMENT


[Stage Direction]
On the orders of the day:
Mr. ROBERT FAIR (Battle River):: Mr. Speaker, I wish to ask a question of the Minister of Mines and Resources based on an article appearing in the Legionary for May, 1944, and written by Mr. Gordon Murchison, director of soldier settlement and the Veterans' Land Act. The concluding paragraph of the article reads as follows under the heading "No Change":
In conclusion I am authorized to say that the proposal is not deemed to be in the public interest and, consequently, it is not being entertained by the government. Therefore, the best advice I can offer to the soldier settlers concerned is to get into step with those who manifestly prefer securing titles to their farms by complying A^ith the terms of their agreements.
This statement, I might say, was in response to a demand, which has been made by several organizations as well as by the soldier settlers themselves,' that clear title be granted to them without the making of further payments. My question is, was this statement which I have quoted made with the consent of the Minister of Mines and Resources?


Hon. T. A. CRERAR (Minister of Mines and Resources):: Mr. Speaker, the question
scarcely- comes within the range of questions that may be asked on the orders of the day, but with the consent of the house I have no objection to giving a reply.
The statement referred to was made with the approval of myself, and it represented government policy. Since it was made a delegation of ex-soldiers of the great war waited upon several members of the government and made the request that all their debts be forgiven and that they be given clear title to their land. This request is at present receiving consideration.


Gordon Graydon: Favourable consideration?


Robert Fair: I have two supplementary
questions to ask based on the minister's reply. Was the article published just prior to the dominion convention of the Canadian Legion at Vancouver for the express purpose of discrediting the Soldier Settlers' Association and blocking any action by the convention? My second question is, why was this statement not made in parliament by the minister instead of being sent to a magazine by a civil servant?


Mr. SPEAKER:: These are questions that
must be put upon the order paper.



RECONSTRUCTION


[Stage Direction]
The house resumed from Friday, June 23, consideration in committee of bill No. 82, to establish a Department of Reconstruction-Mr. Mackenzie King-Mr. Bradette in the chair.
On section 5-Duties of the minister.
Herbert Alexander Bruce: Mr. Chairman, section 5 of this bill to establish a Department of Reconstruction states that it shall be the duty of the minister, amongst other things, to formulate' plans for housing and community planning and! to provide for carrying out such plans. In my opinion there is no project for reconstruc-
Department of Reconstruction

on the site in construction of a housing project were cut in half, the annual cost of the housing produced would be reduced by only about ten per cent. If the cost of materials entering into the production of the housing were cut in half, the annual cost would be reduced by only about fifteen per cent. But a reduction in the financial charges, interest and amortization, by half would effect a greater reduction in annual cost than the cutting in half of the cost of both material and labour, and therefore I commend the latter method to the government.
The city of Toronto has had a planning board of experts under the chairmanship of Mr. A. G. Partridge, president of the Goodyear Tire and Rubber company, who have been working for some time on city planning, and they have recently issued a very illuminating second annual report. They are therefore in a position to take immediate advantage of a national post-war construction programme to be assisted by the federal government under terms which I hope will be as generous as those of the United States.
The Ontario government is in a position to cooperate with this plan in consequence of having recently set up a department of planning and development under a separate minister, Mr. Dana Porter. May I add that as housing is intimately connected with health, this department should more properly be placed under the Department of National Health. One third of our population would mean four million in the low income group, and to house these would require at least one million housing units. If these cost, say, $2,000 per unit, it would mean a loan of $2 billion. May I point out that this does not mean a gift of this amount of money, but only that it shall be made available as a loan at a low rate of interest to be recovered later on. There is no expenditure that will bring greater returns in health and happiness than housing.


[Stage Direction]
Section agreed to.
Sections 6 to 8 inclusive agreed to.
On section 9-Orders and regulations.
Richard Burpee Hanson: I think the Prime Minister ought to give the committee a better idea of what is proposed to have done under the enabling sections with regard to regulations. He was not in the house the other day when I protested against power of legislation being vested in a minister under a bill which was to come under the Minister of Pensions and National Health (Mr. Mackenzie). I was chastised by the minister becauselMr. Bruce.]


Ian Alistair Mackenzie: It was the aeronautics bill.


Richard Burpee Hanson: I think it was under yours too.


Ian Alistair Mackenzie: No. Mine was flawless.


Richard Burpee Hanson: I do not
think so. The practice has grown up under all governments in recent years of legislating under the guise of regulations not only for purely administrative affairs but in executive matters and in others that apply to judicial functions, really establishing in the minister the power to set up policy-a principle that is comparable to what a celebrated Lord Chancellor in England characterized over twenty years ago as the new despotism. I think parliament ought to be jealous about delegating to the government the power to make orders in council on the recommendation of a minister, because usually these are matters of routine, I imagine, so far as the council itself is concerned, providing that the ministers may do thus or so in regard to matters which were never contemplated by the enabling statute. I am trying to state a principle in general terms and I think the Prime Minister will agree with me. Take this section 9 (a). Provision is made to transfer to the minister any powers or duties of a government department or agency whether conferred by statute or otherwise and to provide that such powers or duties shall be exercised or performed concurrently or otherwise by the minister. On its face that is a very innocent looking paragraph. Parliament delegates to one department of government the power to carry on certain functions; but here the powers which were delegated to it, particularly by parliament, are being switched or are capable of being switched by order in council to this new minister. What is contemplated by that? It must be put in there for a purpose. Its purpose does not appear on the face of it. What is envisioned by the authority to make a regulation of that kind?
I have no objection at all to paragraph (c) because on its face it relates purely to administration of the act itself. A government which is promoting a bill cannot think of every little administrative authority that ought to be put into it, and those are the things that can be best handled by order in council. So far as I can recall I have never made any protest against the delegation of powers of that kind. But paragraph (b) provides 'that the minister may set up one or more boards or advisory councils to exercise such functions in connection with the administration of this

Department of Reconstruction
act as may be assigned to them by order or regulation. That is a new thought. We are delegating authority to a minister to do certain things, or to a department of government to do certain things, and in paragraph (b) we are giving authority to the minister, to whom parliament has already delegated powers or authority, to redelegate those powers or authority to some unknown board, governmental agency or department not envisioned by parliament by statute or otherwise. I should like to know what is contemplated by this. It seems to me it is carrying the power of delegation almost to the nth degree. The Prime Minister ought to justify the redelegation, if I may use that term, of such powers as are contemplated by paragraph (b) of section 9. The authority conferred by paragraphs (a) and (b) of section 9 are open to question at least. I am trying to be moderate in what I say about it. Until we have had some further explanation from the Prime Minister I do not think this ought to pass.


William Lyon Mackenzie King: First of all may I say I am sorry I was away when my hon. friend was chastised. Had I been here I would have done the best I could to save him any affliction.


Richard Burpee Hanson: It did not do any harm; it left no scar.


William Lyon Mackenzie King: Let me say at once that practically speaking I agree with him' when he says it is desirable that there should be as little in the way of delegation of important powers as possible, and that it is important that powers should be set forth in the statute rather than given under order in council or by regulation. On the other hand, I think my hon. friend will agree that the business of government to-day has become such that unless there were delegation of power it would be altogether impossible to have it carried on. No minister could begin to discharge the duties that are assigned to him in a statute unless he were given some authority to delegate some of those duties and to bring to his assistance whatever he might need in the way of advisory boards and councils. In debating this matter the other day the leader of the opposition suggested that it would be well for the government to consider the advisability of having some kind of a permanent board set up by the minister which would have on it representatives of the different provinces, and, I think he also added, representatives of the municipalities.


Richard Burpee Hanson: That was for the purpose of reconstruction.


William Lyon Mackenzie King: Yes, and reconstruction is the subject of the bill with which we are dealing. The section my hon. friend is complaining of, if he is complaining, is the one that is intended to help meet a situation of the kind. Recently the premier of Ontario suggested that there should be a joint board of the dominion and the provinces for certain purposes. Well, that may be a very good suggestion, and it may be desirable to carry it out; but unless there were a clause in the statute which gave the minister the necessary authority to effect that end he would be unable to do so without the passing by parliament of another act. I can assure my hon. friend that this section is not intended to go any farther in the matter of conferring powers on ministers of the crown, or on deputy ministers or boards, than is absolutely essential for effective administration.
I would recall to my hon. friend a statute passed when, if I am not mistaken, he was a member of the ministry. It may have been before he was a member of the ministry, because it was in Sir Robert Borden's time. There was an act passed during that time to authorize the rearrangement and transfers of duties in the public service. That statute gives the power to a minister of the crown by order in council to transfer from one department of government to another department many of the duties assigned, in the first instance, to a particular department. As I read this section, particularly paragraph (a), it really goes no farther than that. The governor in council may make such order or regulation as may be deemed necessary or advisable to transfer to the minister any powers or duties of a government department or agency whether conferred by statute or otherwise and to provide that such powers or duties shall be exercised or performed concurrently or otherwise by the minister. That paragraph may have been unnecessary in view of the powers which are given by statute to authorize the rearrangement and transfer of duties in the public service.
Paragraph (b) reads:
To establish one or more boards or advisory councils to exercise such functions in connection with the administration of this act as may be assigned to them by order or regulation.
That is desirable to enable the minister to get the best advice that he can obtain in dealing with the large questions that will come before him. For example, the minister may wish to have the advice of labour and of industry on a great many matters, just as is
Department of Reconstruction

done to-day in connection with work of the Department of Labour, and beyond question this would' give him that power.
On reflection I think that my hon. friend will see that there is nothing being done under this paragraph that will in any way widen existing authority.


Richard Burpee Hanson: It is rather reassuring to have the Prime Minister make that statement. I thought that the statement of the general principle which I made would find response in his mind, because I recall on a good many occasions through the long period of time that I have been in the house that he himself has been in the very van in apposing the principle incorporated in this paragraph. It seems to me that it all depends on where you sit in this house as to whether a principle is good or bad. I can quite understand the government desiring to enlarge its powers irrespective of parliament for the purpose of convenience. I am not unimpressed by the statement of the Prime Minister that government is a very comiplex problem at the present time. Speaking generally I think that is the best argument he has. The government could not be running back to parliament every day or two for a new enabling act. The executive must have some authority to meet new situations. When I make that statement of fact I think the Prime Minister will agree that I am very fair-minded about this thing; but I had in mind that from time to time heretofore the government had been allocating departments, branches, bureaux or whatever they may be-I think "government departs ment" is the term mostly used-from one portfolio to another. It has been doing that as long as I can remember, and I know the .power existed long, before I had any connection with parliament.
The Prime Minister has referred to a statute which is still! unrapealed. I wonder if my right hon. friend opposed it at the time it was passed. It would be a matter of historical curiosity to find out what his attitude was in regard to it.


William Lyon Mackenzie King: I am not sure I was in the house when it was passed, though I may have been if it was in the session of 1919-1920.


Richard Burpee Hanson: That may be so. If my hon. friend was not here I venture to suggest that those who were here did not accept the principle -without scrutiny and examination and a good deal of protest. Generally speaking this power ought to be limited purely to administration; I think we are both in agreement on that.

I am not yet sure that the Prime Minister has made out a case for subsections (a) and Ob). Certainly if subsection (b) means anything at all; if it is anything more than window dressing; if these boards or advisory councils are to have any authority, something more is required, because all they can possibly do under this section is give the minister advice, and he can get that advice without the power to set up a board. He can consult those who are in a position to give him advice on any of the points with respect to which it is suggested that power should be vested in these councils; in fact they have no powers at all, they are merely consultative bodies from which the minister may request advice. My colleague from Yale points out that this power already is conferred by subsection (d) of section 6, so that it would look as .though there were redundancy. Section 6 (d) provides:
The minister, to enable him to perform the duties imposed upon him by this act, may establish committees or boards and use existing organizations and agencies to assist shim in carrying out the purposes of this act.
That would include the right of consultation ; so that it would seem that the draftsman here had gone beyond what was required, or that' something' more is contemplated by section 9 (b) than has been intimated by the Prime Minister.
The Prime Minister did make a point with respect to the setting up of joint boards. Inasmuch as the jurisdiction relating to reconstruction is almost entirely a matter of property and civil rights, and therefore within the ambit of the powers of the provinces, I think it would be a. good thing if the jurisdiction and constitutional rights of the provinces were recognized specifically in the bill. With all this talk about rehabilitation and reconstruction I am afraid we are going to see a multiplicity of boards and authorities and powers set up in the country, .all having one good end in view, but with a tremendous overlapping of personnel and of cost to the taxpayer, whether provincially or federally, unless there is some coordinating authority. That, of course, is the distinguishing point of this bill; it is an attempt, and I .think an honest attempt, to arrange for the coordination of these bodies that .are to be set up. Every province will have its own ideas. Only the other day I read with a good deal of interest that the premier of Nova Scotia had given to the public a scheme of reconstruction and rehabilitation for that little province which would cost anywhere from $70,000,000 to $100,000,000. He expects the federal treasury to bear half the cost, and then he wields the big stick and says if they do not bear half the cost he is going to

Department oj Reconstruction
reenter the field of income taxation. I may not be quoting him accurately, but that was the impression left upon my mind. So that there is great need of a reorientation of the whole field, and certainly there is great need of joint operation, joint thought and joint action on the part of the dominion and the provinces.
I am sure the Prime Minister will agree that the constitutional field is within the provinces, and the dominion's only excuse for stepping in, I assume, is the fear that the provinces will not undertake or carry out the job in a satisfactory manner, perhaps for lack of funds. The dominion now has almost a monopoly of the whole taxation power, under arrangements made since this war started; the taxation field of the provinces has become extremely limited and narrowed. The dominion now is in a position to finance works for reconstruction and rehabilitation, but in provincial circles there is a strong feeling that the autonomy of the provinces ought to be respected. Nowhere, I think, is that feeling more prominent than in the old province of Quebec, where they have always been very jealous of their autonomy, and rightly so. There has been a constant encroachment upon their rights.
I do say to the Prime Minister that there is a good deal of padding and filling in section 9, that he has all the powers he needs without that. If he would limit it to subsection (c) I would not have a word to say; for I think it should be limited to matters of administration.


William Lyon Mackenzie King: In his opening remarks my hon. friend suggested that the way one viewed the power of delegation would depend upon where one sat. I do not quite agree with that; I think it depends a great deal upon the changed times and conditions. As my hon. friend well knows, the war has made it necessary to have a number of boards and to have powers delegated to an extent that no one would wish to see at any other time. I feel as strongly as my hon. friend does about the delegation of power. At the time Lord Hewart published his book on "The New Despotism" I thought it the best treatise of the kind that had been published up to that time, and I hold that view more or less at present. I do think it is unfortunate that there has to be this delegation of power ad infinitum, if not ad something else-


Richard Burpee Hanson: Ad nauseam.


William Lyon Mackenzie King: At any rate the government could not be carried on to-day, with the questions that have to be met and dealt with, without some extension of the
power of delegation. Undoubtedly delegation of authority will go on in the period of reconstruction, but I hope it may be reduced little by little.


Richard Burpee Hanson: Does the Prime Minister hold that opinion with respect to peace-time projects as strongly as he does with respect to the conduct of the war? I agree with him as to the latter, but not as to the former.


William Lyon Mackenzie King: Certainly I do not. I was just saying that as we get away from the war and back to a peace economy, many of these powers and restrictions will gradually disappear. Some will have to be maintained, but the reasons for them will have to be made obvious.
In reference to this section, my hon. friend began by being critical, asserting it went too far. He concluded by saying it was not really necessary, that we had all the powers anyway. Perhaps it is as well for us to make perfectly sure there can be no misunderstanding.


Mr. HAZEN:: Section 9 reads:
The governor in council may make such order or regulation as may be deemed necessary or advisable-
Last week we considered a bill to establish a department of veterans' affairs, of which section 7 read as follows:
Subject to the approval of the governor in council, the minister may make such regulations, from time to time, as he may deem necessary and advisable-
In this section the words are "such order or regulation" while in the other bill the words were, "such regulations." Is there any reason why the word "regulations" should be used in the one bill and the words "order or regulation" in the other? Is there any distinction between a regulation and "order" as used in this bill? In section 7 of the bill to establish a Department of Veterans' Affairs it was provided-I quote subsection 2:
All regulations made hereunder approved by the governor in council shall be laid before parliament within fifteen days after they are made if parliament is then sitting, and if not, then within fifteen days after the commencement of the next ensuing .session thereof.
There is no similar provision in the bill now before us. I suggest to the Prime Minister, and if necessary I so move, that a subsection similar to subsection 2 of section 7 of Bill No. 83 be added to the end of section 9 of this bill.


William Lyon Mackenzie King: I have not the other bill before me, but listening to my hon. friend I would judge that as to the use of "order" or "resolution," it would appear to be
Department of Reconstruction

entirely a matter of drafting and of what appears in the interpretation sections of both bills. Evidently in connection with the other bill, the house felt that for that particular department the drafting was proper, and I hope the committee will take a similar view of the drafting of this bill. It does not follow because two measures are not in identical terms that power is being given in the one which Should not be given simply because like power does not appear in the other. Section 7 of this bill provides:
The minister shall submit annually a report to parliament in such form as may be prescribed by the governor in council.
I would feel that what the governor in council would prescribe would be just the sort of thing my hon. friend says he feels should be inserted in the bill itself.


Douglas King Hazen: I hardly think that would include regulations.


William Lyon Mackenzie King: I am very sure that any report on the Department of Reconstruction made to parliament by the minister would carry in it the fullest details in regard to all orders or regulations that had been made under the statute.


Richard Burpee Hanson: Section 9 contains no provision for making public the regulations. One of the difficulties facing the legal profession to-day is to know what the law is. I recently discussed this problem with a leading counsel and he said that because of the day to day changes in statutes by orders in council issued under the War Measures Act no one could tell a client with any degree of authority what was the law of Canada to-day in connection with a particular matter that had been the subject of amendment by order in council.
In this case no one will be able to ascertain or declare or advise unless some provision is made to make public these regulations.
I wish the Prime Minister would give some consideration to that point. I do not think it is as important as it is in relation to some of the other measures that have been before the house, but there is a principle involved. It seems to me that in the public interest there should be some publication of these regulations and I suggest to the Prime Minister that he take this matter under consideration before the bill receives third reading. Perhaps this section could pass but the bill could be held over until he can consult with his advisers and devise some scheme whereby the regulations may be made public.


William Lyon Mackenzie King: As my hon. friend knows, my legal training and knowledge is not as up to date as it should be.


Richard Burpee Hanson: It is not bad.


William Lyon Mackenzie King: I can, however, assure my hon. friend that the highest legal authorities of the government have carefully considered this measure and have expressed the view that it is adequate in all particulars. I believe that what my hon. friend has just said about the necessity of publishing these regulations is met by an order in council already existing which requires the publication of regulations and orders which have the effect of law. It is called, if I remember aright, the statutory orders and regulations order. I think that would meet the situation my hon. friend has in mind.


Mrs. NIELSEN:: Mr. Chairman, although I am a member of the reconstruction committee I have not made a speech of any length on this subject of reconstruction. I am in agreement with the setting up of this department. Section 9(b) provides for the setting up of boards or advisory councils to exercise such Junctions in connection with the administration of this act as may be assigned to them by order or regulation. It is in connection with this section that I should like to make one suggestion to the Prime Minister with which I believe he will be in general agreement.
We have had a great deal of discussion during the past while about the problem of giving employment to our people. I agree that a need exists in connection with the basic foundation of our whole life-that is, employment for our men and women so that they will have adequate wages and a chance to live decently. But I think in this connection the Prime Minister will also agree that we cannot neglect the other side. There is the well known quotation that man cannot live by bread alone. One thing which the Atlantic charter has promised to mankind generally is that in the new era which opens-before us man shall not only live; he shall have life more abundantly.
We cannot leave the whole question of reconstruction without recognizing the cultural side of Canadian life. Just last week the committee on reconstruction had before it representatives of cultural groups in Canada who presented one of the most comprehensive-briefs yet placed before that committee. They outlined the possibilities which lie before the people of Canada in this direction. Their brief contained two main premises. The first was that in our relationship with the rest of' the world Canada needs to become cognizant of the fact that her cultural activities will be of assistance in maintaining friendly relations-

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with other nations. Second, the cultural development of our people will help to give them that more abundant life which we believe can and must be theirs.
This group of artists, musicians and other representatives of cultural groups asked that a sum of money be set aside for these purposes. They were asking for only a small amount, merely $10,000,000, with which they hoped to start a planned system of what might be called adult education under which the natural talent and abilities of the Canadian people might be directed and encouraged by government supervision. They advised the setting up of community centres where there would be cultural and recreational activities, particularly in the rural areas where we have had such a dearth of culture.
There is in this proposal I believe the realization of how much can be done in the future toward binding together the peoples who make up Canada. There is the great cultural heritage of the province of Quebec, which is perhaps more typically Canadian than any other section of the country. Those people should be welded with the Anglo-Saxon, with the Ukrainian, with the Scandinavian, with the Polish, and with members of other minority groups. Not only would this give the Canadian people a new vision and a new outlook upon life itself; it would be a means of providing employment to many hundreds of people who possibly have no way by which they can give to this country of their natural talent and ability except through the channels of music or art or literature. Definitely I am of the opinion that a start should be made now, perhaps with the creation of a separate branch to deal with cultural relations and cultural matters. I believe that a beginning can be made at this time by the setting up under this section of a national arts board, so that the Minister of Reconstruction, whoever he may be, might have members of cultural groups in this country to advise him and give assistance in the various things which might be accomplished during an era of reconstruction.
Certainly when you think of the question of international trade you begin to realize that in competition with some of the other countries-the United States, for example, and Britain perhaps-we might suffer in this country from having other people take our designs and use them, and being themselves in a position to produce more cheaply than we could, thereby stealing our trade. Industry in Canada should be protected; and I feel that in the field of design there is a need for laws to protect Canadian artists and whatever
they may be able to accomplish by way of industrial development. It would be very necessary I think to have a board to take care of matters of this kind.
I mentioned the other day in the committee, when this group was before us, that there may be some things attributable to the Chinese for which they are not responsible. But at all events I believe the Chinese have a saying which goes something like this: that if a poor man has two yen, it is wiser for his soul's sake that he spend only one yen to buy a loaf of bread and that with the other he buy a rose. I believe that in the hurried rush of the years the people of Canada have been intent upon the bread and have as yet paid little attention to the rose. Although some hon. members may think this unrealistic,
I would definitely place before the Prime Minister the importance of realizing the vast possibilities of the Canadian people whose talents and abilities could be given expression to through cultural channels, and I should like to see set up under section 9 of this bill a national arts board, so that this aspect of reconstruction shall not be overlooked.


Mr. DIEFENBAKER:: There is just one matter I should like to bring to the attention of the Prime Minister; it is one which has been before the house on previous occasions and has to do with the question of the delegation of legislative powers to a minister of the crown.
The Prime Minister to-day pointed out that the reason for his change of opinion was that with time there had been a change of circumstances that made it necessary to confer on ministers of the crown legislative authority to make law, and in certain cases to make substantive law. I would point out to him that similar conditions exist in the United Kingdom. Actually the legislative field in the United Kingdom is much wider than that which this parliament has, and although the United Kingdom is legislating for a very much larger population than Canada's; it has not yet gone on an order in council spree to the extent that Canada has. The total number of orders in council and regulations made in the United Kingdom since the war began is not more than some 6,700, if my information is correct, while in Canada the number is approximately 43,000.
The hon. member for St. John-Albert has made out a good case for the addition to this bill of a provision which, while recognizing the necessity for a degree of delegation, nevertheless will retain in parliament control over the legislative powers delegated to the minister. A commendable step was taken by the Prime
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Minister some months ago when a suggestion of mine was accepted that an appendix or list be made up at the end of each session setting out the orders in council which had been passed. This has been of great assistance, not only to members of the judiciary and the legal profession, but to the citizens in general; because so many orders in council have been passed during the war interfering with the exercise of substantive rights that few lawyers were until recently in a position to advise with authority on the state of the law at any given time. The publication of this list or appendix has at least made available the sources of the new legislation, and as such has been helpful.
The hon. member for St. John-Albert suggested that there should be a provision, similar to that contained in a bill previously introduced, under which a report is to be made to parliament of the orders in council as passed. While he was speaking I sent out for the report of the committee on ministers' powers, presented by the Lord High Chancellor to the British parliament in April, 1932. That report supports the request of the hon. member for St. John-Albert and reinforces him in the stand that he has taken. On page 67 of this report, following the admission that the complexities of modern legislative authority make it necessary that there be a degree of delegation, particularly in matters of technical or special legislation, this distinguished royal commission says:
There should be uniform procedure in regard to all regulations required to be laid before parliament, namely, that they should be open to annulment-not modification-by resolution of either house within twenty-eight days on which the house has sat, such annulment to [DOT]be without prejudice to the validity of any action already taken under the regulation which is annulled.
Then it goes on to make this further recommendation. Recognizing the necessity for delegation of powers in order to cover eventualities that could not be contemplated by parliament, it says:
Standing orders of both houses should require that a small standing committee should be set up in each house of parliament at the beginning of each -session for -the purpose of-
(A)	considering and reporting on every bill containing a proposal to confer law-making power on a minister:
(B)	considering and reporting on every regulation and rule made in the exercise of delegated legislative power, and laid before the house in pursuance of statutory requirement.
It further points out that a standing committee looking into these regulations would only report on the question whether any matter of principle was involved, whether there was any special feature of the regulation

or rule meriting the attention of the house, and whether the regulation or rule should receive special consideration on the ground that it was exceptional in its legislative power and result. I realize that in war time we have gone a long way in delegating authority. We have not only delegated authority to ministers but have delegated wide authority to boards not directly responsible to parliament-indeed to such a dangerous extent that the actions of these boards, however illegal they -may be, are not subject to examination by the courts. I am sure the Prime Minister will not contest what I say, because throughout the years, as I read Hansard of previous parliaments, he was the great protagonist of the retention by parliament, in parliament, of legislative authority.
Now that we can believe that peace will not be too long removed, we in parliament must again examine strictly all delegations of authority which are proposed to be effective in peace time. I submit that while, recognizing the necessity of delegation to cover unusual circumstances or conditions which are bound to arise and cannot be foreseen, on all sides of the house there will be agreement that the exercise of delegated authority should be circumscribed in order to ensure that interference with private rights shall not take place without an opportunity being given to parliament to examine the regulations pertaining thereto, to the end that parliament may retain to the largest possible extent the legislative function.
This is not a controversial matter. If in all our statutes containing a delegation of authority it be provided that so far as such delegated legislative authority is concerned the terms of the pertinent orders in council be laid on the table of parliament, it would go a long way toward removing the present objection that few of us have the opportunity of knowing what is being done under the delegated authority conferred.


William Lyon Mackenzie King: I agree with
very much of what my hon. friend has said. I thank him for having expressed the view that I was a great protagonist for retaining in parliament the necessary legislative authority in these matters. May I say to him that I shall become more strongly than ever a protagonist of retaining as much power as possible in parliament once we get to a time that it is possible for parliament to cope with the many matters which come before it. Parliament at a time of war, could not cope with all the matters which require decision, and to a lesser degree, but still a very considerable

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degree, will require decision in a time of reconstruction. The power to delegate, in any event, has to be authorized in the first instance by parliament.
I do not yield a particle of the view that I have held on the supremacy of parliament and the need of preserving the control of parliament over the ministry, and of the ministry preserving to the full its responsibility. But I am surprised that the hon. member should attempt to estimate the extent of the legislation under order in council by the numbers of orders in council which are passed rather than by what is contained in them. If he does not mind my saying it, that seems to be an aibsurd method of estimating in any true way the quality or amount of legislation. To judge these things by the numbers of orders passed is, I think, proceeding in a quite erroneous way. One enactment might require no end of orders to meet a mass of detail, whereas another would take a much broader scope and not require anything like the same amount of detail to be dealt with by orders.
My hon. friend compares the extent of legislation by order in council in Britain and Canada, but the reason that so many more orders in council are passed here is that in Britain the minister of a department is given powers which in Canada can only be exercised by authority of the governor in council as a whole. We shall find as time goes on that it will be essential for this parliament more and more in that regard to follow the example of the United Kingdom parliament, and to trust ministers with responsibility, rather than to limit a minister's action and authority by requiring, in regard to many matters of detail, that these powers are to be exercised only by the governor in council as a whole. That is the real reason why orders in council are so much less numerous in Britain than they are here.
As to the publication of what is enacted by order in council or by delegated authority under regulation, I have already referred to a general order in council which, I think, covers the matter. May I read, however, from the revised statutes of Canada, 1927, chapter 162, the Public Printing and Stationery' Act, section 29, the following, which seems to me also to cover what the hon. members for Lake Centre and St. John-Albert have requested:
All proclamations issued by the governor general or under the authority of the governor in council, and all official notices, orders in council, regulations, advertisements and documents relating to the Dominion of Canada, or matters under the control of the parliament thereof, and requiring publication, shall be published in the Canada Gazette, unless some other mode of publication thereof is required by law.
So that there is already the provision made under a general statute for the publication of regulations.
A comparison has been made between the bill respecting the establishment of the Department of Veterans' Affairs and this bill establishing a Department of Reconstruction. There is this difference, which is a very important one. The legislation respecting the Department of Veterans' Affairs is of the nature of permanent legislation; the department is being established for a long time to come. The present legislation is in the nature of what is temporary legislation. The measure specifically states that this legislation shall not be in force for a period longer than is regarded as essential to tide over the period of reconstruction, and that period is estimated at about four years. That, I think, is a substantial reason why one would not expect to find, in a measure which relates to a situation which is temporary, some of the provisions which do exist in regard to a measure such as the Veterans' Affairs Act.


Mr. MacNICOL:: I want to ask four questions. First, what will be the powers of the new minister in connection with works which might be considered international? For instance, if it is decided by the two countries to provide work, and the proposed conservation work is that-for which plans and specifications are fully prepared-for the raising of the levels of lake Erie by building a dam across the Niagara river, would this new ministry have any powers to negotiate in that connection? That is international. Second, in connection with interprovincial works such as-the rehabilitation of the Saskatchewan river- and it is something that must be done, something that has been too long neglected,, something that the whole country owes to the west, the placing of that river under control so as to enable it to perform what in my judgment is its God-given function, that of assisting the west-what will be the powers of the new minister in an interprovincial labour problem of that magnitude? Third, what will be his powers in a purely provincial-municipal programme such as the flood-proofing and. water conservation works of the Thames or any other river in Ontario or any other province? Finally, in connection with industry, the post-war planning information sent out by the war-time information board refers to the reconstruction period after the war, and among other statements it declares that the object is to encourage private enterprise. The report recommends that the corporation profita tax and the excess profits tax be eliminated at
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the earliest possible moment. It recommends the removal as soon as possible of controls designed to restrict consumption.
All this is essential if industry is to have an opportunity to go forward and, as the Prime Minister so well said in his opening remarks, take a larger place in providing employment during the reconstruction period. If industry does that, it will conform to the principles laid down at the conference at which the Prime Minister of Great Britain, the Prime Minister of Russia and the President of the United States declared for a stable peace with full employment and the raising of the standard of living. I would impress upon the Prime Minister the importance of these four matters which I have brought to his attention -international projects, interprovincial programmes, provincial-municipal works, and abolishing war-time regulations, as suggested in the post-war planning information sent out by the war-time information board.


William Lyon Mackenzie King: The powers the minister will have in regard to all these matters are set out in sections 5 and 6 already passed. I do not wish to evade giving a full answer, but that would be an appropriate reply at this moment. The minister, broadly speaking, will do all that he thinks advisable and desirable in the way of coordinating efforts which will lead towards full employment and reconstruction, whether in the field of international affairs, interprovincial affairs, or intermunicipal affairs, so far as these might be in any way related to the work of reconstruction carried on by the federal administration. In other words, if the minister thought in connection with some international project that it would be possible to further employment to a greater extent in one particular way rather than another and that the way he had in mind would involve the consideration of authorities in another country, he would bring that matter to the attention of his colleagues in the cabinet and the international aspect would in the first instance, be dealt with, if the cabinet approved, by the Department of External Affairs, which has responsibility for international negotiations. Similarly, as between the provinces and the dominion, the minister would see that there were conferences arranged of a kind which he thought desirable to bring the province and the dominion together to discuss those matters that might further reconstruction. Similarly also with regard to the municipalities. This act does not give the minister arbitrary powers of a kind that no minister of the crown possesses to-day, but it does give him the

fullest authority to get in touch with as many other authorities as may be possible where he sees an opportunity of coordinating work which thereby will more efficiently further reconstruction.


Mr. STIRLING:: The Prime Minister referred just now to an order in council having been passed providing that orders in council shall be published. Surely the one he is referring to deals with orders and regulations passed under the War Measures Act. These have been published and they have been of the greatest use. I do not think that order in council covers such orders and regulations as are referred to in a bill of this sort, and it se'ems to be most essential that the public should be able to find out what regulations and orders are passed1 under a measure such as this. I consider it parallel to the other one we dealt with the other day arranging for veterans' affairs. There it is enacted in the measure that regulations shall be published, and it seems to me a most desirable thing that these orders and regulations should somehow see the light of day. It is so difficult for the public, apart from lawyers who may have ability and facilities which the ordinary man has not got, to ascertain what regulations have been passed. To the ordinary member of the public who desires to look up a certain subject it is most difficult to find out what has actually been passed in the way of regulations.


William Lyon Mackenzie King: A moment ago I read from the revised statutes the particular section of the act dealing with printing and publishing which necessitates the publication of orders and regulations, and the like, in the Canada Gazette.


Grote Stirling: Under any statute?


William Lyon Mackenzie King: Yes. It is a general authority. Apart from any matter that relates particularly to what has been done under the war measures act, section 29 of chapter 162 of the revised statutes of 1927, public printing and stationery, provides:
All proclamations issued by the governor general or under the authority of the governor in council, and all official notices, orders in council, regulations, advertisements and documents relating to the Dominion of Canada, or matters under the control of the parliament thereof, and requiring publication, shall be published in the Canada Gazette, unless some other mode of publication thereof is required by law.


Mr. NEILL:: "And requiring publication".


William Lyon Mackenzie King: There is a
comma, "or matters under the control of the parliament thereof, and requiring publication".

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Alan Webster Neill: That means if publication is deemed to be required. That endorses the statement of the hon. member for Yale.


Richard Burpee Hanson: That leaves a loophole, that it is in the discretion of certain people to publish or not to publish. Why is it put in one statute and not in another? Clearly, a strict construction of the section which the right hon. gentleman has just read indicates that these matters may not all be published, and certainly they are not all published.
I did not intend to speak again, but the Prime Minister renewed his faith in parliamentary institutions. On one celebrated occasion within recent months he slipped. I may forgive him that, because it is said that even Homer nods. But his government passed an order in peace time altering a civil statute that had nothing to do with the war at all. In March of last year an amendment to the Companies Act was put through which altered the law, and I doubt if it ever saw the light of day until somebody dug it up. Did that come to the attention of the Prime Minister, and did he give his imprimatur to it? It was done because the Minister of Transport desired to seize jurisdiction unknown to the people of Canada and to the legal profession. On examination the Prime Minister will find out that it is not all as he would suggest it is. Things are being done to-day by order in council which ought never to be done. I make that statement to the Prime Minister in general terms. I know he cannot watch everything that goes through council. He cannot be there every day. He has to take the statement of his minister on the recommendations and reports that are made by various departments; but there are official acts given the imprimatur of the governor in council as to matters unrelated to the war that ought never to be approved. That is what we object to. I realize that the government must have large and important powers to carry on the war, and emergent powers in relation to those other things that they have set up, although I do not concur in the theory. Powers are delegated to boards that are created, and those powers are not reviewable by the courts. That is an offence committed by the government in relation to certain boards that have been set up during this war. They are not even open to question by the courts. The subject is denied access to the courts. That is a pretty serious thing to happen in this country. On general principles the Prime Minister will agree with that. Denial of access to the courts of Canada should in no
circumstances be made, and no government which thinks the thing through would ever permit that sort of thing to be done.
I know in days gone by that governments have seized jurisdiction. I suppose no greater controversy ever arose in the United States than arose when Mr. Lincoln suspended the writ of habeas corpus at one stage in the civil war. No action on the part of his government, in theory at least, ever raised such a controversy as the seizure of power by his administration at that time. And it subsequently turned out that the attorney general of his administration-I think it was Mr. Chase-wrote a learned disquisition in which he condemned the action of the government of which he was attorney general. I say to the government, let us forget about the past in regard to these things and let us not have a repetition of what has been done improperly in days gone by, especially on the question referred this afternoon to by the hon. member for Lake Centre, the denial to the citizens of this country of access to the courts. I think that is one of the greatest offences of the administration, at least from the point of view of the legal profession and the people of the country.


John George Diefenbaker: I should like to refer to one matter in connection with the statute that the Prime Minister read a moment ago as a justification for the non-observance of the publication of regulations as part of the statute. I believe the section in question covers only the regulations that are required by the statute to be published in the Canada Gazette. In that connection I should like to refer the committee to section 18 of bill No. 133, to amend the Aeronautics Act. This section requires the regulations to be published in the Canada Gazette. The section is as follows :
All regulations enacted under the provisions of this act shall be published in the Canada Qazette, and, upon being so published, shall have the same force and effect as if they formed part of this act.
Apparently section 18 of the Aeronautics-Act is intended to cover such cases as those referred to in the statute of 1927. That is borne out by section 19 of the Aeronautics Act, which reads as follows:
Such regulations shall be laid before both houses of parliament within ten days after the publication thereof if parliament is then sitting, and if parliament is not sitting, then within ten days after the next ensuing sittings thereof.
The hon. member for St. John-Albert has asked that a similar section should be included in the bill we are discussing.
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Douglas King Hazen: It is extremely difficult to understand a section of an act when it is read across the floor of the committee. It requires some study, but I think the hon. member for Lake Centre correctly interpreted section 29 of the revised statutes of 1927, chapter 162, when he said that it provided that the regulations were to be published only when it was so provided in the act or statute. I think that is the interpretation to be put upon that section. I am going to move that section 6 of the bill be amended by adding thereto a subparagraph to read as follows-


The CHAIRMAN:: Section 6 has been passed.


Douglas King Hazen: I bring it to the attention *of the Prime Minister and ask him if the interpretation of chapter 162, section 29, as laid down by the hon. member for Lake 'Centre is correct. Would the Prime Minister entertain such an amendment to this bill?


William Lyon Mackenzie King: I was just about to say if it will make perfectly clear the [DOT]desire and the intention of the government to see that there is full publicity given to orders and regulations, I shall be very happy to add another subsection to section 9, and I am prepared to take the section which .appears in the other act to which the hon. member has drawn attention. I would ask one of my colleagues to move that to section '9 there be added subsection (2) to read as follows:
All orders and regulations under this section .shall forthwith, after approval by the governor in council .be published in the Canada Gazette and laid before parliament within fifteen days after they aTe made, if parliament is then .sitting, and, if not, then within ten days after The commencement of the next ensuing session thereof.


Ian Alistair Mackenzie: I move accordingly, Mr. Chairman.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 10-Information not to be [DOT]disclosed.
Richard Burpee Hanson: I agree with the underlying principle of this section that there should be secrecy in relation to the business of any person, and that information of a private nature or relating to a private business, an individual business or a corporation, should not be disclosed, for Teasons which I think will commend themselves to everyone. But I gravely question the provisions of section 11. I wish the Prime .Minister would direct his attention to that.

What is meant by the words "without lawful excuse"? Suppose the minister demands certain information which I do not wish to give. Notwithstanding the provisions with respect to secrecy, in section 10, we know that it is impossible to keep all this information secret, and I protest against the provision that a man who refuses to speak shall be found guilty of an offence against the act. On general principles that provision is bad.
I will give the Prime Minister an illustration of what I mean. Recently the wartime prices and trade board sent out to shook manufacturers a questionnaire including dozens upon dozens of questions, calling upon them, under the authority of some order in council, to disclose to that board the fullest possible information about these individual businesses. This is information which is given to-day only to the taxation department, and which ought not to be given even to the department in the detail required in this instance save and except on the theory that it is necessary to protect the public revenue. Here the wartime prices and trade board are asking me, as a box manufacturer, to disclose my business in great detail to an army of officials-because that is what it will come down to in its final essence; and while I know an attempt is made in the regulations to hide the identity of the individual by using a code number, or something of the kind, still I say it is asking just too much of human nature. I can tell the Prime Minister that in the case I mentioned the demand will be thoroughly ineffective, because in eastern Canada at least the shook business is not distinct and apart; it is wrapped up with, it is a corollary or branch of, the lumber business. As a rule shooks are made from the lumber left over from the general trade, and they are set up in one corporate enterprise. It is impossible to break that down, from an accounting standpoint; therefore what is required is the disclosure to the wartime prices and trade board of information they ought not to have, because it is information relating to a much broader subject matter and information which, if it came to the notice of a competitor, might do a great deal of damage to the subject under review.
Without pursuing the subject further I ask the Prime Minister to state upon what principle he suggests that this house should enact a punitive clause against some of the people of this country for refusing to give information with respect to a broad subject such as reconstruction. Of course any good citizen will comply with a proper request, but it might go far beyond that; it might become an inquisition in the hands of an improper official. I do think this is going a long, long way, and

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that the Prime Minister would never tolerate it in his own private business. Certainly I would be quite against it, if I came up against a statutory provision of this sort, that because I found it in my own interests and in the interests of my shareholders, we will say, that I should not answer certain questions put to me by the minister, I should be classed as a quasi-criminal and made subject to a penalty. If you can imagine any more bureaucratic method of carrying on business than legislation of this type, I should like to know what it is. I suggest to the Prime Minister that if the public knew this provision was in the bill they would condemn this legislation out of hand, not because on its face it is not a good measure but because attention would be diverted from the good features of the bill to this drastic feature which I suggest should be eliminated.
What reasonable excuse is there for putting in this provision? It ought not to be there at all. The minister has all kinds of power to get advice, to set up committees and do everything else that may be necessary. I cannot imagine why this provision should be included, why it should foe fastened upon a long-suffering public in the face of all the regimentation, the regulation and the bureaucracy we have in this country to-day. That is the sort of thing that is killing government; that is the sort of thing the Prime Minister is going to meet when he goes to the country. I am not particularly anxious to help the Prime Minister when he goes to the country, but if I had no other canvass against this government I would not want a better one than this question of regimentation and bureaucracy.
A moment ago I was facetious; now I am serious, and I do suggest to the Prime Minister that he consider the elimination of section 11. It is undemocratic; it is unnecessary; it is uncalled for. I cannot think of a single useful purpose it will serve. As to the secrecy of information, of course I commend section 10, but certainly I intend to vote against section 11.


William Lyon Mackenzie King: My difficulty is that, to use my hon. friend's own words, I cannot tell when he is being facetious and when he is serious.


Richard Burpee Hanson: Well, I am telling you.


William Lyon Mackenzie King: I am taking it now that he is serious, and I am going to appeal to his experience as a minister of the crown, as to whether or not that experience would not lead him to see the necessity of the very provision which now to a certain extent he condemns. In the first place an obligation is placed upon the minister, a very serious
obligation which this committee already has recognized and agreed to, in section 5, which reads:
It shall be the duty of the minister:-
(a) to inform himself fully of the needs for new employment of the men and women in the armed forces and in industry and the opportunities that will be available to meet those needs as men and women are demobilized from the armed forces and as war production declines.
How is the minister to inform himself fully if he has not authority to make requests that are fair and reasonable and have his requests met? We all know something of human nature. Some people will do all they can to assist a government. Unfortunately there are a great many who will do all they can to embarrass a government and to resist its authority, and a minister might find the whole obligation which parliament has placed upon him nullified by the omission from the statute of the necessary powers to carry out what has been imposed upon him. A part of that necessary power is to have some penalty attach to neglect on the part of those who will not assist the minister to meet the obligations that have been placed upon him in administering the statute. Section 11, which my hon. friend has been discussing along with section 10, reads:
Every person who, without lawful excuse, fails to comply with any proper request


Richard Burpee Hanson: What is a lawful excuse?


William Lyon Mackenzie King: If some questions were asked which would mean disclosing a man's income, for example; there would be a lawful excuse for not answering a question of the kind.


Richard Burpee Hanson: That is prohibited by law now. That is not a good illustration.


William Lyon Mackenzie King: My hon. friend has been emphasizing the importance of the courts. In this case nothing would be done in the way of imposing a penalty until the matter had come before some judicial authority. I am perfectly sure that in a matter of this kind no judicial body would be unreasonable in interpreting this section. They would not permit any broad interpretation. The person would have to make his case that he had lawful excuse for refusing.
On the other hand, if he had what looked like even a reasonable excuse and there was evidence that the minister was trying to get information he really should not have, or trying to get something that would be injurious
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to some party, I am quite sure that no judicial body in this country would enforce any penalty.


Richard Burpee Hanson: What does the Prime Minister say about the burden of proof? This casts the burden of proof right on the accused'.


William Lyon Mackenzie King: Does my hon. friend think it ought to be on the minister? These clauses have to be interpreted in the light of ministerial responsibility. If the minister was not responsible to parliament for his every act there might be some objection offered to the authority being given. I would point out that this does not concern power that has been delegated; it is ministerial responsibility. One has to take very much into account the fact that the minister is the one who has to decide what questions are to be asked] and what inquiries are to be made.
I submit that you cannot ask the minister to seek to get men who are returning from overseas back into industry if he is to be precluded from asking an employer to supply information as to the number of men in his employ who have not been overseas or who have taken no part in the war and the like. Those are the kinds of questions it may be necessary to ask.


Richard Burpee Hanson: Apparently the Prime Minister is not familiar with the bill. Under section 6 the minister may "require of any person in Canada a return of information which the minister may require relating to reconstruction." That takes care of the form of instruction to which the Prime Minister referred a minute ago. This section sets up a penalty against the subject. It makes the man who refuses to disclose information requested by the minister subject to a charge and the burden of proof is thrown on him to shqw why he does not give the information.
I suggest to the Prime Minister that it is a fundamental principle of British justice that when a charge is laid against a man for an infracton of the criminal code, of a quasi criminal piece of legislation or for the commission of a prohibited act, the burden is on the crown, not on the subject. This is on a par with the old prohibitory laws we borrowed from Texas, and other places like Texas, where they had the sumptuary type of legislation which takes away from the subject all his rights and puts him upon the defensive the minute an information is laid. This is not the type of legislation we ought to have if we expect cooperation from the people of Canada.

I know precedents can be given. I see the Minister of Justice is interested in this debate and I know he will tell me there are lots of precedents. But that does not make it right; far from it. The Minister of Pensions and National Health is always referring to the antiquity of certain principles that have been drafted into legislation. That does not make them right, simply because they have been there before and have extended over a period of years. I am simply pointing out to the Prime Minister what I consider is an inherent injustice in this measure.


William Lyon Mackenzie King: My hon. friend has just drawn my attention to a section in the bill which I might have quoted. He referred to section 6, which reads:
The minister, to enable him to perform the duties imposed upon him by this act, may:
(d) require of any person in Canada a return of information which the minister may require relating to reconstruction.
What good would there be to have this section without there being some penalty which could foe imposed upon the man who would pay no attention to what the minister asked?


Richard Burpee Hanson: I do not
think I have made my point clear.


Ian Alistair Mackenzie: You have not.


William Lyon Mackenzie King: You certainly have not.


Richard Burpee Hanson: Just the
mere assertion by the Minister of Pensions and National Health does not prove anything. I call the attention of the Prime Minister that under section 6, which has been passed, this committee has already given to the minister the power to "require of any person in Canada a return of information which the minister may require relating to reconstruction."
It is limited to that. Suppose the minister and the subject differ as to whether the things required relate to reconstruction? The minister gives his ipse dixit that it does relate to reconstruction, but the citizen says, "No; it relates to my private business; it has nothing to do with reconstruction." The government of the country then says, "An information will be laid against you and you will have to prove that you have lawful excuse."


An hon. MEMBER:: No.


Richard Burpee Hanson: Oh, yes.
There is the burden of proof.


Mr. CLAXTON:: The step the government must first take is to show that there has been failure to give information in res-

Department of Reconstruction
pect of reconstruction, and the burden of proof is on the government with respect to that. It is only after it has proved that to the satisfaction of the court that the defendant need even establish that he has a lawful excuse. The burden of proof is laid squarely on the shoulders of the government.


Richard Burpee Hanson: That does not follow at all. The bill states that the minister may "require of any person in Canada a return of information which the minister may require relating to reconstruction." Somebody must form an opinion as to the proper interpretation to give to that part of section 6 which relates to reconstruction. I want to emphasize the point I made a moment ago. The minister and his advisers may say, "This relates to reconstruction," but the subject who is under inquisition may say, "It does not relate to reconstruction at all; you are wrong; it relates to something else." The minister then causes an information to be laid. All he has to do is allege that he requires certain information which he says relates to reconstruction.


Mr. POTTIER:: No.


Richard Burpee Hanson: I have been interpreting statutes in the courts for forty-two years. I have had a little experience and I know how these things work. I know that in certain classes of legislation the courts give a strict construction. In other classes of legislation the courts follow a middle course, and in other classes the courts interpret the provisions of the law quite liberally. There are the three schools of thought in the judiciary with regard to the interpretation of statutes depending upon the nature of the statute. A taxing statute is always construed strictly against the crown. A statute that gives special consideration, like the Bank Act under section 88, is construed strictly.
Here is a statute containing language in express terms which states that the excuse must come from the subject, not that the minister must show that he is in flagrante delicto. The machinery of the law is started immediately and the burden of proof is placed upon the citizen. I am not going to argue the matter any further, but I did want to state my objection.
Mr. ST. LAURENT: The hon. gentleman did not state this last time that he was not being facetious, but I will assume, in spite of the substance of his argument, that he was not intending to be facetious.


Richard Burpee Hanson: That is a quip and a gibe that is quite unnecessary.
Mr. ST. LAURENT: I will ask the hon. member who has had some little experience in interpreting statutes if he will read and interpret section 164 of the criminal code, compare the language of that section with the language of this bill, and then tell us whether it would make any difference whether this section was in the bill or not.


Richard Burpee Hanson: I have not section 164 of the criminal code before me, and I should like to know what the context was before I gave an opinion. I was quite serious, and the minister's gibe at me was quite unworthy of him.
Mr. ST. LAURENT: Section 164 of the criminal code reads:
Everyone is guilty of an indictable offence and liable to one year's imprisonment who, without lawful excuse, disobeys any act of the parliament of Canada or of any legislature in Canada by wilfully doing any act which it requires to be done, unless some penalty or other mode of punishment is expressly provided by law.
The hon. member has read section 6 (b) of this bill and says: There is authority given by parliament to the minister to require certain information to be supplied; now that being something required by an act of parliament, if he from whom it is required fails to supply it or, in other words, omits doing something that an act of parliament requires, if he has no lawful excuse as provided by section 164 of the criminal code, he is found guilty and condemned accordingly.


Richard Burpee Hanson: Provided it is wilful. The minister knows there must be mens rea. In the case which the minister suggests under section 164 of the criminal code the crown would have to show disobedience. The burden does not shift until the crown shows it.
Mr. ST. LAURENT: Similarly here the crown would have to show that the information had been required of the person who is accused and that it had not been supplied. That constitutes the offence unless a lawful excuse is shown by the accused. There is no more shifting of the burden there than in the ordinary application of the law.


Richard Burpee Hanson: Will the minister be good enough to let me see section 164?
Mr. ST. LAURENT: Certainly. There is no more a shifting of burden of proof here than in the other case. It is merely indicating the elements of the offence

the requisition of the information and the fact that it was not supplied. That constitutes the offence
Department oj Reconstruction

unless there is a lawful excuse. The crown would have to show that it was information that the minister was entitled to demand and that it had not been supplied. That being established, a ease would be made out unless the defendant showed a lawful excuse for not supplying the information.


Richard Burpee Hanson: I follow the minister's argument but he misses one salient factor. Under the general law as contained in sectio'h 164 of the criminal code there must be a wilful disobedience or failure to do that which it is commanded to do. The crown must in the first instance assume the burden of proof under the general law.
Mr. ST. LAURENT: Here as well.


Richard Burpee Hanson: I do not think so. That is not the way I interpret it. If the minister will put in this statute mens rea, it would take away from me some of the objection which I have. The Minister of Justice is an old practitioner. I do not know whether he practised in the criminal courts, but I assume he did1, and he knows how difficult it is to get a conviction in certain circumstances in relation to criminal intent. The two cases are not parallel. I suggest to the minister that, under section 11, all that the crown has to do is to show that under section 6 they required the information; they may simply say, "In our opinion it was relating to reconstruction," and on that mere prima facie , case the accused must answer. I do not think that ought to be the law. They ought to go beyond what I have suggested and prove that it was in point of fact and in law a matter relating to reconstruction. I suggest as a matter of public policy that the courts of this country would not compel a subject to give to a .minister or to a group of ministers information that would be detrimental to his private business. It ought not to be the policy of parliament to ask that he should do so. I know that an attempt is made under section 10 to surround with secrecy the information that is given, but that is just not possible. Even in the taxation department, which is suiTounded with as much care as it is humanly possible to take to preserve secrecy, there is the gravest doubt whether it is 100 per cent effective so far as secrecy is concerned. I do not say that with any specific case in mind at all, but so many people cannot know so much about so many different things and these things still remain secretive. I shall not labour the point further. I suggest that this is pretty stringent legislation, and this provision ought not to be put in there unless it is strengthened. I hate to see the burden of 
proof immediately transferred to the accused, and I believe that that will be the construction placed upon this section.
Mr. ST. LAURENT: I suggest that the burden of proof is not changed at all in this section. The hon. member says that we know how difficult it is to get a conviction when there is an express provision that, you have to have proof of rhens rea. This statute is not being put on the statute book so that it may be difficult to apply. It is put there for the purpose described in section 2 (e), to bring about "the reestablishment in civil life and reemployment on demobilization of the men and women of the armed services, and of persons released from war industries." It has been drafted for the purpose of being an effective instrument, and it was not thought in drafting it that it would be proper to make it difficult of application. Here, if information is requested which the accused1 has lawful reasons for not giving, his reasons can be urged before the court; but if the information is requested for the laudable object of providing reestablishment for those persons in the armed services or in war industries and that information is not forthcoming, it should not be difficult to deal with the person who is thus thwarting the object of the legislation.


Richard Burpee Hanson: Even
though it reveals his private affairs?
Mr. ST. LAURENT: Even so, because I think it is fair to ask all of us to submit to such inconvenience as may be necessary to provide for the reestablishment of those who-have done so much for us during the war.


Richard Burpee Hanson: The minister puts it on a very lofty plane, and I take second place to no one in that regard, But I would not use these means and methods. This-is to go on for years after the war.
Mr. ST. LAURENT: For the period of reconstruction.


Richard Burpee Hanson: Nobody
has defined the period of reconstruction.


Ian Alistair Mackenzie: Yes. Read the bill. Five years after the war..


Alan Webster Neill: Four years.


Richard Burpee Hanson: That means after the declaration of peace. That may mean ten years. This war is not over yet. All this talk about reconstruction and rehabilitation is predicated on the theory that the war is to cease within a very short time.. I tell this house and the country that the major battles of this war are still to come. I think we are losing sight of the main chance-

Department oj Reconstruction
when we are spending time on setting up an administration to make blueprints for the future when we do not yet know whether there is to be a future. We are all, of course, hopeful. But too much emphasis is being laid in Canada to-day upon these subject matters, to the exclusion of the war. How often do we hear now from the Prime Minister a stirring address to the nation to gird its loins because this war is not over? Not very often. I suppose that people are inured to the suggestion that the war has yet to go a long way. But I am appalled at the modem trend wherein people talk about the post-war .period to emphasize, and emphasize only, the theory that we are to make men richer and richer instead of better and better. Whoever speaks about the spiritual side of future trends in this country? Nobody. Yet we ought to be thinking about that. But nobody emphasizes it. Hon. members of the socialist group never talk about making people better and better; what they are interested in is making one class poorer and another class richer; that is the main element in their programme to-day.


Mr. GILLIS:: Mr. Chairman-


Richard Burpee Hanson: The hon. member for Cape Breton South can hold! himself in patience. He promised the Minister of Munitions and Supply the other day to make a reply about the situation in Cape Breton, in the coal fields, but I have not heard it.


Clarence Gillis: You will hear it.


Joseph-Arthur Bradette: Order. I ask the hon. member to keep within the limits of the item.


Richard Burpee Hanson: Well, then, Mr. Chairman, please ask the hon. member not to interrupt me.


Clarence Gillis: You started it.


Mr. KUHL:: Do you think we would be better with a tightened: belt?


Richard Burpee Hanson: I heard the hon. member for Jasper-Edson speak the other day of a world in which nobody is going to work any more. I for one would be interested to see that kind of world. I was taught a different theory, that you could not eat unless you worked; but according to the hon. member and those who think as he does we are to have, in the reconstruction days, a world wherein nobody will work.


John Horne Blackmore: The hon. member has misrepresented what the hon. member for Jasper-Edson said.


Joseph-Arthur Bradette: Order.
Mr.	HANSON	(York-Sunbury):	I	heard
him read an essay on the subject.


Joseph-Arthur Bradette: We should now have reached a stage in the discussion of the bill when it is possible to keep the discussion to the item itself.
Mr.	HANSON	(York-Sunbury):	I	agree,
but, with all respect to the Chair, I should like to make this observation: we had the hon. member for Jasper-Edson read an essay taken out of some book written by somebody who was going to remodel the world along the line I suggested, that hereafter nobody would work.


John Horne Blackmore: You never have.
Mr.	HANSON	(York-Sunbury):	I	shouldlike to have had	the hon. gentleman	follow
me for forty years, with the midnight oil I burned.
Mr. IvUHL: I should not like to turn out the same, though.


Richard Burpee Hanson: That is all right, but I will take my chances on heaven along with the hon. member. I admit at once, Mr. Chairman, that we have strayed from the item; perhaps it has been a little entertainment to break up an otherwise dull afternoon.
I suggest to the treasury benches and to the Minister of Justice in particular that this is pretty drastic legislation. I am not going to take up any more time in arguing against it; I have stated my objection in reasonable language, and I am going to let it go at that.


[Stage Direction]
Section agreed to.
Section 11 agreed to.
On section 12-Penalty.
Alan Webster Neill: I am glad we have had this battle of legal wits, because it has furnished me with a good background for the protest I now wish to put in. I refer to the wording of this section, which is as follows:
12. Every person who commits an offence against this act is liable on summary conviction, if an individual, to a fine not exceeding five hundred dollars and, if a corporation, to a fine not exceeding five thousand dollars.
I respectfully submit that that is far too much power to put into the hands of an ordinary, average, run-of-the-mine justice of the peace. The subject with which this bill deals is entirely new; it constitutes, I suppose, a new departure in the jurisdiction of the world. We have seen able legal men on both sides of the chamber spend over two hours debating the meaning of one of the simplest sections of, the bill, and with a certain amount of apparent justification on both sides.
Department oj Reconstruction

The subject matter is so wide, and there is no precedent to govern the unhappy justice of the peace, who is to be called upon to decide on a matter involving a penalty of five thousand dollars. The lawyers have, as I said, argued ably this afternoon. How much longer would they have argued, I wonder, if some fat-fee-paying client had been involved?


Richard Burpee Hanson: Have a
heart.


Alan Webster Neill: They would have been talking here not for hours but for days, and quite justifiably; that is what they are paid for-to try to interpret the law for the benefit ol their clients.


Richard Burpee Hanson: That is not what we are doing here. We are trying to understand the law.


Alan Webster Neill: Yes; quite true. I want to
tell the Minister of Justice, because I take him to be a man of the cities rather than of the country, that when he deals with the cities he generally finds that the justices of the peace or local magistrates are men of some considerable knowledge of law, either lawyers or having some practical experience in law offices or the like of that; but in the country the situation is quite different. In the country men are often appointed simply to meet the need of having someone available to acknowledge a deed, or a conveyance in the case of a man selling a piece of property, when he has to acknowledge his signature before a justice of the peace. Those are about the principal purposes for which they are appointed. Occasionally they deal with the odd drunk, but that is a very simple matter. The justice of the peace, I submit, in all kindness to them- many of them are my personal friends-do not know the law. When there is so much uncertainty among experts as we have seen this afternoon, how do you expect a country storekeeper or game warden or someone of that kind to be familiar with the law? These men may be well educated, but that does not teach them the law. I will give you three instances, two of which came within my personal knowledge and the other was well advertised.
I am myself a magistrate, although I have not acted for many years. On one occasion I had to get a justice of the peace to sit with me on a case, since it required the presence of two justices of the peace, and I had a horrible time persuading my brother magistrate not to send the three defendants, who were charged with something not very much worse than a bad drunk, to penal servitude for fourteen years. He was a capable, sensible

man, but he did not know anything about the law. We finally compromised on three months.
On another occasion, in a little country place some petty ill-feeling led a man to lay a charge against another man for the theft of a mink trap. The trap was worth only fifteen cents new, and this was a second-hand one. The case got before a justice of the peace; a small settlement took sides, and in the end the whole thing was remitted to a court about one hundred and fifty miles away. The justice of the peace was told to serve subpoenas upon the crown witnesses, and in his broad, generous mind he thought he would act fairly and issued summonses to everybody, including witnesses for the defence. By this time the entire village had divided itself into two clans, and nearly half the residents went down to the trial and had a nice holiday. In the end it cost the provincial government $500 to decide the ownership of that mink trap. I have forgotten what happened to the trap, but I know it cost the provincial government $500 because the case came before a country justice of the peace who had the best of intentions.
I give another instance, and it comes home to the hon. member for Yale because it occurred in his district. There are several large lakes there, and a man was charged with the theft of a boat or canoe worth not more than $10. The case was brought before the local justice of the peace, a thoroughly educated gentleman also animated with the best of intentions. The accused was his personal friend; they had social relations with each other. The magistrate thumbed over the criminal code and said to the accused, "I am awfully sorry, old man, but the nearest case I can find to yours is piracy on the high seas and that is punishable with death. I don't know what else can be done." If somebody had not interfered, I suppose the man would have been sentenced to the extreme penalty. These are facts, and this is only an illustration.
Now, you cannot expect knowledge of the law on the part of a country justice of the peace, and yet you are going to give him the power to punish a man with a fine of $500 or in the case of a firm $5,000-and it is sometimes popular but not always wise to hit the big firm in a country place. I suggest that the offence ought to be made indictable. If the Minister of Justice will think the matter over I believe he will agree with me. This is tricky legislation; it is a new measure for which there is no precedent; the justice of the peace cannot run his finger down the page of any statute and find comparable offences. It is entirely new. These cases are not likely

Department oj Reconstruction
to any great extent to come before country justices of the peace, and in the towns a higher authority will be easily accessible. It would be very much better to have the prosecution made under indictment and not under summary conviction, because this would bring it before a judge who has knowledge of the law.
It might be said that it is necessary to impose heavy penalties in order to enforce the law, but it does not by any means follow that by putting absurdly heavy penalties within the discretion of an untrained man you are going to have a successful enforcement of a statute. The minister at the present time has before the house a bill for the amendment of an act which has been on the statutes for fifty or sixty years, which provide that if a man is caught stealing anything, however small, from a letter in the mails, he shall go to the penitentiary for not less than three years, and he explained when he introduced the bill that it had been found necessary to amend the law because as it stood it was not fair to the petty thief and did not result in a successful enforcement of the provision. The reason for that is obvious. Rather than send a man to gaol for three years for a trivial offence a magistrate will suspend sentence, or the matter will be hushed up. That is what I am impressing on the minister now. If he makes his.punish-ment too heavy the penalty will not be enforced, because the matter is likely to be hushed up. It is said of a certain ruler of Turkey that, having found a baker giving false weight, he had the man put into his own oven and baked, and he said that he had stopped that crime for the future. Well, that is neither the British nor the Christian way of doing things. In the long run, certainty of punishment, rather than undue severity, is what deters crime, and I suggest to the minister that what we should aim at here is certainty rather than unduly harsh punishment. For that reason I suggest that the matter should be taken by way of indictment.
Mr. ST. LAURENT: An indictable offence is usually looked upon as much, more serious than matters that are punishable by summary conviction, and this here was regarded merely as an offence and not as something which formerly would have been considered a felony. It having been declared an offence, a penalty had to be provided in the bill itself, or the penalty would have been that fixed by the criminal code under section 164, which is much severer than the one here set out.


Alan Webster Neill: On indictment?
Mr. ST. LAURENT: On indictment. Unless the procedure and the penalty were fixed in this statute it would constitute an indictable
offence, which is usually regarded as something more serious than offences punishable by summary conviction.


Alan Webster Neill: Five thousand dollars is a very heavy penalty.
Mr. ST. LAURENT: That is the maximum. The bill that I have before the house is to remove the minimum. When the minimum is not fixed, article 1029 of the criminal code provides that the penalty may be anything from a farthing or a cent io $500 in the case of an individual and) from one cent to $5,000 in the case of a corporation, absolutely in the discretion of the court. I think the hon. gentleman knows from his experience with the Department of Justice that when it happens that what appears to be an exorbitant fine has been imposed there is no hesitation in coming to the Department of Justice and asking them to recommend to his excellency clemency and a reduction of the fine. There have been some cases where fines which appeared to be out of proportion to the seriousness of the offence have been imposed, and there have been quite a number of cases where the Department of Justice has recommended to -his excellency, in the exercise of clemency, a reduction of the fine. I would fully agree with the hon. member if we were fixing a minimum, but there is no minimum fixed in this case. It is merely a maximum, and as to that maximum, the purpose of the bill is to do for reconstruction what was done for war purposes under the Department of Munitions and Supply Act. There the penalty was -up to $500 in the case of an offence by an individual and up to $5,000 on a corporation. There is no minimum being fix-ed in this bill, and1 there may be oases where a substantial fine would be felt to be in order.


Alan Webster Neill: I see the force of the minister's logic, but. I do not think it was improved by his falling back to some considerable extent on the aigument that if a wrong judgment were given the Department of Justice would see that it was rectified. Would it not be better to obviate the wrong judgment by setting up machinery of such a nature as would reduce the possibilities of such a thing occurring? The country justice of the peace is not a lawyer; he is not familiar with law, and he should not be given such power.
Mr. ST. LAURENT: It may be that these summary conviction cases are frequently prosecuted before justices of the peace in British Columbia. I was so informed the other day, although I had not been aware of that fact. In

Department oj Reconstruction

most of the other provinces they are prosecuted before magistrates who have been appointed under statutes which require them to be lawyers and to. have practised for a certain number of years.


Alan Webster Neill: Not in British Columbia.
Mr. ST. LAURENT: I am told that there are many districts in British Columbia where summary convictions are taken before justices of the peace who have not been practising lawyers, but I think the hon. member knows his community well enough to feel that the possibility of imposing a fine of 3500 on an individual will not be apt to occasion any serious injustice in cases brought before such justices of the peace.


Alan Webster Neill: Oh! I was not worrying about my constituency but about the constituency represented by the member for York-Sunbury (Mr. Hanson).
Mr. ST. LAURENT: In the province from which the hon. member for York-Sunbury comes these matters are usually prosecuted before magistrates.


[Stage Direction]
Section agreed to.
On section 13-Expenses.
John Horne Blackmore: I should like to make a few remarks on the general question that is dealt with in this section. May I read it so that it will appear on Hansard.
The expenses of administration of this act and any other expenditures to be made by the department or by any other department hereunder shall be met out of the war appropriation or other moneys appropriated by parliament.
The other night I took occasion to comment upon the wording of paragraph (e) of section 2, which reads:
"reconstruction" means the reestablishment in civil life and reemployment on demobilization of the men and women of the armed services, of persons released from war industries, and the reorganization of industry, in ordeT to provide maximum production and full employment during and following the change over from war-time production of industry to peace-time production, and includes every undertaking by dominion, provincial or municipal authority or by any corporation or other person which may contribute to such reorganization.
May I call the committee's attention to the very wide field which is covered by paragraph (e) of section 2, and the enormous expenditure of money which will be involved? I doubt very much whether the average member of this committee, including myself, can form even a vague guess of the astronomical figure

which will be required to express the amount of money which would bring about full employment in Canada. Notice what it says: . . . maximum production and full employment during and following the change over from war-time production . . .
I am raising the question, where is the money coming from? If I may direct my remarks for a few minutes constructively to the proposal that the money must not come entirely from debt or taxation, I may make a worth-while contribution to the proceedings of this committee.
I believe it is well known by the members of this committee that tihe organization which I represent in this house believes in the use of the national credit for the financing of projects which are incidental to raising the standard of living in the country; that it maintains that money can be created by the state debt-free-or shall we say "currency" instead of money; and that the amount of such money that can be created bears a direct relation to the productive and consumptive capacity of the nation. If it is accepted that the amount of currency or money which a nation can create depends directly upon the goods and services which that nation can produce and consume, then we reach a realistic concept of the amount of money which the government may have available for the prosecution of any project which it may deem advisable.
We have a way of determining the amount of money we can have, because the amount will depend upon our resources and our skill in working up those resources into consumable goods which our people and people abroad can enjoy. May I cite to the Prime Minister two or three little excerpts from documents which I believe he will find thoroughly reliable and authentic? First I suggest that he take the report of the royal commission on banking and currency in Canada of 1933 and turn to page 22, paragraph 47. There he will read the following words:
In the war session of August, 1914, parliament raised the partially covered issue to $50,000,000. Subsequently an issue of $16,000,000 was made against the deposit of railway securities guaranteed by the dominion government, as well as an uncovered issue of $10,000,000 for government purposes.
May I pause just there to reason with the Prime Minister for a minute or two on what is contained in that statement? The only backing behind the 316,000,000 was railway securities; and behind the $10,000,000 there was no backing at all. But the $26,000,000 which were produced as a result of this creation of money were spent by the government

Department of Reconstruction
for governmental purposes. That was back during the last war, in a time when ordinarily it is dangerous for the state to create money, because there is usually or likely to be a scarcity of goods in the country while war is progressing. May I continue with the passage:
In 1917 an emergency issue of $50,000,000 of dominion notes was made to finance war purchases in Canada by the British government. The notes were secured by imperial treasury bills. In due course, this indebtedness was liquidated by payments from the British treasury and all of this issue had been redeemed by 1927.
That passage has no particular bearing on the matter under discussion this afternoon. The next passage is:
No changes have since been made in the Dominion Notes Act except that by a statute passed on March 30, 1933, the governor in council was empowered to suspend the redemption in gold of dominion notes, and an order in council to this effect was made on April 10, 1933.
It is to be gathered from that passage that after April 10, 1933, it was no longer possible for any one holding a Dominion of Canada note to demand gold in redemption of it. This put the country on a fiat money basis purely and simply, and roughly speaking the country has so continued from that time to the present.
What is there behind the fiat money which can give it stability and value? Only the goods and services producing power of the nation; for the more goods and services a nation can produce the more readily is it possible to buy goods with the money which the nation may create. This truth has profound significance for Canada in the post-war period. It will have a tremendous importance in its bearing upon this act if it is applied successfully, and I wish the Prime Minister and anyone who is in power in the country during the post-war period every success in the application of it. But a tremendously important part in the successful application of this act and the achievement of the objective which is envisaged by it will be played by created money, debt-free. I warn the Prime Minister or anyone who holds his position during those trying times that if we in Canada must depend upon the money which can be collected by taxation from the Dominion of Canada for the application of this act, then the whole process of reconstruction will be a disappointment of the bitterest kind, and many of the fine ideals which actuated those who framed this bill will be discarded, because men will rise and say: "The war is over; we have to pay for the war. Let us tighten our belts." Immediately there will be induced a period of retrenchment
100-262i
which will bode ill for the success of the application of this act and will tend to results as deplorable as those which resulted from the last war.
On one or two occasions I have offended the Prime Minister by rather severe remarks directed towards the way in which we were treating the returned men of the last war. I do not propose to refer to them this afternoon. I have not changed my opinion one iota. The men who fought the last war were my friends, my companions, the boys who were my age, my school mates, my university companions; and the way those men were treated after the war will be held by me as a condemnation of the administrations which have conducted affairs in Canada since that time. Offhand I cannot recall a single man who-received the treatment to which he was entitled. The Prime Minister knows we promised these men "homes for heroes." He has read of that, but what returned man ever received a home befitting a hero?
Now may I go on with this general question of the creation of money, just to show what there is in the records which are available to all hon. members of this house. I wish to-quote further from the report of the royal commission on banking and currency in Canada, this time at pages 22 and 23, and to read what was said by a former minister of finance of the dominion government, a man for whom I should think the Liberals in particular would have a high degree of respect:
But extensive use continued to be made of the power to issue dominion notes to the -banks against approved securities with the result that it was decided in 1923 to make this part of the Finance Act mechanism a feature of the normal Canadian financial system. In introducing the new legislation, Mr. Fielding, -the Minister of Finance, made the following -brief explanation of its purpose: "The act (Finance Act) was-adopted as a war measure, and no doubt was-exceedingly useful in the financial operations-during the war. It may be said that the war being over we no longer have any need for the act, but experience has shown that the act is still required; indeed, I am inclined to think that something of -the kind will have to become almost a permanent -part of our financial system."
I wonder why the Liberal party has so long neglected the wise counsel implied in those words. May I now refer to another semiofficial document, the Canada Year Book, 1932, at the bottom of 759, where hon. members will find a footnote containing the following, words:
The Finance Act, 1914 (5 Geo. Y.C. 3) makes-provision in case of war, panic, etc., -for the issue of dominion notes against approved securities. This emergency arrangement was made a permanent feature by c. 48 of -the statutes of 1923.
41GS
Department oj Reconstruction

One cannot help but wonder why, before we allowed our returned men to suffer degradation, we did not use these powers. I believe the fact that we did not do so constitutes a solemn warning to this generation that unless something is done we will continue to ignore these possibilities. I must say that I am really discouraged by reason of the fact that the Prime Minister, the hon. member for St. Lawrence-St. George, the hon. member for Essex East and the hon. member for Cariboo, who were the government representatives and advocates in the discussion which preceded the introduction of this bill and in the discussion of the bill itself, referred to nothing but taxation and debt. In a vague sort of way the hon. member for Cariboo reminded us what the banks did when they had to market a crop of wheat, but beyond that he did not go, nor did the Prime Minister. What does it mean? It means that the people of Canada are left out on a limb at the present time, with no idea whatever of how the government proposes to do all the things it envisages in this act. If the government has no financial device for financing the projects involved in this act, beyond borrowing and taxation, all I can say is that this whole measure is nothing in the world but another means of deceiving the Canadian people.
As an indication of the possibilities of the use of debt-free money, state-created, I should like to read two or three passages from the report of the Bank of Canada dated February 10, 1944, wherein the governor of the bank, or whoever wrote the report, suggests the tremendous productive capacity of Canada in the post-war world. I have already indicated that the amount of money a state can create debt-free depends upon the goods the state can produce and consume. If, then, it can be shown that we are capable of producing an astounding amount of goods, them the possibility of the use of this debh-free money, which is indicated in the three excerpts which I have read, becomes very encouraging. Now I read from page 11 of the report of the Bank of Canadla:
By the end of 1943 the gainfully occupied population had risen to approximately 5,100,000 but about 1,900,000 of these were engaged in tile armed forces, in supplying the weapons of war, or in producing the food required for special wartime exports. The number available to meet civilian needs 'had therefore fallen to about 3,200,000, but at the same time the average standard of living had risen materially and was *probably higher than it had ever been.


William Lyon Mackenzie King: 
John Horne Blackmore: The Prime Minister will not mind if I read one more sentence?


William Lyon Mackenzie King: Not if my hon.
friend is going to stop then for good.


John Horne Blackmore: Yes, I am going to stop then, because I understand that at eight o'clock we are going on with the budget.
This increased output of consumption goods by a smaller working force can be accounted for in part by longer hours of work, favourable crop conditions and the abnormally small number now employed in private capital development and maintenance work. Another important factor, however, has been the improvement in production techniques worked out under the stress of war.
In the next paragraph the governor of the bank goes on to point out that there will be an enormous increase in the goods produced in this country, which would indicate that if only we will be realistic in the matter of money and use the power which is implied in the three quotations I have read, we will not need to be anxious at all about implementing this measure for the rehabilitation and reconstruction of Canada.
Progress reported.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



THE BUDGET


Hon. J. L. ILSLEY (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committe of ways and means.
He said: Mr. Speaker in laying before the house the government's proposals for meeting the financial requirements of the present fiscal year, it is proper that I should give some account of the economic conditions and the financial results of the fiscal year which closed on March 31. In doing so, I refer the house to the white paper, which I shall table before sitting down, for the detailed record with which I do not wish to burden the house now.

The Budget-Mr. Ilsley



I. ECONOMIC AND FINANCIAL REVIEW

[Stage Direction]
The whole of the fiscal year was marked by high and sustained levels of production and employment. The employment index on April 1, 1944, was at almost exactly the same level as on April 1, 1943, despite the withdrawals to the armed forces. While there were marked changes in individual industries, the over-all variation was only in the amount of the unfilled demand for labour and in the incidence of shortages. This is a condition which we may expect to persist as the European military operations gain in scope and speed. The net demand for labour, as registered at the national selective service offices, has already mounted far above the levels reached in the spring.
Roughly estimated, national income in 194344 was something like twelve per cent higher than in the preceding fiscal year. Aside from the pay and allowances of the armed forces, much the largest increase relatively was in farm incomes. Salaries and wages were up more moderately while investors' and other enterprisers' income experienced still smaller increases. In contrast, rising costs were bringing about a decrease in corporate profits.
Consumer spending also increased through the year, and was in part reflected in an increase in retail sales which was most marked in country stores. It was reflected also in increased revenue from some of our luxury and quasi-luxury taxes.
Prices rose, and the cost of living index moved up one and one-half points during the year though on April 1 it had fallen somewhat from the higher levels established last fall. There are other occasions for discussing at length the government's policy of controlling prices, wages and salaries. However, I believe that that policy in its broad principles has the support of all parties. The need for it is evident on every side. It is not without its irritations and disadvantages but its beneficial results are beyond dispute. It is only necessary to remind the house that the government reaffirmed its policy in November last and again in March, and that the successful maintenance of that policy, through the period of active military operations in Europe and in the readjustment which will follow, will be even more important to this country than it has been in the past and that it will be at least as difficult.

[Stage Direction]
The financial results of the past year reflect these economic changes as well as the unfolding development of the war program and the
application of the revenue measures. Though the public accounts for the year are not yet made up, I am able at this date to give close estimates of the final figures.

[Stage Direction]
Total revenues for the year, including S155 million dollars of refundable taxes, were $2,856 million, an increase of $537 million, or twenty-three per cent over the revenues of 1942-43. Of this increase, total tax revenues at $2,592 million supplied $455 million.
The receipts from the personal income tax were $813 million, $279 million or fifty-two per cent above those for the preceding year. Of these receipts, an estimated $115 million was refundable. The large increase arose from the application of the higher rates of the 1942 amendments to the full fiscal year 1943-44, and the substantial increase in taxable incomes themselves. Revenue from the corporation tax amounted to $311 million, about ten per cent less than in the previous year in which the yield had been abnormally large because the time of payment had been moved forward. The excess profits tax yielded $469 million, slightly more than in 1942-43, reflecting the application of the higher rates of the 1942 budget for a full fiscal year. Succession duties at $15 million were also slightly higher.
Revenues from indirect taxes, with the exception of excise duties, in the yield of which there was little change, were very substantially higher. Customs duties produced $168 million, an increase of $49 million. The net revenues from the sales tax were $305 million, $72 million more than the previous year. The war exchange tax yielded $119 million, or $24 million increase, These are substantial increases. It should be noted, however, that the government itself, as a payer of taxes on its war and ordinary purchases, contributed a considerable part of the increases.
Excise taxes, other than the sales tax and war exchange tax, yielded $215 million, an increase of $54 million. Taxes _on cigars, cigarettes and tobacco provided more than half of this increase, while those on beverages, candy and chewing gum, transportation and communication and the proceeds of sales of excise stamps which reflect the retail taxes, contributed substantially toward it.
Among ordinary non-tax revenues, which totalled $140 million, the post office, following last year's increase in rates, produced a revenue of $61 million, an increase of $12 million. The return on investments was $52 million, $11 million more than in the previous year. Among special receipts, the income surplus of the
The Budget-Mr. Ilsley
[Stage Direction]
Canadian National Railways amounted to nearly $36 million, or almost $11 million over the figure for the previous year.

[Stage Direction]
Ordinary expenditures were $630 million. The interest on the public debt was $243 million, and, of the total increase in ordinary expenditure of $69 million, it accounted for $54 million. To the remaining increase of $15 million, the cost of loan flotations and amortization contributed $5 million; compensation to the provinces in respect of the guarantee of revenues from gasoline taxes, $4 million; unemployment insurance $1 million, increased expenses of the Department of National Revenue $3 million; and the post office $4 million.
Capital expenditures, at $3 million, were slightly reduced. Special expenditures amounted 4o $37 million, and were $6 million higher ithan in 1942-43. Higher payments under the Prairie Farm Assistance Act and the wheat acreage reduction plan accounted for the whole of the increase. Government-owned enterprises required somewhat more than $1 million, about the same as last year. Other charges amounted to $64 million and were slightly lower than in the previous year.
Under the war appropriation acts, including Mutual Aid, expenditures were $4,625 million, an increase of $901 million over war expenditures for 1942-43.
Total expenditures for the year thus were $5,360 million, an increase of $973 million over those of the previous year, but slightly less than the amount estimated in the budget of last year. Total revenues for the year exclusive of refundable taxes were $2,701 million. Deducting these, we arrive at the over-all budgetary deficit of $2,659 million^the amount by which the net debt was increased during the year. The proportion of expenditures met out of current revenue, slightly more than fifty per cent, is somewhat better, it will be noted, than I predicted last year.

[Stage Direction]
The budgetary deficit is the amount by which the net debt increased during the year. It is not the cash deficiency, that is the amount which we had to borrow to meet our cash requirements. As contrasted with total expenditures of $5,360 million, our total requirements for cash in Canada were $5,841 million. The difference between this sum and the amount of our expenditures, is made up of the amounts required to make recoverable advances in con-

nection with war purchases, to pay off indebtedness abroad, and to purchase securities, foreign exchange and other active assets.
Our first source of cash to meet these requirements was our revenues which produced $2,662 million in cash. The refundable portion of the income and excess profits taxes provided $155 million, net receipts in trust, insurance and superannuation accounts contributed $50 million, and miscellaneous receipts and credits resulting from the working of various accounts, $39 million. The remainder, $2,935 million, is the amount of the cash deficiency.
It is this cash deficiency, not the budgetary deficit, which measures the amount of our borrowing requirements, and it is often much the larger amount. In the past year, the cash deficiency was only ten per cent higher than the budgetary deficit, but in three of five of the war years, when we were greatly extending our war programme, repatriating securities and accumulating sterling, it was more than double the budgetary deficit. Over the five years as a whole, it was nearly fifty per cent greater than the budgetary deficit. I lay some emphasis on this distinction because not only has it been of great importance in the past, but it is likely to be very significant in the future.
To a small extent, the cash deficiency was met by drawing down our cash balances by $42 million. The total cash borrowing for the year, $2,962 million, met the remainder, and in addition provided $60 million to meet bond maturities in cash and $9 million to reduce the floating debt. In addition, securities to the value of $696 million were renewed or converted, not including the annual renewal of $33 million of school lands debentures. Of the cash obtained by the issue of new securities, $60 million came from the increase in the treasury bill issues, $170 million resulted from the sale of $200 million 2-year notes to the chartered banks less a reduction of $30 million in the deposit certificates outstanding; the remainder, $2,732 million, was the proceeds of borrowing from the general public. War savings certificates, together with the accumulated interest thereon, yielded $47 million net, noninterest-bearing certificates $1 million and sales of victory bonds $2,684 million.
In the budget speech of last year, I charged national war finance committee with the duty of promoting continuously the sale of war savings certificates and stamps and of organizing and conducting two victory loan campaigns. This task they faithfully and brilliantly accomplished.
Sales of securities and stamps, including conversion sales, by the national war finance

The Budget-Mr. Ilsley
organization amounted to about $2,947 million. Of this total, sales to individuals, excluding those in the special names canvass, amounted to $1,239 million and the number of applications on the occasion of the fifth victory loan rose to 3 million. With the permission of the house, I shall put on Hansard a brief table giving the detail of these sales:
Security Fourth victory loan cash sales	 Fifth victory loan cash sales		Total amount (millions) 	 $1,308-7 	 1,375-0 	 195-6	Sales ton>
individuals (millions) $ 529-5 599-7 42-2	Sales to others (millions) $ 779-2 775-3 153-4	Number of applications (millions) 2-	7 3-	0 0-0
				

$1,570-6	$ 641-9	$ 928-7	War savings certificates 	
66-5 	
1-4	66-5 1-4	10-2
$2,947-2	$1,239-3	$1,707-9	....
<i>
Excludes individuals covered in the special names canvass.
<2>
Net increase in public holdings; certificate sales include certificates issued against payments in stamps. Total stamp sales in the year were $12*2 million.
This is the largest volume of securities which has ever been sold to the Canadian public in any year, but probably it will have to be exceeded in the present year. Further, bonds and certificates are now held by more people than ever before. It is estimated that there are at least 2J million persons holding war and victory bonds, and perhaps over 3i million individuals holding war savings certificates.
The costs of our public borrowing operations are very low considering the magnitude of the loans, and the number of individual transactions. In the year ended March 31, 1944, costs incurred by the national war finance committee, with respect to the sale of victory bonds, and war savings certificates and stamps, amounted to only about 87 cents for each $100 of securities sold-that is, seven-eighths of 1 per cent of total sales. To achieve such outstanding results at this cost, is, in my opinion, a proud record of accomplishment. It is a record which is made possible only by the voluntary services of the tens of thousands of people who form the voluntary staff of the national war finance organization, by the tremendous energy and enthusiasm they bring to the discharge of the war-time responsibility which has been entrusted to them by their fellow-Canadians, and by the unremitting and wholehearted support given to our victory loans by business firms, by the press, the radio, the motion picture industry, and by labour, agricultural, and many other organizations and groups throughout the country.
There is one point at which the record of our war financing is not as good as I would
wish. On several occasions over the past two years, I have referred to the fact that many investors are disposing of victory bonds they bought during campaign periods, and that many people are presenting war sayings certificates for redemption. I should like to say here a further word to the millions of Canadians who now own victory bonds and war savings certificates.
Last year, I said that when a person buys a victory bond or a war savings certificate, that person is helping his country to get the materials needed for war use, and, in doing so, is doing his part to fight the home-front battle against inflation. I went on to say that when people sell their bonds or have their certificates redeemed, they are withdrawing this help. These statements are true to-day as they were a year ago. This is a time for increasing our support of our fighting forces. It is not the time to withdraw it. We are giving and maintaining this support when we set aside the largest possible amount of savings for the purchase of victory bonds and certificates, and when we hold on to the bonds and certificates we now own.
Emergency needs for cash are one thing. Unnecessary spending, financed by the turning of bonds or certificates into cash, is quite another. Unnecessary spending at this time is a betrayal of our obligation to the men who are risking their lives and dying in the great battle for world freedom.
Everyone who owns bonds or certificates should always remember that a reserve of savings will be of great value to the individual
The Budget-Mr. Ilsley
[Stage Direction]
and to the nation after the war. When materials and productive facilities can again be devoted to civilian use, more and better-quality goods will be on sale than are available to-day. Now is the time to lay aside funds for building something after the war, or for buying something new and durable, or to start one's own business-or to expand it. '
In the meantime, the money invested in bonds and certificates is ready for emergency use at any time it may be needed because there is always a ready market for victory-bonds, and war savings certificates are redeemable any time after six months from date of issue. But before any person sells his bonds or presents his certificates for redemption, I would ask him to weigh his real or imagined need for cash against his country's need for his continued support at this critical stage of the war and against the advantages, national and personal, which can be realized by the postponement of spending until after the war is over.

[Stage Direction]
At March 31, 1944, the gross unmatured funded debt is estimated to have been $10,689 million, of which ninety-seven per cent was held in Canada. The net debt at the same date was $8,842 million. The annual interest charge on the funded debt was $274 million or an average rate of 2-57 per cent. On March 31, 1939, the average rate of interest on the funded debt was 3-52 per cent. In addition to the funded debt, there are outstanding bonds and debentures, guaranteed by the government of Canada, in the amount of $699 million, a decrease of $17 million during the year.
From time to time, concern is expressed over the growing size of the national debt. The increase in our national debt as a result of war should be viewed in perspective. There are other considerations than the amount, which is determined chiefly by the necessity of war expenditures. In the five years from 1914 to 1919, the debt of that day had increased nearly seven times, but because the average rate had risen from 3-579 to 5-022 per cent the annual interest charges had risen more than nine times. Further, about one-third of the debt was payable outside the country and a substantial portion of the debt was in tax-exempt securities. Commodity prices had more than doubled, and were about to fall.
In the past five years, while the funded debt has increased slightly more than three times, the average rate of interest has declined from 3-52 to 2-57 per cent, and the annual interest cha-ges have risen two and a quarter times. If we take into account the revenue received by the government then the net

interest charges have increased only by a much smaller amount. The share of the debt payable outside the country has fallen from twenty-six to scarcely more than three per cent; there are no tax-exempt bonds, and we have every expectation of a post-war price level not seriously lower than the present.
I do not wish to push historical comparisons too far; they do give some perspective and draw attention to significant facts. I would emphasize rather that, while the national debt has increased, our national income, and with it our capacity to carry the debt has fully doubled since the beginning of the war. I would point out that the debt is almost wholly domestic. What is paid in debt charges goes into the pockets of taxpayers whose taxpaying capacity is thereby increased. We have, through the great efforts of the war finance committee and as a matter of deliberate policy, succeeded in distributing our new borrowing very widely so that the interest on the public debt will be paid, not to a few institutions and men of wealth, but to probably not less than sixty per cent of the income-earners of this country. These are reasons why I have confidence in the ability of the country to carry this debt and in the soundness and stability of these bonds as an investment.

[Stage Direction]
The record of 1943-44 has been made reasonably clear. It is quite a different task to make realistic estimates and proposals for 1944-45. The events and circumstances which will determine the course of the year's activities have not yet unfolded,
The expenditure estimates for the year new current are known to the house. For non-war expenditures as covered in the main estimates $702 million is required. The war estimates stand at $3,650 million, about $62 million less than our war expenditures last year. The Mutual Aid appropriation is $800 million. The estimated expenditures thus reach a total of $5,152 million. This is some $350 million less than the total estimates for last year and $208 million less than the actual expenditures last year, but as will be pointed out later this amount does not represent the whole of our requirements.
On the revenue side, it is estimated that, under the present tax laws, revenues in 1944-45, not including the refundable portion of axes, will be $2,617 million as compared with $2,701 million in the past year. I shall place on

The Budget-Mr. Ilsley
Hansard a statement showing the details of this estimate in comparison with the revenues of 1943-44:
	1944-45	1943-44
(millions)		(millions)
Customs duties 	$ 160	$ 168Excise duties 	150	142Sales tax 	290	305War exchange tax	120	119Other excise taxes	225	215Income taxes:	Personal 	830	813Corporate 	300	311Excess profits 	425	469Interest and dividends..	27	27Succession duties 	17	15Miscellaneous 	8	8$2,552	$2,592Non-tax revenue	145	140Total ordinary revenue...	$2,697	$2,732Special receipts	$ 75	$ 124Total revenue 	$2,772	$2,856Less refundable taxes....	$ 155	$ 155Net total revenue	$2,617	$2,701The table shows that,	under	the present
tax laws, we anticipate declines from customs duties and sales tax. These, it is thought, will result from two sources. In some lines there is likely to be a reduction in volume. To some degree, these taxes are being removed from individual items as administratively a more practical alternative than paying^ subsidies where such are necessary to maintain the price ceiling. .[DOT]
It is expected that revenues from the personal income tax will increase but that revenue from the corporate income tax and from the excess profits tax will decline. Non-tax revenues are likely to show a small increase.
If these expectations are borne out, there will be a decline of slightly less than $100 million in our total revenues this year. Expenditures of $5,152 million and revenues of $2,617 million will result in a budgetary deficit for 1944-45 of $2,535 million, about $124 million less than that for 1943-44. These estimates are carefully made, but I shall say frankly that I do not attach much importance to the anticipated decline in the deficit. We have entered the period of the most active and widespread offensive operations of the whole war. I consider it not only probable but certain that the swiftly moving events of this year will require expenditures which could not have been anticipated months ago when our appropriations were made up-expenditures which no one would for a moment
hesitate to make. In short, while I am bound to subtract our anticipated revenues from the expenditures for which parliament has been asked to make appropriations, I cannot conceal my own conviction that when the accounts for 1944-45 are closed, we shall find that , the budgetary deficit has, in fact, been greater, not less, than that for 1943-44.
I have already explained at some length that the amount of our cash deficiency differs substantially from the budgetary deficit, and that our total cash requirements do not coincide with our total expenditures. I have reason to believe that, even though our expenditures do not turn out to be greater than the present appropriations, our cash requirements will exceed those of last year.
The probable circumstances affecting various asset accounts are involved in this prediction, but I shall mention only the main ones. The house and indeed the whole country is aware that, after some reduction in the output of war materials and equipment of which great stocks had been built up, there is now intense pressure, in this as in allied countries, to increase war output to the highest possible peak so that the tremendous operations which have been begun so successfully on the continent of Europe may not be limited nor men be sacrificed for lack of fire-power, equipment and supplies. This vast flow of food, supplies and equipment from field and factory to the advancing fronts of Italy and France is a miracle of organization and a prime requisite of victory. Some of these supplies go to our own forces and are covered by the war appropriation which may have to be supplemented before the end of the present fiscal year. Others go to our allies under an arrangement that, in consideration of their being used by their forces for the defeat of the enemy, no payment will be required now or later. These are covered by the Mutual Aid appropriation. Beyond these, there will probably be large shipments, payment for which is not provided under the war appropriation or the Mutual Aid appropriation. For these we shall have to take payment only in the future or present payment in a currency other than Canadian. Whatever the arrangements, they have this in common that, economically, we can at present get no additional goods in exchange for what we send, and, therefore, the pressure on our man-power is increased, and, financially, we have to find the cash, here and now, to pay for their production and transportation.
There are other factors affecting other asset accounts, but I think I have said enough by way of explanation. As nearly as we can now
[Stage Direction]
The Budget-Mr. Ilsley
[Stage Direction]
estimate, even though our expenditures chargeable to the budget should prove to be lower than those of last year, our cash requirements are likely to be some $200 million in excess of those of 1943-44, in other words something over $6,000 million, and mainly because of the need for arms and supplies to press the invasion and secure the victory.

[Stage Direction]
The cash requirement is the first, and most stubborn fact, with which we have had to reckon in framing financial proposals for the current year. This is the measure of the goods and services which must be acquired for war and other governmental uses. Whether in acquiring them, we incur an expenditure or make an investment has some significance for the future but none for the present. It is not unexpected that in this critical year our cash requirements should be high, and, in fact, as I have explained, they are higher than in any previous year.
The second consideration is the urgent need to achieve and maintain the highest possible production of goods and services of which our available working force and management is capable. The urgency of production is very great, and it is immediate. This is not a matter of building up a great organization from which output will flow in one or two years' time. The need is for maximum production now-from our present capacity and working force. It cannot be met except by maximum production per person.
A third consideration is the desirability of relieving cases of special hardship which very frequently arise when tax rates are heavy, and of removing some anomalies which experience has revealed in the working of our laws.
Finally, we have felt it necessary to keep in mind that we are nearer the end of the European phase of the war than we were. It is not in any spirit of foolish optimism that I state this consideration. The most gruelling part of the race is ahead of us, and if, by great good fortune, the coming months should bring victory in Europe, the Japanese phase of the war will still call for great efforts. Nevertheless, it is no more than prudent to give sober consideration to some of the problems which will arise when we are able to release some portion of our productive capacity for the purposes of peace. Let no one misunderstand me. This is no time to begin the execution, as distinguished from the making, of post-war plans. There is other work for every pair of hands at the moment.
- I am concerned only with clearing away some of the uncertainties of fiscal policy-opening the way for business firms, both large and

small, to proceed on as definite as possible a basis with the drawing up of plans for the post-war conversion and expansion of industry and trade on which employment after the war will depend. If the planning and designing can be done, the execution of the plans will come in good time.
These are the considerations which we have had in mind in framing the financial proposals for this budget.

[Stage Direction]
In reviewing the personal income tax, we have given consideration to many contentions that our rates of tax are too heavy and entail serious hardship particularly on persons with low incomes. Realizing that war-time taxation can never be light, we have, nevertheless, carefully reviewed our taxation in its effects on the lower incomes and in comparison with the taxes of other countries.
The main features of our income tax as they affect persons of low income are these: The personal income tax, including the compulsory savings element, consists of two levies. A normal tax of seven per cent is levied on the whole taxable income of single persons who receive more than $660 a year and of married persons who receive more than $1,200 a year. A tax credit is given for each child. In addition, a graduated tax is levied in ascending rates on the taxable income in excess of $660 and tax credits are given for wives and dependents. In order that incentive might not be destroyed by the abrupt application of the seven per cent rate to incomes slightly in excess of $660 or $1,200 there was at first a provision that the income could not be reduced below $660 or $1,200 by reason of the tax, including the compulsory savings portion, and later there was substituted the present provision that the total tax could not be more than two-thirds of the amount by which the taxable income exceeded $660 in the case of single persons or $1,200 in the case of married persons. Thus for single persons whose taxable income is between $660 and $820 the tax on each additional dollar of income is 66$ per cent, of which half is compulsory saving and only the other half is pure tax. For married persons, the same rate applies to a range of incomes above $1,200. For those without children the range is considerable, while for those with children it is less extensive.
The suggestion most frequently made is that *we should increase the exemptions from $660 and $1,200 to $750 and $1,500 or even higher figures. This would relieve a considerable number of present taxpayers from income tax altogether and would reduce total taxes sub-

The Budget-Mr. Ilsley
stantially for all others, no matter how large their incomes. There is a variety of other ways in which taxes could be reduced.
In considering the level of taxes, we are all inclined to look back to the exemptions and rates in force in Canada in 1939. It will improve our perspective if we look also at the exemptions and rates provided in the laws of other countries to-day. In the United States, the basic exemptions under the 1944 income tax law are $500 for single and $1,000 for married persons. In the United Kingdom, they are the equivalent of $356 for single and $623 for married persons. In Australia, the exemption for single persons is $372 and for married persons without children there is no additional exemption though the rates are lower than for single persons. In New Zealand, there is no exemption whatever in respect of the basic 12J per cent national and social security taxes, which are levied on the whole income, no matter how small, without exemption, while the exemptions for the graduated tax, and for that only, are $713 for single and $897 for married persons.
In comparing our tax rates with those of other countries, we must remember that our tax is divided into two parts: the first is pure or fixed tax, and the second a refundable or savings portion which will be paid back with interest after the war, and, unlike the compulsory saving in the United Kingdom, it has not to be paid by any taxpayer who is making equal, contractual savings voluntarily. In any comparison of tax rates with those of allied countries, wre must compare tax with tax, not with savings. I am1 not sure that it
is generally understood that on this basis Canadians in the lower income groups are not taxed more heavily than the people of other countries.
On the contrary, on the basis of non-refundable taxes, single persons, in the United States, getting from $500 to $1,000 are more highly taxed than- in Canada; at higher incomes the Canadian taxes are higher. Married persons without dependents and with incomes from $500 to $1,500 are more highly taxed in- the United States; from $1,500 up, our taxes become higher. In the United States, a married person with two children pays a higher tax than our law imposes until the income rises above $1,600.
For each of the three categories, single, married with no dependents, and married with two dependents, and for all levels of earned income up to $2,000 at least, the fixed or nonrefundable income taxes payable in the United Kingdom, Australia and New Zealand are substantially higher than in this country.
Gordon Graydon: Have those other countries compulsory savings?


James Lorimer Ilsley: The United Kingdom has.


Gordon Graydon: The other two, Australia and New Zealand, have not?


James Lorimer Ilsley: I do not think so.
With the permission of the house, I shall place on Hansard tables showing these comparisons in detail for incomes up to $2,000. I commend these tables to the careful attention-and study of the house:



COMPARISON OF INCOME TAXES PAYABLE IN CANADA, UNITED STATES, UNITED KINGDOM, AUSTRALIA AND NEW ZEALAND

[Stage Direction]
Single Person-No Dependents
Earned Income	Canada	United States	United Kingdom	Australia	New (a) ZealandFixed Tax	Savings Tax	Fixed Tax	Savings Tax	$	%	$	$	$	$	$	$500	0	0	0	0	31	31	63600	0	0	12	18	42	50	75700	11	1	32	45	44	74	88800	45	45	53	72	46	102	113900	66	66	74	99	49	133	1441,000	91	79	95	126	51	168	1721,100	120	88	115	153	53	207	2021,200	149	96	136	180	55	247	2331,300	181	104	157	207	72	288	2641,400	213	112	177	235	89	328	2941,500	245	120	198	275	94	369	3271,600	277	128	219	316	98	410	3591,700	311	136	239	358	101	451	3921,800	347	144	260	399	105	493	4241,900	402	152	281	441	108	535	4582,000	439	160	302	483	111	577	491
(a) Includes national security and social security taxes. 100-263i
The Budget-Mr. Ilsley

[Stage Direction]
Married Person-No Dependents
Earned Income	Canada	United States	United Kingdom	New (a) ZealandFixed Tax	Savings Tax	Fixed Tax	Savings Tax	Australia	$	$	*	$	$	$	$	$500	0	0	0	0	0	9	63600	0	0	2	0	0	20	75700	0	0	4	0	2	36	88800	0	0	7	0	32	51	100900	0	0	10	0	61	67	1131,000	0	0	12	25	65	102	1421,100	0	0	15	52	67	140	1711,200	0	0	36	79	70	173	2011,300	31	31	57	106	72	208	2311,400	65	05	77	133	74	244	2621,500	98	98	98	160	76	281	2931,600	127	127	119	187	93	318	3231,700	148	148	139	215	110	356	3561,800	170	170	160	243	127	395	3881,900	195	189	181	285	130	434	421'.2,000	229	199	202	327	134	473	453
(a) Includes national security and social security taxes.

[Stage Direction]
Married-Two Children
Earned Income	Canada	' United States	United Kingdom	Australia	New (a) ZealandFixed Tax	Savings Tax	Fixed Tax	Savings Tax	$	$	$	$	$	$	$	%500	0	0	0	0	0	0	63000	0	0	2	0	0	0	75700	0	0	4	0	0	0	88800	0	0	7	0	0	3	100900	0	0	10	0	0	12	1131,000	0	0	12	0	0	39	1251,100	0	0	15	0	0	69	1381,200	0	0	18	0	4	96	1501,300	17	17	20	0	33	125	1711,400	21	21	23	0	62	156	1991,500	24	24	26	15	76	188	2291,600	28	28	29	42	79	222	2571,700	40	40	31	70	80	257	2891,800	62	62	34	97	82	292	3201,900	84	84	37	124	84	328	3502,000	106	106	39	151	87	365	381
(a) Includes national security and social security taxes.
The combined rates of tax and savings levied in Canada on nearly all incomes up to $2,000 nre higher than the pure tax rates payable in the United States. They are at no point as high as the combined tax and compulsory savings rates payable in the United Kingdom, and they are rarely as high as the rates of pure, non-refundable tax levied in Australia and New Zealand. -
(Mr. Ilsley.]
These are the facts regarding the relative height of our tax rates, and neither they nor the financial requirements of the year offer any support to proposals for tax reduction. Nevertheless, I appreciate that there are among the lower income groups cases of hardship where individual circumstances increase the severity of the deductions from income required under our law. We had this in mind

The Budget-Mr. llsley
when, we provided so large a refundable portion in the combined tax and savings levy. We had it in mind in providing that the savings portion need not be paid if the taxpayer was making equal contractual savings voluntarily, and when provision was made for an allowance against unusual medical expenses. In framing the present law, great importance was attached to the large savings portion to be returned with interest after the war. Yet I realize that any large compulsory payments, whether they are refundable or not, will create hardships in the particular circumstances affecting some family budgets. It is the chief virtue of voluntary saving in comparison with compulsory saving that it is more flexible and can be adjusted more readily to fit the particular and changing circumstances of different individuals and families.
Other considerations have also given concern. It has been widely represented that the high rates of deduction for income tax purposes is having an adverse effect on production, particularly as many taxpayers apparently do not make any distinction in their minds between refundable and non-refundable taxes but regard them all as simply taxes. The fact that it is not administratively possible to issue certificates for the refundable portion until a considerable time after the deductions are made contributes to this misunderstanding. At this stage of a long war, there are many causes contributing to absenteeism, unwillingness to work overtime and lack of application on the job. But it is alleged that the high rates of deduction for tax and savings are a contributing factor. I am not in a position to judge fully how far this is true, but I do know that now is the time when the need for greater production is urgent and immediate.
In the period of the war in which we have been building up our income tax and savings law and our collection machinery, we have also been building up a voluntary savings organization, which has achieved a notable record of success. Under the national war finance committee, the organization and stimulation of voluntary savings have been brought to a very high level indeed. The work of the national war finance committee now permeates the whole nation to a degree which had not been attained when compulsory savings were instituted.
In reviewing all the circumstances, I have been impressed with an undesirable feature of our income tax. As I have already indicated, our law moderates the abrupt application of the seven per cent normal tax to incomes slightly in excess of $660 and $1,200 by providing that the total tax, including the savings portion, shall not be more than two-thirds of the amount by which the taxable income exceeds $660 or $1,200. Nevertheless, this is a high rate of levy on each extra dollar earned and though it extends over a limited range of incomes, it is undesirable if it seriously blunts incentive.
In the second place, as I mentioned earlier, we cannot overlook the number of cases of special difficulty and hardship which result from high combined tax and savings rates when the savings rate is as rigid and as compulsory as the tax rate.
I have been forced to the conclusion that it would be a desirable change in our income tax law to discontinue the refundable feature of the income tax leaving as the full rates of taxation, the rates of pure, non-refundable tax as they now stand, and depending on voluntary savings to replace the proceeds of the compulsory saving provision. This step will reduce the total tax deductions from each additional dollar of income earned, by one-half for those in the lower income ranges who, being without contractual savings, had1 to make the full compulsory savings contribution. It will substitute the flexible instrument of voluntary saving for the more rigid method of compulsory saving. The refundable feature of our income tax law provided simply a method of borrowing and of borrowing for progressively shorter terms as the war goes on. With its provision of allowances for contractual savings, it embodied a principle of fairness which I regret to relinquish. Nevertheless, if this particular method of borrowing, despite its virtues, has the one fault of discouraging production at this critical pqriod of the war, or if by its rigidity it creates hardship among those income groups whose incomes leave little room for adjustment, then another method of borrowing must be found.
It is recommended, therefore, that no further deductions for the refundable or savings portion be made after June 30, 1944. This will mean that for the year 1944 as a whole, the liability for compulsory savings will be reduced by one-half, deductions having been made during the first six months of the year. For 1945, it is recommended that the total tax liability shall be reduced by the amount of the required savings portion applicable to each taxpayer. More simply, the rates and deductions now applicable to those who have full offsets in contractual savings will apply to all taxpayers.
I must repeat and emphasize that this proposal does not imply that the need for saving is less. On the contrary, from every point bf view, the need is greater than ever before.
The Budget-Mr. Ilsley
[Stage Direction]
Civilian goods continue to be in relatively short supply; the demands from the war fronts are more imperative; and overall cash requirements are mounting to new high levels. Only the desire to remove a barrier to -production, to do away with misunderstandings and to meet legitimate complaints of hardship could have induced me to recommend at this time a step which tests still further the willingness of our people to respond to the appeal for voluntary savings. It is on voluntary savings that the country must rely to replace -the $110 to SI 15 million dollars a year which will be relinquished by the change. If our people understand the need, I am sure that they will answer the call.
The other changes which are proposed in the personal income tax are changes in detail designed, to relieve cases of special hardship. I shall state only the principle of each change and defer fuller explanation until the house discusses the resolutions.
To make the medical expenses allowance now provided in the Income War Tax Act more fully and fairly available to those who have the misfortune to encounter unusually heavy medical expenses, it is recommended that medical expenses incurred outside of Canada should be allowed on the same basis as if incurred' in Canada.
In recognition of the additional expenses [DOT]which they incur, it is proposed that persons suffering from blindness, as defined in the Old Age Pensions Act, be permitted an allowance of $480 in the form of a deduction from income. This is to be an alternative and not an addition to the allowance for the wages of a full-time attendant now provided under the medical expenses section of the act.
The dropping of the refundable or savings portion of the income tax .will help to alleviate many of the cases where our taxes result in some measure of hardship. There are other recommendations to which I now wish to refer respecting dependents, which are intended to recognize more fully than before the varying circumstances of family responsibility. These I believe will be thoroughly in keeping with the greater emphasis that we shall be placing upon family welfare after the war. With the introduction of family allowances we are taking a great stride forward in improving the position of those with low incomes and family responsibilities. Now with respect to dependent children, it is proposed to authorize the extension of the tax credits now granted in respect of the taxpayer's children to include illegitimate children and other children dependent on the taxpayer. In the registration records covering all children, which are neces-

sary for the administration of family allowances, there will come into existence a dependable basis for administering this extended provision which has not hitherto existed. In respect of dependents other than children, I am recommending that the allowances now given for the support of blood relatives be extended to include relatives by marriage supported by the taxpayer.
Our present provision that when the wife or husband, as the case may be, of a taxpayer has an income from investments in excess of $660, both shall be taxed as single persons, has resulted in very severe penalties. There is no concern over cases in which both the taxpayer and his wife have substantial incomes, but when the wife's income rises a small amount over $660, the husband who is a taxpayer loses the tax credit of $150, becomes liable to the higher rates of normal tax imposed on single persons, and has his refundable portion reduced even though the family income may have increased by only a few dollars. It is proposed to provide a method for avoiding these penalties in the marginal cases by allowing a gift to be made to the crown in the right of Canada and to allow such a gift as a deduction from income. Thus, a husband whose wife has an income exceeding $660 need not be taxed as a single person unless her income exceeds $660 by an amount sufficient to equal the additional tax resulting from the single status.
The present provision, whereby a person paying alimony or comparable payments to a divorced or separated wife or husband, as the case may be, is allowed, as a tax credit, the amount of the tax for which such wife or husband is liable on that income, has worked great hardship in the case of persons with relatively low incomes and making relatively low payments. It is proposed, therefore, to amend the law so that the amount of such payments shall be allowed as a deduction from income.
There are a number of amendments related to the retirement of employees from service and contributions to pension funds. It is proposed to allow those who receive long-service gratuities in a lump sum on retirement from service to spread the sum over five years for tax purposes. Contributions of an employee to an approved pension fund are now allowed as a deduction from income up to S300. It is proposed to allow, additionally, payments up to the same amount into such funds by employees, if required to make up past deficiencies. Contributions to approved trade union pension funds paid in the form of union dues are to be allowed as a deduction

The Budget-Mr. Ilsley
from income, as is now done in the case of other approved pension funds. It is proposed that persons reaching the age of sixty-five shall be entitled to the return of refundable taxes standing to their credit after the end of the year in which they reach sixty-five.
The present period of thirty days allowed for making an appeal against income tax assessment is much too short to be fair to members of the armed forces and I am recommending that for them it be extended to one year, or such longer period as the Minister of National Revenue may allow.
To the various powers to require information, it is proposed to add the power to require anyone accepting deposits to report the interest paid on such deposits.
There are some amendments affecting the status of those who maintain in the words of the act "self-contained domestic establishments" which will require detailed explanations into which I shall not enter now. Other proposed amendments would allow taxes paid to foreign governments to be deducted from the non-refundable portion of our tax rather than the total tax, change the penalty for late filing, and the rate of interest on unpaid tax, and limit the time within which assessments can be reopened, except in case of fraud or misrepresentation, to six years after the first assessment.
There are two special income tax problems to which we have given a great deal of study in the past year and to which I wish now to refer. The first of these is the treatment of annuities and other like payments, such as the various types of pension and retirement plans. I have been strongly urged, both in the public press and by letter, to alter the present basic rule under which life annuities are taxed in the same way as any other form of income. The principle upon which our law is founded is the same as that which underlies the income tax in Britain, where so many of the fundamentals of income tax law were developed. This English law has been thoroughly tested in many appeals to the courts, and affords us a well-established foundation on which to base our act and its application. The essential principle we follow is that a life annuity contains no element of capital repayment which the law should recognize. This general principle was commended by the distinguished royal commission which reexamined the income tax in Great Britain in 1920.
The .critics argue, however, that just as we recognize an element of capital repayment in an annuity for a fixed term of years, so we should, by taking into account normal life expectancy, recognize a portion of a life annuity, in any one year, as a return of capital
rather than income. Nevertheless, in dealing with the matter there are more than actuarial considerations to be taken into account. Our basic concept of income-the essential distinction between income and capital payments -is involved. Moreover, we must relate the treatment of annuities to the treatment of pensions and retirement plans of various types. We should, in fact, reconcile the treatment under income tax of the various forms of the accumulation and use of savings. This is a complicated task, and there are many conflicting considerations. In this respect, it may be necessary to consider not only the form of the annual payment but also its origin. Furthermore, we should, I believe, have in mind the relation of annuity and pension plans to succession duties as well as to income tax, and not only the position of the individual taxpayer but the broader aspects of public policy. If the wealthy are to convert their capital into annuities and live upon a presumed return of capital tax-free, we shall lose substantial succession duty revenue.
If we should recognize a portion of a life annuity as return of capital, we are faced with many complex questions in our treatment of pension plans. For example, could we with fairness regard partly as capital the pension given in the form of an annuity iby a generous employer to an old employee on retirement, while treating entirely as income the wages of another, whose employer is unable or unwilling to retire him in similar circumstances? How should we reconcile the treatment of life annuities with the payments out of pension funds at present entirely free from income tax because the payments by employees into the fund have not been exempt? Would it be fair to continue to allow as a deduction from income the contribution of employees to approved superannuation plans? If we should change this practice, how much return of capital are we to recognize in the resulting superannuation payments? Should we not reconsider then our practice in overlooking, as income of the employee, the contribution made on his behalf to the pension fund by his employer? How can we best achieve fairness in the combination of income tax and succession duties when applied to various types of provision for retirement and family security, including, for instance, various life insurance and endowment plans, periodical payments under wills which may or may not be supported by the corpus * of the estate, various types of annuity and superannuation plans, and even the normal accumulation of property or securities? If we continue to adhere to the British principle, where should the line be
The Budget-Mr. Ilsley
[Stage Direction]
drawn in its application to the various combinations of term and life annuities, and between annuities and pension plans? Finally, must we recognize inevitably the wastage of capital in its financial forms and not the wastage of human capital which all must suffer who work for a living?
I mention these difficulties merely to demonstrate that much careful, detailed review of our law is necessary before we embark upon a new course in the basic treatment of annuities and pensions.
The second income tax problem to which I referred is much less common but probably more difficult and incapable of any wholly satisfactory solution. It was briefly discussed last year in the house and I said we would try to work out some form of alleviation for what we recognized to be cases of unfairly heavy taxation. It is created by the combined incidence of income tax and succession duties upon the holdings of deceased persons in private corporations with accumulated surpluses, when these holdings cannot readily be sold to others-as can shares in larger and public corporations-and funds must be obtained through the transfer of the surplus to the taxpayer's estate. I have seen a number of cases where after the payment of income taxes on the lump sum distribution of the surplus the amount left would not be sufficient to pay the succession duties. Since the enactment of our Dominion Succession Duties Act in 1941 and the raising of our income tax to its present heights, this problem has become most acute. In addition to confronting many families with grave difficulties, this problem, it is alleged, may endanger the whole future of private and family businesses, forcing them to consider either selling out to larger companies or the distribution of their shares through the securities markets, thus sacrificing the advantages of personal management by the proprietors-one of the sound and well-recognized virtues of small businesses. My colleague, the Minister of National Revenue, and I have looked into dozens of cases of this kind and tried out quite a number of formulae designed to avoid the inequity arising from this combination of taxes without creating unfairness either to the taxpayers or the crown. We have not yet succeeded in finding a satisfactory plan for dealing with these hard cases. We believe that with further study, a plan can be devised that will afford a measure of justice, relieving at least those cases where the present laws would leave little, if anything, for the family of the chief share- ' holder in a private company, while the estate of an equally wealthy man owning more 
readily marketable shares in a large, well-known corporation would pay only the fair rate of tax which parliament and the provincial legislatures intended. When a solution is achieved, I would recommend that it should be applied in respect of those cases now pending.
In the hope of securing the 'best and soundest solutions of these two difficult problems, I am proposing to make use of the procedure which has frequently been found of value in dealing with particularly difficult tax problems in Great Britain, and therefore to recommend the appointment of a special commission to inquire into these problems in detail, to examine the various types of cases involved, to hear evidence if necessary, and to make recommendations for their solution. As a consequence, I am expecting that in next year's budget, answers to these difficult basic problems of our income tax can be proposed which will not only appear as reasonable and practical under war conditions, but which may be expected to stand the test of time as well.

[Stage Direction]
Business profits are taxed under the Excess Profits Tax Act and corporate profits are taxed additionally under the Income War Tax Act. Profits withdrawn from business are again taxed as personal income. As a result of this overlapping of taxes, high wartime rates, and the strict definition of income, our tax treatment of business profits is severe.
I imagine that most members of the house are unaware of the great extent to which our taxation of business profits as such is more severe than that of either the United Kingdom or the United States. I have always taken and still maintain the view that our policy in this regard is right and proper in war time. I have no amendments to propose which will in anything but a minor way affect our current revenue from taxes on business profits.
One of the great dangers in imposing high rates of tax on business profits is that of inadvertently going beyond the taxation of profits and making inroads on capital or to put it another way that the taxes collected shall turn out to bear a much higher rate to the ultimately realized income than was contemplated in the law. The danger has its origin in the fact that business taxes are imposed on a yearly accounting basis whereas only a period of years, taking the good with the bad, will reveal the true earnings of an enterprise. Our present law makes some allowance for this, but, generally, we tax the yearly profits at very high rates and disregard

The Budget-Mr. Ilsley
the losses. We cannot shut our eyes to the fact that with the change from war to peace many firms may encounter temporary losses and under our present practice, taxes paid over the whole period of war and readjustment may bear considerably higher rates to the full realized income than those prescribed in the law. I am particularly concerned lest for this reason, when the time comes to replace war industries with peace industries, business enterprises should be handicapped in making the necessary changes or should be hesitant rather than prompt in action.
I am proposing, therefore, for the purposes of the corporation income tax and the excess profits tax, that business firms shall be allowed to charge their losses in any one year back to the profits, if any, in the preceding year and forward to the profits, if any, of the succeeding three years. This will permit a firm to charge losses which it may encounter in the first post-war year against the profits of the last war year. It will give such a firm the further assurance that losses which it incurs in the period of converting and expanding its business may be made a first charge on the profits of the succeeding three years when it may hope to be reaping some of the results of its enterprise.
This recommendation will bring our taxation of business profits nearer to the principle of taxing only what is actually realized in income over a period of years and should be of substantial assistance to business enterprise in the post-war years.
Another point, at which our taxes on business income have gone beyond the taxation of true income, is in the matter of expense for maintenance and repairs. These, of course, are a normal expense of doing business. For the past two years, in certain industries at least, it has been impossible, by reason of shortages of materials and labour and the necessity of continuous operations, to carry out the maintenance and repair work that would be normal and necessary to prevent the deterioration of plant and equipment. As a result, deferred maintenance expense is accumulating, and, in the meantime, profits are inflated because full maintenance is not charged. We have tried in the past to find some equitable formula for permitting the setting up of a maintenance reserve, but it is extremely difficult to devise one which will fit the varying circumstances of all industry.
We are now recommending a provision for the future which I hope will meet the problem in at least a partial way, and will speed up the work of plant repair in a period when additional employment may be needed. The proposal is that one-half the expenditure on
maintenance and repairs, incurred in a period to be fixed'by the governor in council, may be charged against the income of a previous fiscal period but not farther back than the fiscal periods ending in 1943. In the case of the mining industry, maintenance and repairs will be held to include also underground development work.
I have also some important recommendations which should facilitate the expansion of industry after the war. All will agree that Canadian industry must expand its research and technical development if we are to apply the most advanced technical knowledge to our resources, and maintain our competitive position. By all means, let us borrow whatever is best from other countries, but what we can borrow is not always what we need. The present tax treatment of expenditures for research is somewhat less than generous, and has some arbitrary results. Two classes of expenditure for research are not allowed as an expense of doing business: capital expenditures such as for laboratories, pilot plants, et cetera, and current expenses for research which are not directly related to the firm's immediate production activities. It is recommended that these limitations be removed and that all expenditures on research of a current nature be allowed in the year of expenditure and that research expenditures of a capital nature be written off as an expense over a period of three years.
There is a practical problem of the very greatest significance to which consideration has been given. Our drastic Excess Profits Tax Act is entirely a war-time measure. It has been appropriate to a war economy, but, in my opinion, it would be highly inappropriate as normal peace-time legislation. On the other hand, it would be a great mistake to repeal the measure until the conditions, which it was designed to meet, have disappeared. We do not know when the end of the war will come. Whether it comes soon or late, we do not know how closely the need for industrial and commercial conversion and expansion will coincide with the end of the war. What we do know is that at some time on fairly short notice it is going to be necessary to say to business, now is the time to put into effect your post-war plans. It is quite clear to everyone that present rates of taxation are, as they are intended to be, very discouraging to new enterprise, other than necessary war enterprise, and that the prudent course of a business man would be to delay his new ventures until the new level of taxation had been established. On the other hand, it is impossible and improper for a Minister of Finance to announce what will be recommended to parliament in future budgets.
The Budget-Mr. llsley
[Stage Direction]
I am making a recommendation which I think offers a practical way out of this dilemma, maintaining our present revenues and conforming to the principle of restricting taxation, as nearly as possible, to taxation of income. It is that we provide that, in respect of bona fide new investment in depreciable assets carried out after a date to be designated by the governor in council, the taxpayer should be allowed rates of depreciation which may vary at -the option of the taxpayer between maximum rates double the present ordinary rates and minimum rates which will be one-half the ordinary rates.
The significance of this proposal is twofold: first, it will allow the taxpayer to recover a part of his capital whenever earnings are good but will still leave all the income or profit, actually realized from the venture over its whole life, subject to taxation; second, it will allow him, in respect of such new investment carried out at a time when the government has declared the conversion and expansion of industry to be desirable, to transfer some of his income from a period when war-time tax rates may still be in effect to a later period when he may expect normal taxation to be lower. To this extent, it will relieve such investment for post-war purposes from such war-time taxation of business profits as may still be in effect at the time the work of conversion or expansion is carried out. It should be borne in mind that the taxpayer can write off no more than the full value of his new investment and to the extent that he reduces his taxable income in the early years he will increase it in the later years. There is nothing in the proposal which allows income to escape taxation.
There is a further recommendation to facilitate the plans of private industry for post-war expansion. It is desirable that, when the time comes to encourage such expansion, business firms shall be able to use the post-war refunds due to them under the Excess Profits Tax Act. On the other hand, although some firms may need them before others, it does not seem desirable that the government should make refunds available on a selective basis. It is, therefore, recommended that the act be amended to permit the assignment by way of security of the refundable portion in cases in which the governor in council is satisfied that the funds so obtained will be used in capital expenditures in preparation for post-war business giving desired employment.
The other recommendations which it is proposed to make on business taxation concern the detailed provisions of the act, and I shall try to explain only two or three of them.

The first affects new businesses under the Excess Profits Tax Act. At present, a company starting a new business enterprise cannot know in advance of the beginning of operations what standard profit will be subsequently awarded by the board of referees. This uncertainty makes it difficult for a company to proceed with its plans. The amendment which I am recommending will provide that for the first fiscal period of a bona fide new business, taxes Shall be levied at the flat rates which, in the ordinary case of corporations, will be forty per cent. This will give certainly to the tax position of the company for its first year. Thereafter, taxes will be levied in accordance with whatever standard profit is awarded.
Since the beginning of the excess profits tax in 1940, many businesses have substantially increased the volume of capital employed through ploughing back earnings. This has enabled them to expand productive facilities to meet the needs of war production. Unless a company has made an equivalent issue of capital stock, annual increases in the capital employed have not been taken as justification for any increase in the standard profits of the business, even though as a result of this reinvestment of earnings the business is substantially larger than it was in the standard period. It is now proposed, after four and one-half years of the operation of the Excess Profits Tax Act, to allow one adjustment upward in standard profits. The allowable adjustment upward will be an amount equal to five per cent of the increase in capital employed since the coming into force of the act where, under other provisions, no adjustment has been allowed in respect of new capital used in the business.
Those familiar with the technical features of our corporation income tax are aware that at present dividends paid from one Canadian company, whose earnings have been taxed, to another Canadian company are not taxable income in the hands of the receiving company. Furthermore, under certain conditions dividends from a wholly-owned subsidiary operating outside Canada are not taxable in the hands of the recipient Canadian company. In view of the fact that the profits of Canadian subsidiaries earned abroad will have already borne tax abroad at rates comparable to our own, it is now proposed that these dividends shall not again be taxable in the hands of the Canadian company receiving them. They are, of course, taxable when distributed by the Canadian company to its shareholders.
During recent months we have been urged to introduce a number of drastic changes in the tax structure as it affects the mining and oil producing industries. These industries are

The Budget-Mr. Ilsley
very properly considering their post-war position and the contribution which they can make to the solution of post-war problems. Needless to say, the government has very much in mind the need of a comprehensive and many-sided programme to encourage the efficient development of our natural resources and to assure that these industries will make the maximum contribution to the expansion of employment, national income and national wealth after the war. Natural resources, of course, are for the most part in the hands of the provinces, but the dominion, it is believed, can do much to promote full development and wise conservation. Tax policy may be one of the devices which it may appropriately use - to these ends but it will be by no means the only one. The dominion's programme should be part of an integrated programme worked out in cooperation with the provinces. At the forthcoming dominion-provincial conference, this programme, it is proposed, should be discussed with provincial governments and agreement reached as to the contribution to be made by the respective levels of government.
For these reasons I believe that any radical changes in tax policy of special application only to the mining and oil companies would be premature at this time. The Excess Profits Tax Act already includes a special formula for the taxation of oil wells and gold mines. New companies in the metalliferous mining field enjoy a three-year exemption from excess profits tax. In last year's budget we made a number of important concessions to encourage exploration and drilling for oil and also made it possible for mining companies to write off exploration and prospecting expenses incurred in prospecting anywhere in Canada for base metals or strategic minerals. With this measure of encouragement the oil and mineral industries have been able to make a very important contribution to the country's war effort. They have also been willing to bear their full share of the burden of financing the war and they well recognize, I believe, that the need for war revenue continues at least as great and as urgent as ever. The changes I have announced in respect of income and excess profits taxation and the indications I have given in regard to future tax policy will apply to these industries as well as to other industrial enterprises and I hope that it may be possible to announce at the next session of parliament the comprehensive and integrated programme for the development and conservation of natural resources to which I have already referred.
While changes of a general nature in this field cannot be announced at this time, there
is one situation which I believe calls for some immediate attention. My colleague, the Minister of Munitions and Supply, has recently reported to this house the serious situation in regard to supplies of oil. It is,
I think, in the national interest that some additional encouragement be offered to the Canadian oil industry to undertake the drilling of several deep test wells in certain areas with a view to proving up significant, geological structures. The budget resolutions therefore include a recommendation to provide a tax credit of fifty per cent of the cost of any well drilled in the selected areas and spudded in between June 26, 1944, and March 31, 1945, if such well proves to be unproductive. This tax credit will be allowed only with respect to projects recommended by the Minister of Mines and Resources and approved by the governor in council.
With regard to the encouragement of prospecting for base metals or strategic minerals, it is proposed to extend for a further year the provision whereby a tax credit has been given in respect of contributions to prospecting syndicates.

[Stage Direction]
For the present, the customs tariff is without any great influence on the scope or direction of external trade. Scarcity of supplies, agreed allocations, bulk purchasing, import and export permits, and import subsidies- these are the instruments which determine, for the time being, the extent and pattern of world trade. Changes in the customs tariff would here and now have little, if any, effect on the supply or cost of goods. The government continues, however, to have the most lively appreciation of the importance to this country, and, indeed, to all other trading countries, of entering a post-war world which has been freed or is assuredly being freed not only from the extraordinary wartime restrictions on trade, but also from the high tariffs, quotas, import licensing, and other restrictive and discriminatory trade practices which so paralyzed and dwarfed world trade in the inter-war years. As the time approaches when we and other countries must convert our productive resources to the purposes of peaceful prosperity, it becomes increasingly important that we should be able, in agreement with others, to set out the broad pattern of post-war trade policy, so that producers may know toward what markets they may orient their post-war plans.
The government's policy was clearly set out in the budget speech of last year and it may be appropriate to quote from that
The Budget-Mr. Ilsley
[Stage Direction]
speech. After a reference to the obligations the government had assumed to enter into conversations with other countries on international economic policies, the following words were used:
Committed to these objects and having in mind particularly the vital concern of this country in access to the selling and buying markets of the world, the government is prepared to discuss with the government of the United States, the government of the United Kingdom, or the governments of other countries with which we trade, reciprocal trade arrangements wider in scope and longer in duration than have hitherto been made, provided always that the advantages of such arrangements shall be open to other countries willing to adhere to the same terms.
We believe that questions of post-war commercial policy must be tackled broadly and boldly; we believe that world trade must have a more liberal and dependable charter than it has had in the past two decades; and that countries, such as Canada, for which world trade is the very blood stream, should be prepared, not merely to accept desirable arrangements but to take the initiative in working out a plan mutually of benefit to ourselves and to other countries. We believe that countries, which have had long experience of friendly relations should associate themselves with that initiative and furnish to others examples of concrete accomplishment in the distribution of the world's products for the mutual welfare of all people.
On several occasions in the fifteen months which have elapsed since the budget of 1943 was presented, our officials have had exploratory and noncommittal conversations with officials of other countries on a wide range of economic matters, including, among others, monetary arrangements, international lending, the control of cartels and1 monopolies, international cooperation in promoting high levels of employment, and commercial policy. We have pressed forward studies of our own on these matters both with a view to contributing to these international discussions and to lay the basis for domestic measures in these fields. As has already been made public, the most progress in the international discussions was made in the field of monetary arrangements where agreement was reached among experts on the establishment of an international monetary fund. While equal progress was not made in the much more complex field of commercial policy, our officials pressed vigorously the need for a bold initiative in the orderly and agreed unshackling of world trade, if the ideals of economic expansion, higher incomes, full employment, adequate nutrition and the progressive abolition of poverty are to become realities. Considerable progress has been made in the definition and solution of the technical

problems involved, and we shall continue to press at the appropriate time for the rapid development of a broad programme.
It is not, therefore, our intention to present at this time proposals for comprehensive alterations in our tariff structure. Such alterations would have no great immediate effect, and it is desirable that, if possible, we should make them in conformity with reciprocal arrangements made by other countries.
However, the government desires to give concrete evidence of the direction which it is endeavouring to follow in the formulation of post-war commercial policy. It desires also to give to agriculture assurance in respect of some of the conditions- under which it may , expect to operate after the war, just as it has tried to give to industry some assurance in the field of taxation policy.
Canadian agriculture will be faced with important opportunities in the post-war period and if it is to take full advantage of them, its costs of production should be at the lowest practicable level. Recognition of this fact was given by the farm improvement loans bill and several important provisions of the bill for the extension of the bank charters now under consideration by the banking and commerce committee. These measures have as one of their most important objectives the provision of credit facilities to farmers which will enable them to purchase agricultural implements at the lowest cost on a cash basis. With the same end in view, the government believes it appropriate to provide at once and without waiting for the completion of reciprocal arrangements with other countries for the removal of all customs duties on agricultural implements.
It is therefore recommended that agricultural machinery, including cream separators, and parts thereof, be made free under all tariffs. While it is impracticable from a revenue standpoint to remove the war exchange tax on the general range of commodities, the war exchange tax on agricultural machinery and cream separators and parts thereof is being removed along with the customs duties.
The removal of the customs duties and war exchange tax on farm implements will not increase the supply of such implements coming from the United States because they are subject to restricted allocations. The wartime prices and trade board will however amend its order setting ceiling prices on imported farm implements and repair parts in such a way as to give effect to any decreases in the laid-down cost to importers which will result from the action taken.

The Budget-Mr. Ilslcy
There are a number of other changes in the tariff but they are changes of detail made to remove anomalies and reduce administrative difficulties. They need not be explained until the resolutions are before the house.

[Stage Direction]
An important amendment to the War Exchange Conservation Act is proposed. The house will recall that this act was passed in December, 1940, as one of the means taken to reduce the demand for United States dollars at a time when our payments in that currency were running far in excess of our receipts. It was estimated at the time that the restrictions of imports then enacted would save $5 million to $6 million a month in badly-needed foreign exchange.
By that measure, a long list of articles enumerated in schedule I was prohibited entry into Canada, if imported from any country other than the sterling area and Newfoundland, except under permit granted by the Minister of National Revenue. It was understood that for the items under part I of the schedule no permits would be granted, while for those in part II permits would be granted on a restricted and declining scale.
Schedule II of the act contained an extensive list of items on which customs duties were reduced for imports entering Canada from the United Kingdom. Since 1940, there have been amendments to this part of the act extending the list and further reducing the duties. Duties on imports from the United Kingdom have in all cases, except liquors, tobaccos, sugar and silks, been reduced by at least 25 per cent, in the great majority of items by at least 50 per cent, and, on a great many, been removed altogether.
The house will realize that the discriminatory prohibitions of imports contained in the War Exchange Conservation Act would not in normal circumstances be compatible with our trade agreement with the United States and in taking the reluctant step of recommending the measure to parliament, the government evoked the war clause of that agreement. It was made very clear to our own people also that the measure was an emergency measure, and would not be maintained for protective reasons. In introducing the resolutions on December 2, 1940, I emphasized that it was "not for the purpose of assisting any producers or any industry . . . but to protect our exchange position."
As I explained to the house in my statement of April 21 of this year, our position in respect of foreign exchange has greatly
improved, and the government is of the view that we are no longer .justified in maintaining these severe restrictions of imports from the United States. We do not wish to deprive our own people of any supplies which may be procurable nor do we wish to retain these emergency prohibitions after the emergency is past. We wish further to make perfectly clear that this type of emergency trade regulation has no place in our normal trade policy. '
It is recommended1, therefore, that schedule I of the War Exchange Conservation Act and the relevant clauses be repealed.
There are some further explanations which I should add. It must not be assumed that there will forthwith flow into this country a flood of imports.- Because of the scarcity of supplies in the United States, many of these prohibitions have been quite nominal in effect. Further, it is not proposed to extend import subsidies to luxury goods, and it will not be profitable in many lines to buy at United States prices and sell at the Canadian ceilings.
The house should understand also that import permits are required in many cases under other authority than that of the War Exchange Conservation Act. For purposes of allocating shipping space, to assist in the equitable allocation of short supplies among our own industries, and under arrangements made by the various combined boards, orders in council under the War Measures Act have imposed the requirement of import permits either for overseas imports or for imports from all sources. In some degree, these controls have been built around the War Exchange Conservation Act. It will, therefore, be necessary to determine what, if any, extensions of these orders in council are required by the amendments being proposed to that act. It may be that in some cases it will be necessary to supplement somewhat our import controls because of the amendments now proposed. Any such supplementary measures will, however, not discriminate against countries outside the sterling area. In order that there may be time to examine the effect of the withdrawal of schedule I from this act, on our whole system of import controls and make any necessary adjustments in it, I am recommending that this amendment should be effective as from August 1 of this year.
The changes proposed in the Succession Duty Act this year are quite minor in character. The details will be found in the resolutions which will be tabled. Similarly, the changes in the Sales Tax and in the taxes levied under the Special War Revenue Act are neither sufficiently numerous nor important enough to require explanation here.
The Budget-Mr. Ilsley

[Stage Direction]
This completes the changes in legislation which we are recommending. None of these changes will affect current tax revenues to any significant degree, although the dropping of compulsory savings will mean a loss in nontax receipts estimated at $70 million for this fiscal year and $110 million for a full year.
To recapitulate the financial outlook for this year, taking account of the changes which are being recommended, we must start with the statement that our total cash requirements are likely to be $6,000 million or more, that is, about $200 million more than last year. Our revenues will probably be about $50 million lower than last year, and we are giving up receipts of about $70 million from compulsory savings. Our borrowing requirements will, therefore, be some $320 million more than in 1943-44 or more, than $3,200 million.
To meet these requirements, having discontinued compulsory saving for individuals, we must turn to voluntary saving and to the national war finance committee, on whom the government depends for mobilizing the voluntary savings of the country and for whom this year I bespeak the active assistance of every member of this house and every Canadian citizen.
Throughout this speech, I have laid emphasis on the importance of the savings programme to Canada's war effort, on its importance to the continued success of our efforts to hold down the cost of living, and on its relationship to the preservation of an orderly economy. Everybody who has participated, in any way, in the work of the national war finance committee can take great pride in its past achievements, and in the valuable patriotic work they are doing for their country. These men and women command our respect and our thanks.
The work of the national war finance committee is an integral part of our economic life, and it will continue to occupy this important status for some time to come. The need for large scale public borrowing operations is very great this year, and will continue as long as the war goes on, and, in my opinion, will extend into the period of reconstruction which will follow the termination of hostilities. I hope and believe that the men and women who have brought our wartime savings programme to its present stature-the men and women who have the experience and the knowledge necessary to the successful organization of these huge public loans-will continue to perform this patriotic work for the

balance of the war period and after the war until the time when the need for this type of borrowing will have passed. This whole speech has made clear that the need for large public loans is greater than ever. There can be no slackening in the support of the activities of the national war finance committee. On behalf of the government, and of the people of Canada, I urge all those now associated with the national war finance organization to continue the good work they have done thus far. The need for this form of national service is not drawing to a close. The need for determined, persistent effort, for undiminished vigour, and for imaginative planning will be particularly important this year, and must continue for some time to come.
Looking to the current fiscal year ending March 31, 1945, I would request the national war finance organization throughout Canada, firstly, to continue their efforts to encourage the maximum volume of personal savings by the Canadian people; secondly, to promote, by every possible means, the retention of bonds and certificates now owned by Canadians ; thirdly, to organize and1 conduct another victory loan in the fall of 1944, with greater emphasis than ever on the sale of bonds to individuals; and, fourthly, to promote continuously the sale of war savings certificates and stamps.
They have already carried out a part of the borrowing programme for 1944-45 with conspicuous success in the sixth victory loan. Full report on that loan will be made to the house but I would point to a notable achievement, the record of cash sales to individuals of $644 million.
Let me explain why we attach so much importance to increasing the sales of bonds and certificates to individuals. We must borrow some $320 million more than last year. This additional amount we' must borrow mainly from individuals. The real investing ability of business firms and corporations, apart from such as the insurance companies which act as intermediaries in mobilizing personal savings, will not exceed during the current fiscal year the amount of bond purchases which they made in the year ended March 31, 1944. We cannot hope to increase our sales in that quarter.
We have not avoided borrowing from the Bank of Canada and the chartered banks in the past, but we wish to keep it to an absolute minimum. Borrowing from the banking sys-

The Budget-Resolutions
tem has its place when it is desirable to expand credit and increase purchasing power. But when as now, purchasing power in the hands of the public is far in excess of what is needed to buy what is available for sale, and is an ever present danger to the price ceiling and the orderly distribution of goods and services, borrowing from the banking system is to be avoided as much as possible.
It is on an increase in personal savings and on the work of the war finance organization in mobilizing those savings that we must rely. Borrowing the personal savings of individuals for the temporary use of the nation at war is the only type of borrowing which will relieve rather than increase the inflationary pressures which are continuously at work. The trend of personal incomes is still upward, and, despite taxation, the excess of personal disposable income over the cost of necessary wartime living standards is greater than ever before.
If anyone thinks we Canadians at home are being asked to do too much, let him make some comparisons. Let him compare the small privations and the limited self-denial that we at home have endured up to now with the hardships and difficulties which are being endured by our armed forces on world battle-fronts. Let him consider the standard of complete, selfless devotion to the common cause shown by our men who are serving in the navy, the army, and the air force. As long as this war goes on, as long as Canadian lives are at stake, we here must not let down in any phase of our war effort. The burden of our responsibility is heavy indeed-but given the will to succeed, we have the strength to carry it.
We are told that victory in Europe may come soon, that victory in the Pacific may not be long postponed. I do not know. I do know that we are well on the road to victory. I do know also that now, when victory is within our grasp, i3 no time to falter. The fruits of victory will go to those countries which can hold steady on the threshhold of success, and whose people can, in mutual trust, work together for peace and a better world as they have worked together for victory. To finish this war in triumph, not only in the field, but in our production and financial programmes at home, will carry us far toward the realities of better things after the war.

James Lorimer Ilsley: Mr. Speaker, I desire to give notice that when we are in committee of ways and means I shall move the following resolutions :



INCOME WAR TAX ACT

[Stage Direction]
Resolved, that it is expedient to amend the Income War Tax Act and to provide:
1.	That for 1944 the total tax on individuals be reduced by one-half the amount of the refundable portion thereof, less one-half credits for savings, and that for 1945 the total tax on individuals be reduced by the full amount of the refundable portion thereof, less credits for savings.
2.	That dependents as referred to in the said act be extended to include parents-in-law, grandparents-in-law, brothers-in-law, sisters-in-law, sons-in-law and daughters-in-law in the same circumstances and subject to the same conditions as parents, grandparents, brothers, sisters, sons and daughters respectively.
3.	That the provision under which a tax credit is allowed in respect of a child of the taxpayer be extended to include an allowance-in respect of any person under eighteen years of age and dependent upon the taxpayer for support, including an illegitimate child.
4.	That the allowance in respect of unusual, medical expenses be extended to include such expenses incurred outside of Canada.
5.	That the deduction in respect of unusual medical expenses be extended to allow as a deduction in any taxation year such expenses actually paid in any twelve-month, period ending in the taxation year.
6.	That in lieu of the deduction in respect of unusual medical expenses of the amount of salary or wages paid to a full-time attendant upon a taxpayer who is totally blind, the taxpayer shall have the option of deducting $489 from his income in the taxation year.
7.	That the basis for taxation under the normal tax and the tax credit against the graduated tax allowed to an unmarried person who maintains a self-contained domestic establishment and actually supports therein a person wholly dependent upon him and connected with him by blood relationship, marriage or adoption, be extended to a married person separated from the spouse.
8.	That, if a taxpayer maintains one of his children in a self-contained domestic establishment in which he employs a full-time housekeeper or servant, the tax credits of $80 against the graduated tax and $28 against the normal tax be allowed to him in respect of the child notwithstanding that he is entitled to the tax credit of $150 against the graduated tax in respect of that child.
9.	That the basis of taxation under the normal tax and the tax credit against the graduated tax for a married person be limited \ >
a married person who supports the spouse.
10.	That individuals may reduce income for taxation purposes by the amount of gifts made in money to His Majesty in right of Canada if such gifts are made within the year when the income was received or within four months from the end thereof.
41SS
The Budget-Resolutions
[Stage Direction]
11.	That payment by an employer to an employee upon retirement, other than a payment out of a superannuation or pension fund or plan, if the Minister of National Revenue is satisfied that such payment is in recognition of long service, be deemed to be income of the retired employee over a period of five years rather than income in the year when received.
12.	That an employee be allowed to deduct from income the amount, not exceeding three hundred dollars per year, paid by him to an employees' superannuation or pension fund or plan approved by the minister with respect to service rendered previous to the taxation year when he was not a contributor to the fund or plan.
13.	That a member of a trade union be allowed to deduct from income the amount, not exceeding three hundred dollars per year, paid by him in the form of union dues to a superannuation or pension fund or plan approved by the minister.
14.	That the refundable portion of tax in respect of which a taxpayer is entitled to repayment be refunded to a taxpayer when he reaches the age of sixty-five years in the case of a taxpayer whose income is less than five thousand dollars.
15.	That, in respect of the taxation year 1939 and subsequent years, the time for serving a notice of appeal upon the Minister of National .Revenue, in the ease of members of the armed
forces overseas, be extended to one year after the date of mailing of the notice of assessment or for such further period as the minister may allow.
10. That any amount paid pursuant to a decree, order or judgment made in an action or proceeding for divorce or judicial separation, or pursuant to a separation agreement, as alimony or other allowance for the maintenance of the recipient thereof or of children of the marriage, be allowed as a deduction from income of the payor and that he be not entitled to tax credits in respect of the wife or children to whom or on whose behalf the payments are made, and that the present provision whereby he is entitled to deduct from tax the tax paid by his spouse or former spouse on the amount so paid as alimony or other allowance be repealed.
17.	That exemption from taxation be granted to any limited-dividend housing corporation organized to construct, hold and manage houses built as a low-rental housing project and subject to conditions as to limitation of dividends set out in or pursuant to the National Housing Act, 1938, or any subsequent act of the parliament of Canada designed to encourage the building of houses or the providing of adequate housing accommodation at low rentals.
18.	That with respect to returns filed in 1944 and subsequent years the penalty for failure to file a return be reduced to a penalty of five per cent of the amount of the tax unpaid at the date when the return was due with a minimum penalty of $5 and a maximum penalty of $500.
19.	That the deduction in respect of tax paid to Great Britain or any of its self-governing dominions or dependencies or any foreign country for income tax in respect of 'income derived from sources therein, be made from the tax other than the refundable portion.
20.	That the right of the minister to reassess or make additional assessments in respect of

any tax year be limited to a period of six years from the date of the original assessment, except where the taxpayer has made any misrepresentation or committed any fraud in making bis return or supplying information under the act.
21.	That the interest payable on taxes not paid when due be reduced from five per centum to four per centum.
22.	That losses sustained in 1944 and fiscal periods ending therein and all subsequent periods by any person carrying on a business may be deducted from profits derived from the business either in the year immediately preceding or in the three years immediately succeeding the taxation year.
23.	That expenditures in respect of scientific research directly or indirectly related to the taxpayer's business, whether of a current or capital nature, be allowed as a deductible expense, in the case of expenditures of a current nature, in the year when the expenditures are made and, in . the case of expenditures of a capital nature, over a three year period commencing with the year of expenditure.
24.	That the minister may allow depreciation at double the rates normally allowed in respect of bona fide new investments made after a date to be declared by the governor in council; and, in such event, the taxpayer will be required to charge in any subsequent year at least one-half the rates normally allowed: Provided, however, in the case of a sale of assets in respect of which special depreciation has been so allowed, the Minister may revise the assessments of the vendor for the years when the special depreciation was allowed, by disallowing as a deduction a pro rata portion of the special depreciation allowed, to the extent of the excess of the selling price over the depreciated cost of the said assets, less the amount of the depreciation normally allowed on the said assets, and less the excess, if any. of the selling price over the undepreciated cost of the said assets: Provided further that the portion of any loss attributable to the allowance of special depreciation shall not constitute a loss for purposes of resolution number twenty-two.
25.	That the provision permitting a taxpayer to deduct from tax the amount paid to any foreign country for income tax in respect of the income of the taxpayer from sources therein, be amended by deleting the requirement that such foreign country in imposing tax allow a similar credit to persons in respect of income thereof from sources within Canada,
26.	That the provision whereby a special payment by an employer to make up a deficiency in an employees' superannuation or pension fund or plan may be deducted from income over a ten-year period be amended to permit annual payments of one-tenth, or less, of such deficiency to be deducted from income in the year of payment.
27.	That dividends paid by a wholly-owned subsidiary non-resident company to a Canadian parent company be exempt from tax when received by such parent company.
28.	That persons authorized by law to accept deposits be required to file information returns showing interest credited to depositors in 1944 and subsequent years.

The Budget-Resolutions
29.	That with the approval of the governor in council upon the recommendation of the Minister of Mines and Resources there be allowed a tax credit of fifty per centum of expenditures incurred by a corporation, association or syndicate or exploration partnership whose principal business is the production, refining or marketing of petroleum or the exploration or drilling for oil, on a well spudded in between June 26, 1944, and March 31, 1945, which proves to be unproductive, provided that such well is a deep-test well the drilling of which is deemed desirable in the interest of extending the petroleum resources of Canada and which could not reasonably have been expected to be undertaken without such tax credit.
30.	That the tax credit allowed to a taxpayer of forty per centum of contributions made by him in the year 1943 to associations, syndicates or mining partnerships organized for the purpose of prospecting in Canada for base metals or strategic minerals be extended to include a tax credit in respect of contributions in the year 1944.
31.	That one-half of expenditures on maintenance and repairs incurred by any taxpayer carrying on a business (or on underground development, in the case of a taxpayer operating a mine) in a period to be fixed by order in council be regarded as deferred maintenance and repairs and be deductible as an expense, at the option of the taxpayer, either in the year or fiscal periods when incurred or in years or fiscal periods ending subsequent to December 31, 1942.
32.	That the provision allowing deductions by a corporation from income of amounts paid by way of donations to charitable organizations in Canada be amended to provide that the amount of the donations made in excess of the average of the taxpayer's donations in the last two fiscal periods ending before July 1, 1942, shall be allowed as a deduction for purposes of the Income War Tax Act and the Excess Profits Tax Act, 1940, only to the extent that the total taxes payable by the taxpayer under the said acts are thereby diminished by forty per centum of the said excess, unless made before February 1, 1944, and paid or evidenced in writing before the said date or evidenced by a payment before the said date which is one of a series of payments to be made thereafter and accompanied by proper evidence of the undertaking.
33.	(a) That any enactment founded on resolutions 20 and 29 be brought into force on enactment; and
(b) That any enactments founded on resolutions 1 to 19 inclusive, resolutions 21 to 28 inclusive and resolutions 30 to 32 inclusive be applicable, unless otherwise stated, to the income of the 1944 taxation period and fiscal periods ending therein and all subsequent periods.

[Stage Direction]
Resolved, that it is expedient to amend the Excess Profits Tax Act, 1940, and to provide:
1.	That expenditures in respect of scientific research directly or indirectly related to the taxpayer's business, whether of a current or capital nature, be allowed as a deductible expense, in the case of expenditures of a current nature, in the year when the expenditures are
made and, in the ease of expenditures of a capital nature, over a three-year period commencing with the year of expenditure.
2.	That in the computation of capital employed for the taxation year and subsequent periods thi requirement to reduce capital by one-lialf of the dividends paid in cash during any taxation year be altered to provide that such reduction shall be made only to the extent that earned surplus at the end of the taxation year is less than earned surplus at the beginning of the year.
3.	That the refundable portion in respect of which a taxpayer is entitled to repayment may in case of bankruptcy, liquidation, winding-up or dissolution, be repaid in accordance with regulations made by the governor in council.
4.	That the refundable portion in respect of which a taxpayer is entitled to repayment may be assigned by way of security in cases where the governor in council is satisfied that the purpose of the assignment is to enable the taxpayer to make capital expenditures that will contribute to the post-w-ar conversion of the taxpayer's business and will provide substantial employment.
5. That the rate of tax provided in the second part of the second schedule to the Excess Profits Tax Act, 1940, be inapplicable in respect of the first fiscal period of taxpayers who, in the opinion of the minister, commence business after the twenty-sixth day of June, 1944.
6. That a taxpayer, whose income in the taxation period is, in the opinion of the minister. derived from the carrying on of a .business substantially different from the class of business carried on by such taxpayer in the standard period, be required to have its standard profits ascertained by the board of referees as if they had not commenced business before the second day of January, 1939.
7.	That the provision permitting a taxpayer to deduct from tax the amount paid to any foreign country for income tax in respect of the income of the taxpayer from sources therein, be amended by deleting the requirement that such foreign country in imposing tax allow a similar credit to persons in respect of income thereof from sources within Canada.
8.	That the standard profits be adjusted upwards to the extent of five per centum of the increase of the capital employed at the commencement of the 1944 taxation period over the capital employed-
(a)	at the commencement of the 1939 taxation period; or
(b)	at the commencement of the first fiscal period after 1939 in respect of the taxation of the profits of which the board of referees have determined a standard profit:
Provided that such increase in capital employed shall be reduced by the amount of any increase in capital employed accompanied by an equivalent increase in capital stock on which an adjustment of seven and one-half per centum has been made to the standard profits as already provided in the act.
9.	That companies which elect or have elected since January 1, 1940, under the Income War Tax Act to file consolidated returns be not
[Stage Direction]
The Budget-Special War Revenue
permitted to file such returns under the Excess Profits Tax Act in respect of fiscal periods ending on or after January 1, 1944.
10.	That the provision allowing deductions by an unincorporated taxpayer from income of amounts paid by way of donations to charitable organizations in Canada be amended to provide that the amount of the donations made after January 31, 1944, by a taxpayer carrying on business, in excess of the average of the taxpayer's donations in the last two fiscal periods ending before July 1, 1942, shall be allowed as a deduction for purposes of the Excess Profits Tax Act, 1940, only to the extent that the tax payable by the taxpayer under the said act is thereby diminished by fifteen per centum of the said excess, unless made before February 1, 1944, and paid or evidenced in writing before the said date or evidenced by a payment before the said date which is one of a series of payments to be made thereafter and accompanied by proper evidence of the undertaking.
11.	That any enactments founded on-
(a)	Resolutions 3, 4, 5, 8, 9 and 10 come into force on enactment; and
(b)	Resolutions 1, 2, 6 and 7 be applicable to the income of 1944 taxation period and fiscal periods ending therein and all subsequent periods.

[Stage Direction]
Resolved, that it is expedient to amend the Dominion Succession Duty Act, and to provide:
1.	That the definition of "child" be extended to include that child to whom the deceased stands in loco parentis.
2.	That when a person is given a general power of appointment or disposal over property, such property be subject to duty as if it were .given directly to him, and, upon his death, the person then benefiting be regarded as his successor for purposes of taxation.

[Stage Direction]
Resolved, that it is expedient to amend the War Exchange Conservation Act, 1940, and to provide:
1.	That sections 2, 3, 4, 5 and 6 of the said act and schedule one thereto, which prohibit the importation of specified goods from countries outside the sterling area, be repealed.
2. That schedule two to the said act be amended by:
(a)	substituting the phrase "synthetic textile fibres or filaments" for each of the phrases '"artificial silk", "artificial silk or similar synthetic fibres", and "artificial silk or similar synthetic fibres produced by chemical processes" wherever they appear in items 524a, 548, ex 553, 558b, 558d, ex 560c, 561, 561a, 562a, ex 564, ex 565, 567a and ex 568;
(b)	substituting the phrase "yarns of synthetic textile fibres or filaments" for the phrase *"artificial silk yarns" in item 558d.

3.	That any enactment founded on:
(a)	Resolution 1 come into force on August 1, 1944; and
(b)	Resolution 2 come into force on June 27, 1944.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Special War Revenue Act, and to provide:
1.	That the excise tax of twenty-five per cent on furs be extended to cover the fur content of imported articles.
2.	That exemption from sales tax be provided for grain loaders or elevators with a capacity not exceeding forty bushels per minute.
3.	That exemption from sales tax be provided for baling twine to be used for baling farm produce and for articles and materials to be used or consumed exclusively in the manufacture of baling twine.
4.	That the tax on certain places of entertainment as imposed by part XVI of the said act be levied on the operator in each case where he fails to collect the tax from the patron or fails to affix the excise stamps as required under the provisions of the said act.
5.	That the retail purchase tax as imposed by part XYII of the said act be levied on the vendor in each ease where he fails to collect the tax from the purchaser or fails to affix the excise stamps as required under the provisions of the said act.
6.	That the existing provision for the taxation of cigars in item 1(a) of schedule II to the said act be replaced by a provision imposing an excise tax of three dollars and twenty-five cents on cigars valued at not more than twenty-five dollars per thousand, and six dollars and twenty-five cents on cigars valued at more than twenty-five dollars per thousand but not more than forty dollars per thousand.
7.	That any enactment founded on paragraphs one to six inclusive of these resolutions shall come into force on the twenty-seventh day of June, one thousand nine hundred and forty-four.

[Stage Direction]
1.	Resolved, that Schedule A to the Customs
Tariff, being chapter forty-four of the Revised Statutes	of	Canada,	1927, as	amended,	be
further amended :by adding to subsection (1) of Section 2 the following paragraph:
(n) "rubber" includes synthetic rubber which may be defined by regulations prescribed by the Minister.
2.	Resolved, that Schedule A to the Customs
Tariff, being chapter forty-four of the Revised Statutes	of	Canada,	1927, as	amended,	be
further amended by striking thereout tariff items 156, 158, 188, 216d, 219a (i) and (ii), 220 (a), (b) and (c), 300, 316a, 326b, 326h,

The Budget-Customs Tariff
356b, 408, 409, 409a, 409b, 409c, 409d, 409e (i), (ii) and	(iii),	409f,	409g,	409h, 409i,	409j,409k, 409n, 409o, 410s, 431c, 431d, 438j, 442, 442a (1) and (2), 443b. 476b, 476c, 477, 482, 524a, 537,	537a,	537d,	538a,	540 (c) and	(d),542, 542a,	548,	551,	555,	556b, 557,	557a,557b, 558b	(a) and (b), 558d	(a) and (b),	558f,
560a, 560c, 561, 561a (i) and (ii), 562a, 564, 567a, 616c, 617, 618, 618c, 619a, 654, 688. 691, 813, 825, and Orders in Council P.C. 2/1245
of July 30, 1925, P.C. 5/296 of February 22, 1927, P.C. 21/2009 of November 5, 1928, P.C. 4078 of August 21, 1940, P.C. 4761 of June 10, 1943, P.C. 6097 of August 3, 1943, P.C. 686 of February 3, 1944, the several enumerations of goods respectively and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said Schedule A:

Tariff
Item
British
Preferential
Tariff
2a
Rabbits, pure bred, for the improvement of stock, under regulations prescribed by the Minister.
Free
Ethyl alcohol, or the substance commonly known as alcohol, hydrated oxide of ethyl or spirits of wine, n.o.p.; gin of all kinds, n.o.p.; rum; whisky and all spirituous or alcoholic liquors, n.o.p.; amyl alcohol or fusel oil, or any substance known as potato spirits or potato oil; absinthe, arrack or palm spirit, brandy, including artificial brandy and imitations of brandy, n.o.p.; cordials and liqueurs of all kinds, n.o.p.; mescal, pulque, rum shrub, schiedam and other schnapps; tafia, angostura and similar alcoholic bitters or beverages; and wines, n.o.p., containing more than forty per cent of proof spirit, per gallon of the strength of proof	
[Stage Direction]
Provided, (1) that when the goods specified in Item 156 are of greater or less strength than the strength of proof, the measurement thereof and the amount of duty payable thereon shall be increased or decreased in proportion for any greater or less strength than the strength of proof.
Provided, (2) that bottles and flasks and packages of gin, rum, whisky and brandy of all kinds, and imitations thereof, shall be held to contain the following quantities (subject to the provisions for addition or deduction in respect of the degree of strength) viz.:-
Bottles, flasks and packages, containing not more than three-fourths of a gallon per dozen, as three1 fourths of a gallon per dozen;
Bottles, flasks and packages, containing more than three-fourths of a gallon but not more than one gallon per dozen, as one gallon per dozen;
Intermediate
Tariff
General
Tariff
Explanatory Notes
Free
Free
The new item provides for duty free entry of all kinds of pure bred rabbits. Pure bred Chinchilla, Angora and Sable rabbits have been admitted duty free under Orders in Council P.C. 2/1245 of July 30, 1925, P.C. 5/296 of February 22, 1927, and P.C. 21/2009 of November 5, 1928, respectively. Pure bred rabbits other than the three mentioned above were formerly dutiable at rates of Free-20-25 pc.
The words "methyl alcohol, wood alcohol, wood naphtha, pyroxylic spirit or any substance known as wood spirit or methylated spirits" have been deleted from Item 156 and are now provided for under Item 158.
[Stage Direction]
o
o
s
o
[Stage Direction]
The Budget-Customs Tariff
Bottles, flasks and packages, containing more than one gallon but not more than one and one-half gallon per dozen, as one and one-half gallon per dozen;
Bottles, flasks and packages, containing more than one and one-half gallon but not more than two gallons per dozen, as two gallons per dozen; Bottles, flasks and packages, containing more than two gallons but not more than two and four-fifths gallons per dozen, as two and four-fifths gallons per dozen;
Bottles, flasks and packages, containing more than two and four-fifths gallons but not more than three gallons per dozen, as three gallons per dozen; Bottles, flasks and packages, containing more than three gallons but not more than three and one-fifth gallons per dozen, as three and one-fifth gallons per dozen.
Provided, (3) that bottles or phials of liquors for special purposes, such as samples not for sale to the trade, may be entered for duty according to actual measurement, under regulations prescribed by the Minister.
Methyl alcohol, subject to the provisions of the Excise Act, and regulations	per proof gallon
20 cts.
20 cts.
Plain basic photographic paper, baryta coated, for use exclusively in manufacturing albumenized or sensitized photographic paper	
Free
Free
206c
Bottles, and tubes other than rubber, bail bands, labels, corks, stoppers or other closures, for use with bottles, whether or not assembled into units partially filled with anti-coagulating solutions or not; filters, drop counters, clamps; all of the foregoing, when imported to be used exclusively for the collection, preparation, storage, transportation or administration of human blood (whether whole or in the form of liquid or dry serum or plasma); component materials to be used exclusively in making the foregoing articles or anti-coagulating solutions..
Free
Free
20 cts.
10 p.c.
This Item was formerly limited to methyl alcohol to be used in denaturing alcohol for use in the arts and industries and for fuel, light and power, when imported by the Department of National Revenue, or by a person licensed by the Minister of National Revenue. It is now widened in scope to include "methyl alcohol, wood alcohol, wood naphtha, pyroxylic spirit or any substance known as wood spirit or methylated spirits", previously dutiable under Item 156.
Two Tariff Items, 188 and 813, are being replaced by one Item. Both covered the same goods. Item 188 carried rates of Free-15 p.c.-15 p.c. and Iterti 813 carried rates of Free-Free-10 p.c. The new Item, 188, continues the lower rates.
This is a new Item to provide for duty free entry from all countries of both the chief articles used for the collection, preparation, storage, transportation or administration of blood serum or plasma, and the materials used in the manufacture of these articles. The goods provided for by this Item were dutiable according to material.
n
!z5

Free
h-*
[Stage Direction]


The Budget-Customs Tariff
[Mr. Iisicy.j
Tariff Item	-	British Preferential Tariff
216d	Phthalic anhydride, adipic, abietic, maleic and succinic acids, hexamethylene diammonium adipate, hexamethylene diammonium sebacate, caprolactam, and ethylene glycol, when imported by manufacturers of synthetic resins, for use exclusively in the manufacture of synthetic resins, in their own	
	factories		Free
219a	Non-alcoholic preparations or chemicals for disinfecting, or for preventing, destroying, repelling, or mitigating fungi, weeds, insects, rodents, or other plant or animal pests, n.o.p.:- (i) When in packages not exceeding three pounds	
	each, gross weight		Free
	(ii) Otherwise		Free
220	All medicinal and pharmaceutical preparations, compounded of more than one substance, including patent and proprietary preparations, tinctures, pills, powders, troches, lozenges, filled capsules, tablets, syrups, cordials, bitters, anodymes, tonics, plasters, liniments, salves, ointments, pastes, drops, waters, essences and oils, n.o.p.:-	
	(i)	When dry	 (ii)	Liquid, when containing not more than two	17J p.c.
	and one-half per centum of proof spirit		20 p.c.
(iii) All others	
Provided that any article in this item containing more than forty per cent of proof spirit shall be rated	60 p.c.for duty at	per gallon..	$3.00and Provided, also, that drugs, pill-mass and preparations, not including pills or medicinal plasters, recognized by the British or United States pharmacopoeia, the Canadian Formulary or the French Codex as officinal, shall not be held to be covered by this item.	30 p.c.220a	Chemical preparations, compounded of more than one substance, n.o.p.:- (i) When dry, or liquid containing not more than	two and one-half per centum of proof spirit	15 p.c.(ii) All others	
Provided that any article in this item containing more than forty per cent of proof spirit shall be	30 p.c.rated for duty at	per gallon	$3.00and	30 p.c.
General
Tariff
Explanatory Notes
This Item is being widened to include "hexamethylene diammonium adipate, hexamethylene diammonium sebacate, and caprolactam", three chemicals used in the manufacture of nylon polymers. These chemicals were formerly dutiable at rates of Free-25-25 p.c.
Free
25 p.c. 15 p.c.
In order to cover new uses and methods of application of insecticides, the words ''for disinfecting, or for preventing, destroying, repelling, or mitigating fungi, weeds, insects, rodents, or other plant or animal pests" have been substituted for the words "for disinfecting, dipping, spraying or fumigating, n.o.p.". Formerly the B.P. tariff rate was 5 p.c. and the Intermediate tariff rate was 25 p.c. on goods covered by sub-item (i) of Item 219a.
This Item formerly covered all medicinal, chemical and pharmaceutical preparations, compounded of more than one substance. These chemical preparations are now provided for in a separate new item, designated as 220a.
25 p.c.
40 p.c. 60 p.c.
co
[Stage Direction]
o
2
o
co
S3.00 30 p.c.
25 p.c. 30 p.c.
$3.00 30 p.c.
This is a new Item covering chemical preparations compounded of more than one substance, which were formerly provided for in Item 220. The B.P. rate of dry preparations is reduced from 17§ to 15 p.c. On liquid preparations not more than 2| p.c. proof spirit, the B.P. rate is reduced from 20 to 15 p.c. and the Intermediate rate from 40 to 25 p,c. The Tariff on preparations containing over 2| but not more than 40 p.c. proof spirit is reduced from 60-60-60 p.c. to 30-30-30 p.c.
The Budget-Customs Tariff
316a
326b
326h
356b
Crucibles, n.o.p., and covers therefor.
409
409a
409b
Incandescent lamp bulbs for use in the manufacture of incandescent lamps; glass tubing for use in the manufacture of incandescent lamps, vials and ampoules; glass tubing, n.o.p., in straight lengths of not less than three feet; mantle stocking for gas light
[Stage Direction]
Fresnel type lenses, sections and globes, of glass.
Artificial eyes for human use.
Nickel chromium, in bars or rods not more than three-fourths of an inch in diameter, containing more than fifty per cent nickel and more than ten per cent chromium, of a class or kind not manufactured in Canada, when imported by manufacturers of electric resistance wire and electric resistance strip or ribbon for use only in the manufacture of such articles in their own factories	
Malleable sprocket chain and link belting chain of iron or steel, including roller chain of all kinds for operating on steel sprockets or gears, when imported by manufacturers of agricultural implements for use exclusively in the manufacture of agricultural implements, in their own factories, under regulations prescribed by the Minister	
Cream separators and complete parts therefor, includ ing steel bowls	
Milking machines and attachments therefor; centrifugal machines for testing butterfat, milk or cream complete parts of all the foregoing	
Cultivators, harrows, seed-drills, horse-rakes, horse-hoes, scufflers, manure spreaders, garden seeders, weeders, and complete parts of all the foregoing....
Free
15 p.c
Free
Free
Free
Free
Free
Free
Free
Free
p.c
Free
Free
Free
Free
Free
Free
Free
15 p.c.
10 p.c. Free
30 p.c.
Item 300 formerly provided for crucibles of clay, sand or plumbago. The new Item will cover crucibles of all kinds except those made of platinum which have been duty free under all tariffs for many years. Crucibles of silicon carbide and plumbago were dutiable at rates of 10-25-30 p.c. '
This Item is being widened to include "glass tubing, n.o.p., in straight lengths of not less than three feet" which was formerly dutiable at rates of 10-20-22| p.c.
Duty free entry under this Item was limited to "glass eyes for human use". It is now extended to cover artificial eyes of all kinds which were dutiable according to material, mainly at rates of 15-25-25 p.c.
This Item formerly read "Fresnel or dioptric lenses-sections and globes". To facilitate administration the Item is being revised by deletion of the words "or dioptric" and by addition of the words "of glass".
The nickel content requirement of the bars and rods described in this Item is being reduced from sixty per cent to 50 per cent in order to cover the type of bar or rod being used at present.
Free
The Intermediate and General Tariffs on goods covered by this Item are being reduced from 10 p.c. to Free. (Can.-U.S. Agreement rate 5 p.c.)
g
[Stage Direction]
Free
Free
Free
Free
The Intermediate and General Tariffs on goods covered by this Item are being reduced from 25 p.c. to Free. (Can.-U.S. Agreement rate 12j p.c.)
The Intermediate and General Tariffs on goods covered by this Item are being reduced from 10 p.c. to Free.
The Intermediate Tariff on goods covered by this Item is being reduced from 7| p.c. to Free and the General Tariff from 25 p.c. to Free.
>&*
[Stage Direction]
Cn
The Budget-Customs Tariff

Tariff Item	-	British Preferential Tariff	Intermediate Tariff409c	Ploughs; farm, field, lawn or garden rollers; soil packers; complete parts of all the foregoing	Free	Free409d	Mowing machines, harvesters, either self-binding or without binders, binding attachments, reapers, harvesters in combination with threshing machine separators including the motive power incorporated therein, and complete parts of all the foregoing	Free	Free409e	(i) Spraying and dusting machines and attachments therefor, including hand sprayers; apparatus specially designed for sterilizing bulbs; pressure testing apparatus for determining maturity of fruit; pruning hooks; pruning shears; animal dehorning instruments; and complete parts of all the foregoing	Free	Free(ii) Fruit and vegetable grading, grating, washing and wiping machines and combination bagging and weighing machines, and complete parts thereof; machines for topping vegetables, and machines for bunching and/or tying cut flowers, vegetables and nursery stock, and complete parts thereof; machines and complete parts thereof for making or lidding boxes for fruit or vegetables; egg-graders and egg-cleaners, and complete parts thereof, not including aluminum parts	Free	Free(iii) Complete parts of aluminum for egg-graders..	Free	Free409f	Hay loaders, hay tedders, potato planters, potato diggers, fodder or feed cutters, ensilage cutters, grain crushers and grain or hay grinders for farm purposes only, post hole diggers, snaths, stumping machines, grain loaders or elevators with a capacity not exceeding 40 bushels per minute and all other agricultural implements or agricultural machinery, n.o.p., and complete parts of all the foregoing	Free	Free409g	Incubators for hatching eggs, brooders for rearing young fowl, and complete parts of all the foregoing.	Free	Free
Explanatory Notes
The Intermediate Tariff'on goods covered by this Item is being reduced from 7) p.c. to Free and the General Tariff from 25 p.c. to Free.
The Intermediate Tariff on goods covered by this Item is being reduced from 7§ p.c. to Free and the General Tariff from 25 p.c. to Free.
a.
[Stage Direction]
The Intermediate Tariff on goods covered by this Item is being reduced from 7J p.c. to Free and the General Tariff from 25 p.c. to Free. (Can.-U.S. Agreement rate 5 p.c.)
The Intermediate Tariff on goods covered by this Item is being reduced from 5 p.c. to Free and the General Tariff from 10 p.c. to Free.
[Stage Direction]
Co
The Intermediate Tariff on goods covered by this Item is being reduced from 15 p.c. to Free and the General Tariff from 30 p.c. to Free.
The Intermediate Tariff on goods covered by this Item is being reduced from 7i p.c. to Free and the General Tariff is being reduced from 25 p.c. to Free. This Item is also being widened to include "grain loaders or elevators with a capacity not exceeding 40 bushels per minute". These grain loaders or elevators were formerly dutiable at rates of 10-27)-35 p.c.
The Intermediate Tariff on goods covered by this Item is being reduced from 7| p.c. to Free and the General Tariff from 25 p.c. to Free.
The Budget-Customs Tariff
[Stage Direction]

to
Oi
409h
409i
409j
409k
409n
409o
410s
431c
Hay presses and complete parts thereof
Scythes, sickles or reaping hooks, hay or straw-knives, edging knives, hoes, pronged forks, rakes, n.o.p	
Fanning mills; peaviners; corn husking machines; threshing machine separators, including weighers, wind stackers, baggers and self-feeders therefor; complete parts of all the foregoing	
Windmills and complete parts thereof, not including shafting	
Portable engines with boilers, in combination, for farm purposes; horse powers; complete parts of all the foregoing	
Equipment for generating electric power for farm purposes only, viz.: engine, gas tank, generator, storage battery, and switchboard or panel; and complete parts of the foregoing	
Amalgam safes; automatic ore samplers; automatic feeders; retorts; mercury pumps; non-metallic heating elements; pyrometers; bullion furnaces; amalgam cleaners; and integral parts of all the foregoing, for use exclusively in mining or metallurgical operations	
Machinists' or metal workers' precision tools and measuring instruments, viz.:-Calipers, micrometers, metal protractors and squares, bevels, verniers, gauges, gauge blocks, parallels, buttons, mercury plumb bobs, dividers, trammels, scribers, automatic centre punches, hand speed indicators, straight edges, key seat clamps and other clamps and vises used by toolmakers for precision work, precision tools and measuring instruments, n.o.p.; parts of all the foregoing, finished or not	
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
10 p.c.
Free
Free
The Intermediate Tariff on goods covered by this Item is being reduced from 7f p.c. to Free and the General Tariff from 25 p.c. to Free.
The Intermediate Tariff on goods covered by this Item is being reduced from 7§ p c. to Free and the General Tariff from 25 p.c. to Free.
Free
The Intermediate Tariff on goods covered by this Item is being reduced from p.c. to Free and the General Tariff from 25 p.c. to Free.
Free
Free
Free
Free
15 p.c.
The Intermediate Tariff on goods covered by this Item is being reduced from 7£ p.c. to Free and the General Tariff from 25 p.c. to Free.
The Intermediate Tariff on goods covered by this Item is being reduced from 15 p.c. to Free and the General Tariff from 25 p.c. to Free.
The Intermediate and General Tariffs on goods covered by this Item are being reduced from 10 p.c. to Free. Provision is also being made in this Item for panels, which usually consist of a metal board with a cut-out, fuses, etc., attached thereto. These panels were formerly dutiable as electric apparatus n.o.p. at rates of 15-25-30 p.c.
This Item is being widened to accord free entry to "non-metallic heating elements" such as those made of silicon carbide for use in high temperature electric furnaces. These articles were formerly dutiable as electric apparatus n.o.p. at rates of 15-25-30 p.c.
In connection with centre punches, the word "automatic" has been inserted before the word "centre". In connection with speed indicators, the word "hand" has been substituted for the word "pocket". The Item has been widened in scope to provide for parts, finished or not. These parts had formerly been dutiable in most cases under Item 462 at rates of 7\-25-30 p.c. They are now dutiable at the same rates as the finished article.

co
The Budget-Customs Tariff

Tariff
Item
431d
Engineers', surveyors' and draftsmen's precision instruments and apparatus, viz.:-allidades; altazimuth surveying instruments; aneroid barometers, engineering, military and surveying; angle prisms; boards, military sketching; box sextants; clinometers; compasses; cross staff heads; curves, adjustable, irregular, railroad and ship; curvimeters; drafting instruments of all kinds, including fitted cases containing the same; dipping needles; drafting machines; heliographs; integrators, levels, tripod and hand or pocket types; levelling rods; liners, section; meters, portable for hydraulic engineering; pantographs; planimeters; protractors, parallel rulers, parallel ruling attachments; poles, ranging; pedometers and paceometers; plane tables, military and topographic; scales, flat and triangular; slide rules; splines; straight edges, steel and wooden; ta-cheometers; tallying machines, pocket; tee squares, steel and wooden; telemeters; theodolites; transits, tripod and hand or pocket types; triangles of all types; tripods for use with any of the foregoing instruments; parts of all the foregoing, finished or not
British
Preferential Intermediate Tariff	Tariff
General
Tariff
Explanatory Notes
The Item has been widened in scope to provide for parts finished or not. These parts had formerly been duitable in most cases under Item 462 at rates of 7\-25-30 p.c. they are now dutiable at the same rates as the finished article.
Free
10 p.c.
15 p.c.
438j
Piston castings of any material, in the rough or semifinished	
Free
25 p.c.
35 p.c.
This Item formerly provided for "semi-finished piston castings of any material". Piston castings of any material in the rough are now being accorded the same tariff treatment as semi-finished piston castings.
Articles which enter into the cost of manufacture of the goods enumerated in tariff items 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409j, 409k, 409o and 439c, when imported by manufacturers for use exclusively in the manufacture in their own factories of the goods enumerated in the aforesaid tariff items, under regulations prescribed by the Minister	
Free
Provided that goods which are entitled to free entry or to a lower rate of duty than is mentioned in this item shall not be entered at the rates specified in this item.
442a
Notwithstanding the provisions of tariff item 442, materials or commodities as hereunder defined or described, when imported by manufacturers for use exclusively in the manufacture, in their own fac-
Free
On the goods covered by this Item the British Preferential Tariff of 5 p.c. is being reduced to Free and the Intermediate and General Tariffs of 6 p.c. are being reduced to Free. (Can. -U.S. Agreement rate 5 p.c.)
Free
On the goods covered by Part (1) of this Item the British Preferential Tariff of 75 cents per ton is being reduced to Free and the Intermediate Tariff of $1.25 per ton is being reduced to Free.
*.
[Stage Direction]
g
[Stage Direction]
§
[Stage Direction]
The Budget-Customs Tariff
100-264J
tories, of the goods enumerated in tariff item3 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409j, 409o, 409p and 439c, under regulations prescribed by the Minister:-
(1)	Pig iron	per ton
(2)	Bars or rods, of iron or steel, hot rolled,
per ton
Free
Free
443b
Oven thermostats, automatic oven lighters and dual valves, for use in the manufacture of apparatus designed for cooking with gas; gas pressure regulators for use in the gas line between the meter and the cooking apparatus or for installation on the cooking apparatus	
Free
476b
476c
Surgical suction apparatus including motive power; prepared surgical sutures; ethylene; operating room lights designed to minimize shadow, not including bulbs; all the foregoing of a class or kind not made in Canada, and complete parts thereof, for the use of any public hospital, under regulations prescribed by the Minister	-	
Chloroform and ethyl chloride for anaesthetic purposes	
Containers and parts thereof, including expelling bulbs, for vaccines including toxoids (anatoxins) and baeterins, toxins, serums containing immune bodies including anti-toxins, glandular extracts and/or antibiotics, when imported by manufacturers of such products for use in their own factories, under such regulations as the Minister may prescribe
[Stage Direction]
Free
Free
Free
Ear-telephone sets and similar appliances, including batteries therefor, and complete parts, for use by deaf persons, under regulations prescribed by the Minister	
Free
524a
Fabrics with cut weft pile, wholly of cotton or of cotton and synthetic textile fibres or filaments....
5 p.c.
Rovings, yarns and warps wholly or in part of vegetable fibres, not more advanced than singles, n.o.p., not to contain silk, synthetic textile fibres or filaments, nor wool.	,
12£ p.c.
Free
Free
10 p.c.
Free
Free
Free
Free
m p-c
Free
Free
30 p.c.
Free
Free
Free
Free
On the goods covered by Part (2) of this Item the British Preferential Tariff of $2,121 per ton is being reduced to Free and the Intermediate Tariff of $3.50 per ton is being reduced to Free. The General Tariffs of $1.25 and $3.50 are eliminated. (Can.-U.S. Agreement rate $1.00 per ton on pig iron and $2.75 per ton on bars or rods).
This Item is being widened to include "dual valves" and "gas pressure regulators". These articles are not made in Canada and were formerly dutiable at a rate of 25 p.c. when imported from the United States.
This Item is being revised by substitution of the word "sutures" for the word "catgut". Sutures of silk, artificial silk .nylon and other synthetic materials are being widely used. They were formerly dutiable according to material but will now be admitted duty free.
This Item is being amended to include "ethyl chloride" which was formerly provided for in Item 476b but under that Item duty free entry was limited to importations "for the use of any public hospital".
This is a revised wording of a duty free Item that has been in the Tariff since 1906 at least, covering "metallic tubes, glass caps, shells, containers and capillary tubes, rubber bulbs, boxes and corks, when imported by manufacturers of vaccine points. .
This Item is being amended to accord duty free entry to complete parts of hearing-aid batteries. These parts were formerly dutiable as "complete parts of electric batteries" at rates of 15-25 -27 ) p.c.
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".
Ch
[Stage Direction]
25 p,c,
The Budget-Customs Tariff

Tariff Item	-	British Preferential Tariff	Intermediate Tariff	General Tariff	Explanatory Notes537a	Rovings, yarns and warps wholly or in part of vegetable fibres, including yarn twist, cords and twines generally used for packaging and other purposes, n.o.p., not to contain silk, synthetic textile fibres or filaments, nor wool	17! p c.	22\ p.c.	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".537d	Rovings, yarns and warps wholly of jute, not more advanced than singles, n.o.p., not to contain silk, synthetic textile fibres or filaments, nor wool	Free	17! P-o.	25 p.c.	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".538a	Articles which enter into the cost of the manufacture of binder twine, or twine for harvest binders, and twine for baling farm produce, when imported for such use exclusively by manufacturers who manufacture such twine only	Free 22| P-c. 3 cts.	Free 30 p.c. 3! cts.	Free 35 p.c. 4 cts.	Duty free entry is being extended to articles entering into the cost of the manufacture of baling twine for farm produce, principally twine for baling hay. These articles were formerly dutiable according to material.540	(c) Towelling and glass cloth of crash or huck, with or without lettering or monograms woven in, table cloths and napkins of crash with coloured borders, in the web, wholly of flax or hemp; woven fabrics, in the web, composed in part of flax or hemp, not containing silk, synthetic textile fibres or filaments, nor wool	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".and, per pound	(d) Towels and glass cloths of crash or huck, with or without lettering or monograms woven in, table cloths and napkins of crash with coloured borders, wholly or in part of flax or hemp, not containing silk, synthetic textile fibres or filaments, nor wool	25 p.e. 3 cts.	30 p.c. 3! cts.	The words "synthetic textitle fibres or filaments" have been substituted for the words "artificial silk".and, per pound	4 cts.	542	Woven fabrics, wholly or in part of vegetable fibres, and all such fabrics with cut pile, n.o.p., not containing silk, synthetic textile fibres or filaments, nor wool	20 p.c.	27! p.c.	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".
542a	Woven or braided fabrics not exceeding twelve inches in width, wholly or in part of vegetable fibres, n.o.p. not to contain silk, synthetic textile fibres or filaments, nor wool		22! p.c.	27! P-c.	35 p.c.	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".
The Budget-Customs Tariff
551
556b
557a
Clothing, wearing apparel and articles, made from woven fabrics, and all textile manufactures, wholly or partially manufactured, composed wholly or in part of vegetable fibres but not containing wool, n.o.p.; fabrics coated or impregnated, composed wholly or in part of vegetable fibres but not containing silk, synthetic textile fibres or filaments,
nor wool, n.o.p	
and, per pound
25 p.c.
30 p.c. 1 i cts.
Yams, composed wholly or in part of wool or hair but not containing silk, or synthetic textile fibres or
filaments, n.o.p	 15 p.c.
and, per pound 6 cts.
20 p.c 20 cts.
Clothing, wearing apparel and articles made from woven fabrics, and all textile manufactures, wholly or partially manufactured, composed wholly or in part of wool or similar animal fibres, but of which the component of chief value is not silk nor synthetic textile fibres or filaments, n.o.p.; fabrics, coated or impregnated, composed wholly or in part of yarns of wool or hair, but not containing silk nor synthetic textile fibres or filaments, n.o.p.
and per pound
Slipper cloth, woven, napped on one or both sides, wholly or in'part of wool, not to contain silk or synthetic textile fibres or filaments, weighing not less than 22 ounces per square yard, when imported by manufacturers of indoor footwear, to be used exclusively in the manufacture of such articles in
their own factories	
and, per pound..
30 p.c.
40 p.c. 32J cts.
Free
35 p.c.
Silk cocoons; raw silk, not more advanced than singles, not to include material wholly or partially degummed; rags and waste wholly of silk or of synthetic textile fibres or filaments, unfit for use without further manufacture, not to include used garments nor waste portions of unused fabrics	
Free
Waste portions of unused fabrics, or used garments, wholly of silk or of synthetic textile fibres or filaments, imported by manufacturers to be used exclusively for disintegrating in their own factories... I Free
Free
Free
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".
The words "synthetic textile fibres or filaments" have been substituted for "artificial silk".
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".

The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar synthetic fibres produced by chemical processes".
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar synthetic fibres produced by chemical processes".
[Stage Direction]
o
The Budget-Customs Tariff

Tariff
Item
557b
558b
558d
558f
-	British Preferential Tariff	Intermediate Tariff	General TariffGarnetted material wholly of silk or of synthetic textile fibres or filaments, obtained by disintegrating cocoons, yarns or fabrics, prepared for use; filaments or loose fibres wholly of silk or synthetic textiles, not more advanced than in the form of sliver; waste portions of unused fabrics, wholly of silk or of synthetic textile fibres or filaments, n.o.p., not to include remnants nor mill ends	Free	71 p.c.	10 p.c.Rovings, yarns and warps wholly of Synthetic textile fibres or filaments, not more advanced than singles, not coloured, with not more than seven turns to the inch, under such regulations as the Minister may prescribe: (a) Produced from cellulose acetate	5 p.c.	30 p.c.	35 p.c.Provided that, in no case, shall the duty under the Intermediate or the General Tariff be less	(b) N.o.p	20 p.c.	30 p.c.	35 p.c.Provided that, in no case, shall the duty under the Intermediate or the General Tariff be less than	28 cts.	28 cts.
Rovings, yarns and warps wholly or in part of synthetic textile fibres or filaments, n.o.p., including threads, cords or twist for sewing, embroidering or other purposes, not to contain silk; yarns of synthetic textile fibres or filaments wholly or partially covered with metallic strip, one pound of which shall contain not less than 10,000 yards; under such regulations as the Minister may prescribe:

(a) Produced wholly from cellulose acetate	/ 7} P-c.	30 p.c.	35 p.c.Provided that, in no case, shall the duty under the Intermediate or the General Tariff be less than	28 cts.	28 cts.(6) N.o.p	25 p.c.	30 p.c.	35 p.c.Provided that, in no case, shall the duty under the Intermediate or the General Tariff be less than	28 cts.	28 cts.Rovings, yarns and warps wholly of spun synthetic textile fibres or filaments, not coloured, imported by manufacturers for use exclusively in the manufacture of cut-pile fabrics, in their own factories...	Free	30 p.c.	35 p.c.but not less than, per pound	28 cts.	28 cts.
Explanatory Notes
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar synthetic fibres produced by chemical processes".
The words "synthetic textile fibres or filaments'^ have been substituted for the words "artificial silk or similar synthetic fibres, produced by chemical processes".
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar synthetic fibres produced by chemical processes" and the words "synthetic textile" have been substituted for the words "artificial silk".
The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar synthetic fibres produced by chemical processes".
[Stage Direction]


g
g
[Stage Direction]
co
The Budget-Customs Tariff﻿560a 560c	Woven fabrics wholly or in part of silk, not to contain wool, not including fabrics in chief part by weight of synthetic textile fibres or filaments, n.o.p	 and, per lineal yard Woven fabrics with cut pile, whether or not coated or impregnated, wholly or in part of silk or synthetic textile fibres or filaments, but not containing	22$ p.c. 17$ p.c.
561	Woven fabrics wholly or in part of synthetic textile	
	fibres or filaments, not to contain wool, not including fabrics in chief part by weight of silk, n.o.p...	27$ p.c.
	and, per pound	
561a	Fabrics, coated or impregnated, n.o.p.:-	
	(i) Composed wholly or in part of silk		27$ p.c.
	(ii) Composed wholly or in part of synthetic textile fibres or filaments, but not containing silk...	30 p.c.
562a	Woven fabrics not exceeding twelve inches in width, generally known as "ribbons", whether with cut pile or not, wholly or in part of synthetic textile fibres or filaments, but not containing silk nor wool	
		22$ p.c.
564	Woven fabrics, of a kind not made in Canada, wholly	
	or in chief part, by weight, of silk or of synthetic textile fibres or filaments, or both, imported in the web in lengths of not less than five yards each by manufacturers of neckties, scarves, or mufflers, for use exclusively in the manufacture of such articles in their own factories		17$ p.c.
567a	Clothing, wearing apparel and articles, made from	
	woven fabrics and all textile manufactures, wholly or partially manufactured, n.o.p. of which the component of chief value is synthetic textile fibres or	25 p.c.
616c	and, per ounce.. Materials, non-alcoholic, in liquid or paste form, when	
	imported by manufacturers of sealing compounds for cans and jars, for use exclusively in the manufacture of such sealing compounds, in their own	Free
617	Rubber boots and shoes		Free
40 p.c. 10 eta.
32$ p.c.
40 p.c. 40 eta.
30 p.c.
40 p.c.
32$ p.c.
20 p.c.
35 p.c. 5 eta.
Free 22$ p.c.
45 p.c. 10 cts. 35 p.c.	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk". The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk". The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar
45 p.c. 40 cts.	synthetic fibres, produced by chemical processes".
45 p.c.	No change.
50 p.c.	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar synthetic fibres produced by chemical processes".
35 p.c.	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar synthetic fibres produced by chemical processes".
20 p.c.	The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk".
50 p.c.	The words "synthetic textile fibres or filaments" _ have
7 cts.	been substituted for the words "artificial silk or similar synthetic fibres produced by chemical processes". This Item is being amended to accord duty free entry to synthetic rubber compounds by substitution of the words "materials, non-alcoholic, in liquid or paste form" for the words "liquid rubber compound, non-
Free	alcoholic". This synthetic rubber compound was formerly dutiable at rates of 15-25-25 p.c.
25 p.c.	This Item is being amended by deletion of the word "India". The word "rubber" will henceforth cover both natural and synthetic rubbers.
a
S2i
[Stage Direction]


Ci
The Budget-Customs Tariff

Tariff
Item
British
Preferential
Tariff
Rubber cement and all manufactures of rubber and gutta percha, n.o.p	
15 p.c.
619a
Rubber clothing and clothing made from waterproofed cotton fabrics	
And, in addition, on raincoats	each
Bristles and broom corn	
25 p.c.
Free
Artificial teeth, not mounted, and materials for use only in the manufacture thereof	
Free
Communion sets of metal, glass, wood or other material; oil stocks; crosiers; benitiers; sprinklers; incensers; incense boats; baptismal shells or fonts; missels; scapulars; chapelets; rosaries; religious medals and crosses	
Free
692b
Trophies of war, being arms, military stores, munitions of war and other articles, which are to be retained for use as bona fide trophies, under such
regulations as the Minister may prescribe	
Provided that no article admitted under this item shall be sold or disposed of for use other than as a bona fide trophy without payment of duty.
Provided further that any article before disposal thereof may be reduced to scrap and valued and rated for duty accordingly.
Free
Woven cord tire fabric, wholly or in chief part by weight of synthetic textile fibres or filaments, not to contain silk nor wool, coated with a rubber composition, when imported by manufacturers of rubber, to be incorporated by them in pneumatic
tires, in their own factories	
and, per pound
Free
Intermediate Tariff	General Tariff	Explanatory Notes25 p.c.	27* p.c.	This Item is being amended by deletion of the word "India". The word "rubber" will henceforth cover both natural and synthetic rubbers.30 p.c. 50 cts.	35 p.c. 50 cts.	This Item is being amended by deletion of the word "India". The word "rubber" will henceforth cover both natural and synthetic rubbers.Free	Free	This Item is being amended by deletion of the words "and hair brush pads" as the trade has no knowledge of the existence of such an article.Free	Free	This Item is being amended to accord duty free entry to materials for use in the manufacture of artificial teeth. These materials were formerly dutiable at rates of 15-25-25 p.c.This Item is being amended to accord duty free entry on imports from General Tariff countries of missels, scapulars, chapelets, rosaries, religious medals and crossesFree	Free	Free	Free	This is a new Item established to accord duty free entry to articles brought to Canada as war trophies. These articles were formerly dutiable at various rate.The words "synthetic textile fibres or filaments" have been substituted for the words "artificial silk or similar synthetic fibres".17* p.c. 3* cts.	25 p.c. 4 cts.	
The Budget-Customs Tariff

The Budget-Customs Tariff
3. Resolved, that Schedule B to the Customs Tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as amended, be further amended by striking thereout Tariff Items 1001, 1027 and 1057, the enumerations of goods
and the rates of drawback of Customs duties set opposite to each of the said items, and by inserting the following items, enumerations and rates of drawback of Customs duties in said Schedule B:-
Item No.	Goods	When Subject to Drawback	Portion of Duty (Not Including Special Duty or Dumping Duty) Payable as Drawback1001	Oil, fuel and other articles not machinery, imported on or after June 1, 1941.	When entering into the cost of twine for baling farm produce, manufactured in Canada on and after June 1, 1944, and when entering into the cost of binder twine manufactured in Canada	99 p.c.1027	Materials	When used by manufacturers of malleable iron castings or steel shafting for use exclusively in the manufacture of such articles for use in the manufacture of goods enumerated in tariff items 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409j, 409o, 409p and 439c...	99 p.c.1057	Materials	When used in the manufacture of articles entitled to entry under tariff item 442, when such articles are sold to manufacturers to be used as specified in said item	99 p.c.
4. Resolved, that any enactment founded upon the foregoing resolutions to amend the Customs Tariff or schedules thereto shall be deemed to have come into force on the twenty-seventh day of June, one thousand nine hundred and forty-four, and to have applied to all goods mentioned in the foregoing resolutions imported
or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
On motion of Mr. Rowe the debate was
adjourned.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
A.	Review of Government Accounts, 1943-44.
B.	Tables on Economic Conditions, 1943-44.
A. Government Accounts, 1943-44 Comparative Summary Statement of Revenues and Expenditures
1. Although the Dominion's fiscal year ends March 31st, the books of the Dominion for each fiscal year remain open for some time thereafter in order to record expenditures made to April 30th as provided by Section 32 of the Consolidated Revenue and Audit Act and to provide for adjustments which affect revenue and expenditure accounts as well as asset and liability accounts. Final figures for the fiscal year 1943-44 are not yet available, and accordingly the statements which follow,
in so far as they relate to 1943-44 reyenue, expenditure, investment and balance sheet items, are preliminary. However, it is expected that when the books of the year are finally closed variations from the figures shown herein will be of slight importance.
2. The following tables show, by main categories and in detail, revenues, expenditures and the increase in net debt for the fiscal year 1943-44 together with comparable figures for the four preceding fiscal years:
[Stage Direction]
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (Thousands of Dollars)
-	1939-40	1940-41	1941-42	1942-43	Estimated 1943-44Tax Revenues- Customs import duties	S 104,301	t 130,757	$ 142,392	% 118,963	J 167,882Excise duties- Spirits, malt, etc	
Cigars, cigarettes and tobacco	
Licences	21,267 40,557 35	34,140 55,417 45	46,776 65,050 40	65,594 76,372 38	65,922 79,906 3761,859	89,602	111,866	142,004	145,865Less refunds	827	994	1,775	3,283	3,74161,032	88,608	110,091	138,721	142,124250,478	Sales	141,121	184,536	246,553	339,256Manufacturers-	11,206	16,742	3,062	6,001Automobiles, rubber tires and tubes	1,568	-	-	-	3,170	4,199Gasoline	-	-	24,752	24,898	24,930Candy and chewing gum	-	-	-	8,184	12,602Cigarette papers and tubes	1,879	3,356	3,948	5,056	6,159Cigars, cigarettes and tobacco	130	245	333 6,247	26,295 14,119	54,688 19,059Matches and lighters	2,135	2,173	2,766	2,855	2,87412,302	11,894	22,009	14,951	13,048Toilet preparations and soap	1,371	1,542	3,539	4,542	5,327Trunks, bags, etc	-	-	-	2 187	4,170Electric and gas appliances	-	1,886	8,470	5,506	3,302Phonographs, radios and tubes	420	1,289 658	2,361 1,445	1,191 2,007	491 1,710312	682	877	1,938	2,579-	-	8,792	12,066.	13,701Special excise (importations)	1,979	1,008	861	480	508Transportation and communication..	1,657	1,848	8,131	16,083	22,379Stamps, licences, interest, etc	4,829	4,747	5,095	12,840	17,065War exchange	-	61,932	100,874	94,553	118,912169,703	289,002	463,795	506,261	672,960Less refunds	3,675	4,835	10,370	17,549	34,341166,028	284,167	453,425	488,712	638,619453,940	Individuals-Graduated	45,407	75,863	189,502	813,047National Defence Tax.	-	27,672	106,637	80,198	38877,920	131,566	185,836	347,970	311,37911,122	13,042	28,269	28,081	26,943Excess profits tax	-	23,995	135,168	454,581	468,718134,449	272,138	645,412	1,364,770	1,620,475Succession duties	__	6,957	13,273	15,020Banks, Insurance Companies, etc.-	949	898	786	665	458Insurance companies	926	972	1,148	10,893	6,481Miscellaneous	540	636	702	723	753Total Revenue from taxes	468,225	778,176	1,360,913	2,136,720	2,591,812Non-tax Revenues-	40,383	45,994	48,869	36,729	61,071Return on investments	14,617	17,902	25,826	41,242	52,152Bullion and coinage	3,756	6,266	4,767	5,884	8,732Premium, discount and exchange	7,939	6,107	11,855	395	2,150Other	10,351	10,921	14,469	19,689	15,760Total non-tax revenues	73,392	81,579	102,911	116,079	139,865Total ordinary revenues	541,617	859,755	1,463,824	2,252,799	2,731,677
100-265i
The Budget-Appendix
[Stage Direction]
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(Thousands of Dollars)
-	1939-40	1940-41	1941-42	1942-43	Estimated 1943-44%	$	$	3	$Special Receipts and Other Credits- Consolidated Fund- Refunds of previous years' Specia' Expenditure	153	78	102	239	220War Appropriation Acts: refunds, etc.	-	1,542	16,384	18,651	81,000War and Special donations	11	1,410	459	275	217Canadian National Railways- Net income surplus, calendar years	4,016	25,063	35,640Capital gain on repatriation of Canadian National Railways securities	5,504	99	11,073	2,430Dominion stock "A" written off....	-	4	Balance of award I'm Alone Case	25Canadian Wheat Board, Reserve Account-Adjustment based on operations of the Board calculated as at July 31, 1942 and 1943	6,660	2,971Total Consolidated Fund	164	8,538	21,060	61,961	122,503Capital Accounts- Refunds of previous years' expenditure	21	20	38	103	95Net insurance proceeds on the P.E.I. Car Ferry	984	Non-active Accounts- Canadian Government Merchant Marine, Limited- Balance in Contingency Reserve...	1	Canadian National (West Indies) Steamships Ltd.- Reduction in indebtedness	165Canadian Pacific Railway- Repayment of loan made under Unemployment Relief Act, 1932	1,000National Harbours Board- Reduction in indebtedness	33	15	Write-downs to Consolidated Fund-Seed Grain and Relief Loans	10	46	58	42	29Relief Loans to Province of Saskatchewan 	17,682	Canadian National Railways Securities Trust Stock-Line abandonments	2,600	2,334	2,539	4,576	232Net capital loss on sale of S.S. Prince David and S.S. Prince Robert	-	1,475	Total Special Receipts and Credits	20,477	12,414	24,712	66,697	124,024Grand Total Revenue	562,094	872,169	1,488,536	2,319,496	2,855,701Less estimated amount of Income and Excess Profits Taxes refundable after the war	-	-	70,000	155,000562,094	872,169	1,488,536	2,249,496	2,700,701
(Mr. Ilsley.l

The Budget-Appendix

[Stage Direction]
(Thousands of Dollars)
Ordinary Expenditure
Agriculture	
Auditor General's Office	
Civil Service Commission	
External Affairs, including Office of
Prime A inister	
Finance-
Interest on Public Debt	
Cost of Loan Flotations and Annual Amortization of Bond Discounts and
Commissions	
Subsidies to Provinces	
Special Grants to Provinces	
Wartime Prices and Trade Board-Dominion Fuel Board Administration, coal subsidies and subventions Miscellaneous Grants and Contributions	
Civil Pensions and Superannuation.... Government contribution to Superannuation Fund	
Old Age Pensions, including pensions to
blind persons	
Compensation to Provinces under Dominion-Provincial Taxation Agreements-
Income and Corporation Taxes____
Gasoline Tax	
Administrative and Sundry Expenditure	
Fisheries	
Governor General and Lieutenant Governors	
Insurance	
Justice	
Penitentiaries	
Labour	
Technical Education	
Unemployment. Insurance Act, 1940-
Administration	
Government contribution	
Government Annuities-
Payments to maintain reserve	
Legislation-
House of Commons	
Library of Parliament	
Senate	\
General	
Chief Electoral Officer, including elections	
Mines and Resources-
Administration	
Immigration	
Indian Affairs	
Lands, Parks and Forests	
Surveys and Engineering	
Mines and Geological Survey	
Movement of Coal and Subsidies under
Domestic Fuel Act	
Munitions and Supply	''
Dominion Fuel Board Administration,
Coal subsidies and subventions....
National Defence-
Administration	
Militia Service	
Naval Service	'
Air Service	
Sundry Services	
National Revenue (including Income
Tax)	
National War Services	
11,817
398
1,220
129,315
4,992
13,769
5,475
567
2,271
29,977
3,966
2,320
195
2,725
2,941
31
1,286
432
458
1,338
5,675
2,116
1,301
1,324
4,532
5,997
1,869
4,852
12,064
194142
Estimated
[Stage Direction]
8,593
397
1,013
139,179
6,304
13,769
5,475
500
2,316
29,912
3,508
1,618
176
2,711
2,717
18
111
2.468 70
868 58
2.469
179 1,273 5,183 1,937 1,114 1,173
4,408	(>)
30
12,229
8,430
399
1,052
155,018
16,350
14,409
(>) 4,880
531 435
2,347
29,612
21,120
3,817
1,679
181
2,657
2,786
41
2,344
7,287
1,408
424
282
1,289
5,000
1,959
1,128
1,156
43
13,428
8,492
427
1,156
188,556
13,838
14,490
(!) -
391
2,341
29,976
85,942
8,273
4,188
1,699
182
2,667
2,772
19
4,657
11,487
1,827
555
1,447
1,268
4,978
1,753
1,129
1,140
([DOT]) -12
4,965
371
15,190
[Stage Direction]
8,856
458
1,647
242,681
19,285
14,449
(*) -
352
2,299
30,377
83,678
11,757
4,445
1,690
184
2,727
2,749
1,000
5,187
12,344
1,921
562
89
1,262
5,156
1,588
1,301
1,125
(') -
2,160
32
17,733
4210
The Budget-Appendix
[Stage Direction]
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
Ordinary Expenditure-Con.
Pensions and National Health-
Administration	
Treatment and after-care of returned
soldiers (War 1914-18)	
Pensions (War 1914-18) and Military...
Health Division	
Post Office	
Privy Council	
Public Archives	
Public Printing and Stationery	
Public Works	
Royal Canadian Mounted Police	
Secretary of State	
Soldier Settlement	
Trade and Commerce	
Canada Grain Act	
Mail Subsidies and Steamship Subventions	
Transport-
Administration	
Air Service	
Marine Service	
Canadian Travel Bureau	
Railways and Canals	
Maritime Freight Rates Act	
Railway Grade Crossing Fund	
Total ordinary expenditure..
'Capital Expenditure
Railways	
Public Works.
Total Capital Expenditure..
War Expenditure
National Defence-Army-
Army Services	
Internment Operations	
Inspection Board of the U.K.
Canada	
Sundry	
and
National Defence-Naval Services. National Defence-Air Services-
Overseas War Establishment....
Home War Establishment	
Air Training	
Sundry	
Munitions and Supply-
Administration	
Expansion of Industry	
Acquisition of U.K. Assets.
1939-40	1940-41	1941-42	1942-43	Estimated 1943-44$	$	$	$	t132	133	182	162	16114,771	13,402	12,667	12,689	14,06942,219	41,515	40,569	39,684	38,9981,113	1,111	1,246	1,244	1,61536,726	38,700	41,502	44,742	48,48459	54	54	62	80150	126	123	123	124199	283	195	245	23513,065	[DOT] 11,507	11,937	12,014	12,3395,626	5,554	5,985	6,242	6,681836	772	823	820	831624	582	564	567	8374,999	4,315	(*) 6,200	4,566	4,2581,933	1,908	1,909	1,918	2,0891,907	942	616	616	799358	334	388	375	3973,862	3,478	3,386	3,334	3,5604,215	3,795	4,010	4,257	4,408312	470	(6) _	(s) -	(') -3,763	3,527	3,694	3,340	4,0892,660	. 3,951	3,935	[DOT] 4,894	5,058255	126	25	12	17398,323	390,629	444,778	561,251	630,21523	7	4	38	6927,007	3,351	3,426	3,238	1,9657,030	3,358	3,430	3,276	2,65767,302	380,345	502,773	1,021,944	1,319,035287	805	1,370	1,556	1,0244,876	10,946	10,545604	2,085	2,150	3,344	4,84168,198	383,835	511,169	1,037,790	1,335,44511,341	88,163	189,368	810,188	369,8875,362	13,333	23,666	384,72528,561	49,415	109,820	226,550	312,2004,257	121,502	247,383	366,897	225,550113	122	125SB,818	176,879	370,649	617,835	988,6002,068	4,930	9,457	10,00077,886	247,761	469,675	710,000-	200,000	5,000-	79,954	. 858,691	679,138	725,000
(1) For previous years included in Departments of Trade and Commerce and Mines and Resources,
(i) For current year see Department of Munitions and Supply.
(*) For relative years see Departments of Finance and Munitions and oupply.
(1 * * 4 *) Includes an amount of $2,615,000 for Census of population of Canada.
(6) Included in Department of National War Services.
I Mr. Ilsley.]

The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars) (*)
-	1939-40	194041	194142	194243	Estimated 194344War Expenditure- Continued Agriculture- Disposal of agricultural products rend-	$	$	S	$	*ered surplus by the War	
Subsidy to increase export bacon price to secure adequate supplies for the	1,302	4,350	2,260	2,901	1,875U.K	
Payments on cheese exports to the	-	-	2,281	U.K	
Freight assistance on western feed	-	-	1,784	grains	
Payment to increase the income of farmers in the spring wheat area of	3,792	10,318	17,758Western Canada	
Fertilizer subventions and freight	-	-	16,299	2,678	19allowance	
Subsidy on western wheat used exclusi-	-	-	-	1,036	893vely as feed for live-stock	-	-	-	836	4,508Subsidy on milk and milk products.... Premium on hog carcasses suitable for	-	-	-	-	29,971export to Great Britain	
To provide for reserve stocks of feed	-	-	-	-	3,855grains	-	-	-	-	1,292Sundry	74	140	971	2,211	4,586Finance-	1,316	4,490	21,381	19,980	64,161Comptroller of the Treasury	
Payment of premiums on the purchase of Dominion of Canada Registered	355	1,602	3,866	6,493	8,365Stock	
Wartime Prices and Trade Board-	-	-	8,100	126	13Administration	
Subsidies due to application of Order	(') -	([DOT]) -	1,437	9,278	13,735placing a ceiling over all prices	
Canadian Wheat Board- Accountable advances for payment of drawback claims to millers and other	3,242	67,715	81,552manufacturers of wheat products	-	-	-	(') -	20,500Old Age Pensions, increased benefits..	-	-	-	3,062Sundry	216	90	80	1,051	1,243Labour-	611	1,692	16,126	84,663	128,470Industrial training	-	1,400	4,569	4,360	3,528Training aircraft mechanics 	-	249	1,489	2,019	1,357National Selctive Service	
Removal of enemy aliens from pro-	-	-	-	4,737	9,381tected areas	-	-	-	4,328	2,450Sundry	55	248	496	1,383	3,538Mines and Resources- Prince Rupert-Terrace-Cedar vale	66	1,891	6,664	16,821	20,264Highway	-	-	10	2,965	5,750Employment of Japanese	-	-	71	1,686	896Sundry	„	18	292	678	1,626	2,766National War Services-	18	292	769	6,211	9,412War Charities	-	-	1,175	6,499	10,912National Film Board	-	-	10	122	1,109Censorship	-	-	22	([DOT]) 1,070	(*) 1,727Sundry	-	2,370	2,011	954	1,331Pensions and National Health-	-	2,310	3,218	8,646	16,079Treatment-Defence Forces	778	2,144	2,696	4,175	6,456Pensions-Defence Forces	5	189	886	2,760	5,637
(*) Included under Department of Labour.
C) See Department of Trade and Commerce.
([DOT]) Including the censorship of telegrams, cables, etc., which was detailed under National Defence- Army in previous years.
The Budget-Appendix
[Stage Direction]
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
-	1939-40	1940-41	1941-42	1942-43	Estimated 1943-44$	$	$	$	%War Expenditure-Concluded Pensions and National Health-Cone. Air Raid Precautions	56	140	619	5,027	1,724Sundry	61	897	1,412	2,358	4,143900	3,370	6,613	14,320	17,960Public Works	829	4,917	4,497	6,880	6,486Royal Canadian Mounted Police	t.m	2,385	3,001	3,870	4,291Trade and Commerce- Gift of wheat to Greece	3,835	8,798Canadian Wheat Board- Accountable advances for payment of drawback claims to millers and other manufacturers of wheat products	
National Research Council	3,000	(') -121	419	1,125	2,091	2,773Sundry	3	21	80	529	998Transport	124	440	1,205	9,455	12,569S82	1,464	5,228	5,762	9,486Acquisition of Airfields and Works from United States Government	66,600Wartime Information Board	-	-	1,474	764Other Departments	283	1,097	1,610	1,757	2,995118,291	752,045	1,339,674	2,724,249	3,711,994The War Appropriation (U.K. Financing) Act, 1942	1,000,000	The War Appropriation (United Nations Mutual Aid) Act, 1943	-	-	-	-	912,603Total War Expenditure	118,291	752,045	1,339,674	3,724,249	4,624,597Special Expenditure Unemployment Relief- Administration-Relief Acts	287	236	106	2	Material Aid to Provinces, including municipal improvements projects	19,534	15,785	Dominion share of joint Dominion-Provincial projects	7,147	1,794	2,063	512	128Dominion projects	24,919	9,784	6,331	4,499	3,624Transportation facilities into mining areas	1,121	48	-	-	-53,008	27,647	8,500	5,013	3,752Western Drought Area Relief- Direct Relief	1,605	Prairie Farm Assistance Act, 1939- Administration	346	423	157	217Advances to Prairie Farm Emergency Fund	7,500	4,376	11,848	249	2,578Wheat acreage reduction plan- Administration	980	1,342	814Payments of awards to farmers	-	-	29,654	24,527	30,0979,105	4,722	42,905	26,275	33,706Provision for reserve against estimated losses on 1938 wheat marketing guarantees 	27,000	Provision for reserve to meet deficits resulting from the operations of the Canadian Wheat Board calculated as at July 31, 1940 and 1941, respectively, not previously provided for	10,500	12,571	Total special expenditure	89,113	42,869	63,976	31,288	37,458
(') See Department of Finance. 

The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Concluded
(Thousands of Dollars)
-	1939-40	1940-41	1941-42	1942-43	Estimated 1943-443	$	$	$	sGovernment Owned Enterprises Losses charged to Consolidated Fund- Canadian National Railway System, ex-eastern lines	34,850	14,451	Eastern lines	5,245	2,514	-	-	-Prince Edward Island Car Ferry and Terminals	427	461	424	591	698National Harbours Board	94	40	33	-	29Trans-Canada Air Lines	412	-	-	-	-Central Mortgage Bank	16	-	-	-Total charged to consolidated fund	41,044	17,466	457	591	727Loans and advances non-active- Canadian National Steamships	8	National Harbours Board	1,027	716	758	657	579Total non-active advances	1,035	716	758	657	579Total government-owned enterprises 	42,079	18,182	1,215	1,248	1,306Other Charges Write-down of assets chargeable to Consolidated Fund- Drought Area Relief Loans, 1934-35- Province of Saskatchewan	1,374	Reduction of soldier and general land settlement loans	1,643	1,011	271	51	553Yearly established losses in seed grain and relief accounts-Department of Mines and Resources	10	46	58	42	29Canadian National Railways Securities Trust Stock-Reduction due to line abandonments during calendar years 1939, 1940, 1941, 1942, and 1943	2,600	2,334	2,539	4,576	232Canadian National Railways Securities Trust Stock-Capital loss (exclusive of loss applicable to expired service life) on sale of S.S. Prince David and Prince Robert	1,475	Cancellation of Canadian Farm Loan Board- Capital Stock	11	12	10	7	Province of Saskatchewan Treasury Bills	17,682	_	_To provide a reserve for possible losses on ultimate realization of Active Loans and Advances	25,000	25,000	25,000	25,000Non-Active Accounts- Fulfilment of guarantees- Saskatchewan Seed Grain Loans, 1936 and 1937	2,638	7,136	Canadian National Railways Securities Trust Stock- Increase in Dominion's Equity in the Canadian National Railways due to capital gain on repatriation oi Canadian National Railways Securities	5,504	99	11,073	2,430Increase in Dominion's Equity in the Canadian National Railways due to surplus earnings of Canadian National Railway System for calendar years	4,016	25,063	35,640Total other charges	25,958	42,518	31,993	65,812	63,889Grand total expenditures	680,794	1,249,601	1,885,066	4,387,124	5,360,122
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(Thousands of Dollars)
-	1939-40	1940-41	1941-42	1942-43	Estimated 1943-44S	$	$	$	sOrdinary revenues	541,617	859,755	1,463,824	2,182,799	2,576,677Capital refunds	21	20	1,022	103	95Special receipts and other credits	20,456	12,394	23,690	66,594	123,929Total revenues	562,094	872,169	1,488,536	2,249,496	2,700,701Ordinary expenditures	398,323	390,629	444,778	561,251	630,215Capital expenditures	7,030	3,358	3,430	3,276	2,657War expenditures	118,291	752,045	1,339,674	3,724,249	4,624,597Special expenditures	89,113	42,869	63,976	31,288	37,458Government-owned Enterprises	42,079	18,182	1,215	1,248	1,306Other charges	25,958	42,518	31,993	65,812	63,889Total expenditures	680,794	1,249,601	1,885,066	4,387,124	5,360,122Total deficit or increase of direct net debt	118,700	377,432	396,530	2,137,628	2,659,421
revenues, 1943-44
3.	Although not all figures are as yet final for the year it is anticipated that total revenues in 1943-44 will be about $2,855,701,000, a total which represents a peak never before reached in the Dominion's financial history. The increase over the previous year was $536-
205,000	or 23 per cent, and over the last prewar year, 1938-39, was $2,353,530,000, or about 469 per cent. It is interesting to note also that in the six full fiscal years ended on March 31, 1920, which embraced the war and rehabilitation periods of World War I, total revenues of the government amounted to $1,461,395,000, or only slightly more than one-half the revenue of the single year ended March 31, 1944.
The forecast of revenue given in the budget of March 2, 1943, after taking account of changes made subsequent to the budget presentation was for $2,702,200,000, which figure the actual revenue of the year exceeded by about $153,501,000. On page 16 there is given a detailed comparison of the forecast and the present estimate of actual revenue for the year. It will be noted that in some instances revenue exceeded the forecast by a considerable margin, while in others it fell short of the forecast. Further comment will be made in this connection in later paragraphs.
* A prominent feature of the overall picture for the year was again the large part played [Mr. Ilaley. 3
by direct taxation. This form of tax is generally recognized as being most equitable, since it is possible in levying it to take account of family responsibilities in the case of the individual and impose a burden in proportion to the taxpayer's ability to meet it. When levied on corporation incomes at high rates under both the excess profits tax and the corporation income tax it assures that no abnormal or unreasonable profits should be derived from production for the war effort.
In 1943-44 the proportion of total revenue derived from the direct taxes on incomes and profits w-as 56-7 per cent, compared with 28-3 per cent in the last pre-war year, 1938-39.
Of the total revenue of $2,855,701,000, it is now estimated that $155,000,000 will be refunded after the war under the provisions of the Income War Tax Act and the Excess Profits Tax Act. This is in addition to the sum, of $70,000,000 refundable out of taxes collected in the previous fiscal year, making a total to the end of 1943-44 of $225,000,000 repayable after the war.
4.	The five-year table of revenue receipts to be found on pages 4207 and 4208 is in the same form as that of earlier years. This table is divided to show tax revenues under the appropriate headings with considerable detail given in the case of excise duties, excise taxes and

The Budget-Appendix
income taxes. In the following paragraphs each source is discussed in the order in which it appears in the table.

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5.	Revenue from customs duties for the fiscal year 1943-44 is now estimated at $167,-
882.000.	which compares with receipts of $118,-
963,000	from this source during the preceding fiscal year and with the budget forecast of $100,000,000.
Prior to April 1, 1943, importations into Canada or purchases in Canada by or on behalf of allied governments were granted exemption from customs duty and as well from sales tax, excise taxes and any other taxes that would normally have applied, although purchases by the Canadian government for its own account were subject in full to all applicable taxes. With the adoption of the mutual aid programme, the Canadian government became the purchaser of a substantial amount of the munitions and other war supplies procured in Canada for the use of other governments. Since the beginning of the 1943-44 fiscal year, therefore, only those supplies which were purchased for cash in Canada by allied governments have been eligible for tax exemption and this exemption is now provided for by a drawback of duties or taxes included in the purchase price. The effect of this change in procedure was to bring within the scope of taxation a substantial volume of war supplies previously exempt from tax. At the time the budget was presented on March 2, 1943, it was not possible to take account of the probable effect of the above change in procedure in making the forecast of probable revenue receipts for the fiscal year 1943-44.. This change in procedure is the principal factor explaining the extent to which revenues from customs duties during the year were substantially higher than had been forecast or had been collected during the preceding year. The increase in the volume of imports was also somewhat greater than had been anticipated.
6.	Excise duties are levied exclusively on alcoholic beverages and tobacco products. Revenue in the fiscal year 1943-44 amounted to $142,124,000, some $3,403,000 in excess of the previous year, which increase arose almost entirely from higher revenue from cigarette and tobacco consumption, particularly cigarettes, consumption of which alone increased
some 5 p,er cent over the peak figure of the previous year. Revenue from alcoholic beverages would have shown some decline from the previous year due to the restrictions on consumption had it not been for the fact that the increased rates of tax imposed in the budget of June 23, 1942, were in effect during the whole of the fiscal year 1943-44 compared with at the most ten months in the fiscal year 1942-43.
The extent of the smokers' contribution to the federal treasury is indicated by the fact that revenue from tobacco products, taking account of the additional taxes imposed under the Special War Revenue Act on tobacco, cigars, cigarettes and on cigarette papers and tubes, amounted in the fiscal year 1943-44 to almost $140,753,000, or a sum almost one-third of the total tax revenue of the government in the last pre-war year, 1938-39.
7.	The term "excise taxes" connotes in general the commodity taxes levied under the Special War Revenue Act, including the sales tax, the war exchange tax, and a group of some forty or more miscellaneous taxes on a variety of commodities. The revenue under this general heading in the fiscal year 1943-44 amounted, after deducting refunds, to $638,-
619,000,	or $149,907,000 in excess of the previous year, and $130,419,000 in excess of the forecast. Of this increase the larger part is attributable to the sales tax and the war exchange tax, which both exceeded the forecast figure in considerable part because of the change in tax procedure resulting from the mutual aid programme which has already been discussed in section 5. It is now estimated that these two taxes contributed almost $96,-
345,000	to the increased revenue, whereas a slight decrease had been provided for in the budget forecast.
The balance of the increase over the previous year arose from the variety of taxes on goods and services of domestic consumption, in the case of many of which the rates either were increased in the budget of March 2, 1943, or were increased in the budget of June 23, 1942 and were effective during the full twelve months of the fiscal year 1943-44, compared with at the most ten months of the previous fiscal year. These taxes as a group yielded $214,792,000, exceeding the revenue of the previous year by $53,562,000, and the forecast by $16,592,000. The major increases arose
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[Stage Direction]
under the following headings (the amount shown is the increase in 1943-44 over 1942-43):
1.	Cigars, cigarettes and tobacco.. .§28,393,000
2.	Transportation and communication	
6,296,0003.	Beverages (soft drinks)	
4,940,0004.	Candy and chewing	gum	
4,418,0005.	Stamps, etc., including paymenton jewellery, chinaware, cabaret attendance, etc	
4,225,0006.	Tires and tubes	
4,009,0007.	Purses, bags, trunks,	etc	
1,983,0008.	Amusements	
1,635,000
Certain of these revenues, on the other hand, suffered some reduction due to curtailment of production or to rationing of domestic consumption. These sources, and the amount by which the revenue decreased, were as
follows:
1.	Electric and gas appliances	$ 2,004,0002.	Sugar	
1,903,0003.	Phonographs,	radios	and	tubes..	700,0004.	Wines	
297,0008. The	personal	income	tax, now	the largest
single source of tax revenue, yielded $813,435,000 in 1943-44, $279,297,000 or 52 per cent in excess of the combined revenue from graduated income tax and national defence tax in the previous year. It should be indicated, however, that this revenue fell below the revised budget forecast of $880,000,000 by $66,-
565,000,	or about 7 per cent. This discrepancy may be accounted for by two factors: (a) the level of employment and incomes was slightly lower during the year than was anticipated at the time of making the budget forecast; and (b) the amount of taxes refunded during the year as a result of the cancellation of 50 per cent of the 1942 liability under the transition to the "pay-as-you-go" system was larger than had been anticipated. These refunds are deducted from the revenue of the year in which they are repaid, and the amount shown for 1943-44 has thus been reduced by the amount of such repayments.
At the present time it is estimated that the savings portion of personal income taxes levied against 1943 incomes and repayable to the taxpayer after the end of the war was in the neighbourhood of $110,000,000. It was estimated in the previous year that the corresponding amount in relation to 1942 incomes

would be $50,000,000, which it is now proposed, on the basis of more complete information, to increase by an additional amount of $5,000,000. These amounts taken together thus give an estimate' of the total amount refundable on the dominion's books at the end of the fiscal year 1943-44 of $165,000,000 repayable after the war in respect of the 1942 and 1943 taxation years.
9.	Corporate income tax and excess profits tax, both of which are levied on business incomes, may appropriately be discussed together. Revenue from the corporate income tax amounted to $311,379,000, slightly in excess of the forecast of $300,000,000, but below revenue of the previous year by $36,591,000. This decline was due to the fact that in the previous year collections were somewhat above normal because of inauguration of the compulsory monthly plan of tax payment in July, 1942, which brought forward into the fiscal year 1942-43 revenue which under the old system of one single annual payment would not have been received until the following fiscal year. In 1943-44, as the monthly payment plan was in effect for the full twelve months, there was no comparable overlapping of revenue, and collections were reduced to a level closer to normal.
Revenue from the excess profits tax, at $468,-
718,000	fell substantially below the forecast of $550,000,000 for the year. This discrepancy is largely explained by the extreme difficulty of forecasting from the distance of a ' year in advance not only the total amount of corporation profits during a year but also the extent t-o which such profits are excess profits, that is, in excess of standard profits. In th present instance it can only be said that because of these difficulties, for which there does not appear to be any ready solution, a substantial error was made in forecasting excess profits tax revenue for the fiscal year 1943-44.
It is now estimated that in respect of excess profits taxes collected in the fiscal year 194344 an amount of $40,000,000 will be refunded after the war. This figure can only be regarded as tentative until assessment of excess profits tax returns has been completed for the year in question, and the refundable amount finally determined in each case. It will be some time however before this work will be completed, and it is felt desirable in

The Budget-Appendix
the interim to establish on an estimated basis an approximate figure for the amount of such refundable taxes. The addition of this $40,000,000 to the $20,000,000 set up in the previous fiscal year brings to $60,000,000 the total amount of refundable taxes as at March 31, 1944.
10.	Revenue under the heading of dividends, interest, etc., is derived from the special taxes imposed on certain income under Section 9b of the Income War Tax Act. In 1943-44, this revenue amounted to $26,943,000, reduced by $1,138,000 from the previous year, and was derived for the most part from the 15 per cent tax levied on dividends and interest paid to non-residents.
11.	The dominion government has levied succession duties only since 1941, and revenue from this source is only gradually reaching its full anticipated level. Such revenue amounted to $15,020,000 in 1943-44, compared with $13,-
273,000	in the previous year.
12.	Small amounts of tax revenue are derived from the tax on note circulation of the chartered banks, which decreases from year to year -with the decline in such circulation as provided by statute; from taxes on the net premium income of insurance companies, reduced considerably in 1943-44 from the previous year because in the previous year two years' revenue was collected in one following certain arrangements made under the Dominion-Provincial Tax Agreements; from a tax on the export of electrical energy from Canada; and from a tax on the export of furs from the Northwest Territories. Revenue from all these taxes amounted in 1943-44 to $7,692,000.
13.	Total non-tax revenues are estimated at $139,865,000, an increase of $23,786,000 over 1942-43. Receipts from the Post Office total $61,071,000, an increase of approximately $12,-
200,000	which was due to the one cent increase in letter rates effective April 1, 1943, as well as to a greater volume of post-office business during the year. The receipts from the Post Office will, it is expected, exceed cost of operations by about $12,587,000 without taking into account any credit for services rendered other departments free of charge and without adding to the cost of operations, rentals and other costs of premises occupied by the Post Office. Returns on investments are expected to realize $52,152,000, an increase over the previous year of about $10,910,000. The larger items making up this total are: interest on advances to Canadian National Railways, $18,724,000; Bank of Canada profits, $14,118,000; interest on loans to Foreign Exchange Control Board, $3,467,000; interest
on loans to National Harbours Board, $3,250,000; interest on loans to provinces, $2,861,000; interest on loans to Canadian Farm Loan Board, $1,092,000; Soldier Land Settlement loans, $992,000; and interest on advances made by the Department of Munitions and Supply to commodity companies, $3,970,000.

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14.	The total amount shown for the, fiscal year 1943-44 under this heading is $124,024,000. The items making up this total are: Special receipts, War Appropriation Acts, $81,000,000 (divided as follows: refunds of previous years' war expenditure, $32,500,000; sale of surplus war assets, $6,000,000; profits on certain war operations and miscellaneous war revenues, $42,500,000); operating surplus of the Canadian National Railways for the calendar year 1943, $35,640,000 and the capital gain on repatriation of Canadian National Railways securities, $2,430,000. These last two items increase the book valuation of the Canadian National Railways securities trust capital stock, and accordingly are offset by contra amounts appearing on the expenditure side under the heading "Other Charges".
The Canadian Pacific Railway company repaid a loan of $1,000,000 advanced under the authority of the Relief Act, 1932. This loan which was non-interest bearing was charged to non-active account and accordingly the repayment is shown as a revenue item.
Another item which is recorded under the heading of special receipts and credits is an amount of $2,971,000 representing a reduction in the reserve account established to meet the operating deficits of the Canadian Wheat Board. This adjustment is occasioned by a further improvement in the board's balance sheet based on calculations made as at July 31, 1943 with respect to the 1939 and 1940 crop accounts. This reserve account now stands at $8,816,210.36.
15.	The table which follows gives a summary of the forecasts made at the time of the last budget of the probable receipts from the various sources of revenue during the fiscal year 1943-44, and a comparison of these forecasts with presently estimated receipts for the fiscal year. A comparison of presently estimated receipts with the original forecasts has already been given in respect of the major items of revenue. The increase in total receipts over the amount forecast, in terms of percentage, excluding estimated refundable portion of income and excess profits taxes, is 5-6 per cent.
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[Stage Direction]
Budget Forecast of Receipts			Increase (+)	
Source of Revenue	From tax structure before Budget changes	From tax structure as changed by proposals made in Budget of March 2,1943	Receipts now estimated for 1943-44	or decrease (-) in receipts as compared with final budget forecast	
		(Thousands of Dollars)			
Tax revenues					
100,000	100,000	167,882	+	67,882Excise duties	130,000	135,000	142,124	+	7,124Excise taxes:	225,000	225,000	304,915	+	79,915War Exchange tax	85,000	85,000	118,912	4*	33,912Other excise taxes	165,000	198,200	214,792	+	16,592Total excise taxes	475,000	508,200	638,619	+	130,419813,435	66,565Tax on personal incomes	825,000	*880,000	-	300,000	300,000	311,379	+	11,379550,000	550,000	468,718	-	81,282Interest and Dividends	26,000	26,000	26,943	+	943Total income taxes	1,701,000	1,756,000	1,620,475	-	135,52518,000	18,000	15,020	-	2,980Miscellaneous taxes	7,000	7,000	7,692	+	692Total Tax Revenues	2,431,000	2,524,200	2,591,812	+	67,612Non tax Revenues	130,000	138,000	139,865	+	1,865Total	2,561,000	2,662,200	2,731,677	+	69,477Special Receipts and Credits	40,000	40,000	124,024	+	84,0242,601,000	2,702,200	2,855,701	+	153,501Less Refundable Taxes	210,000	225,000	155,000	-	70,000Net Total Revenue	2,391,000	2,477,200	2,700,701	+	223,501
* The actual revenue forecast given in the Budget Speech at March 2, 1943, was $930 millions for personal income tax revenue. The moving back of the date for filing annual returns from March 31 to April 30, which was provided for subsequent to the Budget Speech, however, resulted in a reduction in the revenue expectation for the fiscal year 1943-44 amounting to $50 millions. The figure given in the table has been adjusted to take account of this reduction.

[Stage Direction]
16.	The comments which follow deal with expenditures classified by the usual main categories:	(1) ordinary expenditures; (2)
capital expenditures; (3) war expenditures; (4) special expenditures; (5) operating deficits of, and non-active advances to, government-owned enterprises; and (6) other charges. All disbursements under these headings, with the exception of active loans and investments chargeable to war appropriation acts, are included as expenditures in arriving at the over-all deficit or increase in net debt.

[Stage Direction]
17.	It is estimated that ordinary expenditures for the year will total $630,215,000. Of this total a few of the larger contractual and uncontrollable items, such as interest and other charges on the public debt, pensions, unemployment insurance, post office, subsidies and payments to provinces under the dominion-provincial taxation agreements represent $509,891,000 or approximately 81 per cent.
The above total of $630,215,000 is greater than the actual amount of ordinary expenditure during the previous fiscal year by $68,-
964,000.	Some of the larger items making up this increase are:

The Budget-Appendix
Increased interest and charges on
public debt	$59,572,000
Increase in post office expenditure 3,742,000 Increase in administrative cost of Department of National Revenue, including income tax ... 2,543,000 Increase in unemployment insurance 1,387,000 Increase in cost of treatment and after-care of returned soldiers (war 1914-18)	 1,380,000
[Stage Direction]
Less important increases, as well as decreases effected during the year, are readily ascertained by referring to the five-year table. It may be noted, however, that the increase in ordinary expenditures is due to increased expenditures made necessary by or arising out of the war.

[Stage Direction]
18.	Total expenditures charged to capital are estimated at $2,657,000 compared with $3,-
276,000	in the previous year. The main items in this category are expenditures arising out of dredging the St. Lawrence ship channel, improvements in connection with civil airways and airports, and a payment in connection with the construction costs of a new Prince Edward Island car ferry.

[Stage Direction]
19.	Of the $4,890,000,000 appropriated by the War Appropriation Act, 1943, and the War Appropriation (United Nations Mutual Aid) Act, 1943, $4,665,192,113 was disbursed. Of this sum, $40,595,500 was for loans, advances and investments treated as active assets, and the remainder, $4,624,596,613 was classed as war expenditure. The following table lists the same classifications for the last five fiscal years.
Fiscal Year	Charged to Active Assets	War Expenditures	Total1939-40	$ 9,092,742 26,379,066 42,816,676 65,231,622 40,595,500	% 118,291,022 752,045,326 1,339,674,152 3,724,248,890 4,624,596,613	t 127,383,764 778,424,392 1,382,490,828 3,789,480,512 4,665,192,1131940-41	1941-42	1942-43	1943-44	
184,115,606	10,558,856,003	10,742,971,609
The Budget-Appendix
[Stage Direction]
20. The following is a summary of the esti- ing amounts classed as expenditure from those
mated disbursements from the war appropria- classed as active assets, tions for the fiscal year 1943-44, distinguish-

[Stage Direction]
Department of National Defence-Army Service	 $1,335,445,000
"	"	Naval Service	
369,827,000"	"	Air Service	
922,600,000"	Munitions and Supply	
725,000,000
Miscellaneous Departments:
Agriculture	 64,757,050
Auditor General's Office	 198,000
Civil Service Commission	 497,000
External Affairs including Prime Minister's Office	 671,000
Finance	 128,470,313
Fisheries	  234,040
Justice	;	 78.000
Labour	 20,254,000
Legislation-House of Commons	 20,000
Mines and Resources	 9,411,700
National	Harbours Board	
453,000National	Research Council	
2,773,000National Revenue	
4,000National	War Services	
15,079,400Pensions	and National Health	
17,959,760Post Office	
281,000Privy Council	
851,000Public Works	
6,486,000Royal Canadian Mounted Police	
4,291,000Secretary of State	
413,250Soldier Settlement of Canada	
58,000Trade and Commerce	
9,795,800Transport	
76,085,300
Total estimated direct war expenditure under War Appropriation
Act, 1943	 $3,711,993,613
The War Appropriation (United Nations Mutual Aid) Act, 1943	 912,603,000
Total war expenditure	 $4,624,596,613

[Stage Direction]
Purchase of railway equipment:
1941	order	
3,295.0001942	order	
17,366,500
Acquisition of all issued capital stock of Eldorado Mining and Refining,
Limited	  5,272,000
King's Printer advance account	   883,000
Canadian Wool Board, Limited...:	 13,779,000
Total active loans, advances and investments from the war appropriation, 1943-44	$	40,595,500
Total disbursements from war appropriations, 1943-44	$4,665,192,113
21.	The table in the preceding section does	in the prosecution of the war and any oblignot include recoverable outlays made under	ations or costs incurred temporarily or asthe provisions of section 3 of the War Appro-	sumed may be paid out of unappropriated
priation Act which are also classed as active	moneys in the Consolidated Revenue Fund,
assets rather than expenditure. Under this	Furthermore, any expenditure required to be
section, the Government of Canada may act	made by the Government under any contract
as the agent of an allied government for any	for war supplies entered into for the purpose
purpose which will aid directly or indirectly	of enabling any company wholly owned by
[Stage Direction]
The Budget-Appendix
the government to fulfil its obligations in respect of orders received by such company from an allied government may also be paid out of unappropriated moneys. The amount disbursed under this authority during the fiscal year 1943-44 are included in the loans and investments described in sections 33 to 48.
22.	The principal items of war expenditure have already been detailed in the table on page 4210, where the comparable items for the last five fiscal years are also shown. In this connection there are two points worth noting in comparing 1943-44 expenditures with the corresponding figures of the previous year- both of which concern the Department of National Defence for Air. The first is the large increase in the expenditure for the Overseas War Establishment, from 823,666,000 in 1942-43 to an estimated 8384,725,000 in 194344. This is largely explained by the increase in the number of squadrons for which the dominion has assumed responsibility, involving an increased expenditure of approximately
8308,000,000, and by the arrangement whereby Canada has assumed the responsibility for the pay of all R.C.A.F. personnel overseas, resulting in a further increase in expenditure approximating 850,000,000. The second point is the substantial decrease in the charges under the British Commonwealth Air Training Plan -from $366,897,000 in 1942-43 to 8225,550,000
in 1943-44. This apparent decrease merely reflects the apportionment of the costs as between Canada and the United Kingdom; the gross expenditure for the Plan for 1943-44 totals approximately $496,500,000 but approximately 8270,950,000 has been deducted and treated as a recoverable advance to the Government of the United Kingdom in accordance with the responsibilities assumed by the two governments under the terms of the Agreement. This sum of $270,950,000 is an adjustment for the United Kingdom's share of the expenditures made by Canada between July 1, 1942 and March 31, 1944; offsetting it there is an estimated total of $93,000,000 in credits to the United Kingdom in this account for other adjustments during the same period under the terms of the Agreement.
23.	The table which follows gives a more detailed account of the estimated expenditures during 1943-44 from the war appropriation (excluding Mutual Aid, of which more will be said later). The expenditures of the three armed services and their supply department, the Department of Munitions and Supply, are of course the principal components; they are estimated at 90-3 per cent of the total. It is not possible, however, to fight an all-out war without involving nearly every department of government in war activities of one kind or another as this table clearly shows.

[Stage Direction]
Agriculture-
Agriculture-
Agricultural Supplies Board-
Administration	$
Programmes to encourage production of
essential war supplies	
Assistance in disposal of agricultural products rendered surplus by the war
Feeds administrator	
Flax fibre administrator	
Fertilizers and pesticides administrator..
Seeds administrator	
31.000
719.000
1.875.000 23,697,000
27.000
1.129.000
260.000
Meat Board ....,	
Dairy Products Board	
Special Products Board	
Agricultural Food Board	 Special farm income payments
Auditor General-
Auditing and checking war appropriation accounts	
Civil Service Commission-*
Supply of personnel for war services	
Payment of minimum rate railway fare re stenographers and typists	
External Affairs-
27.738.000 4,019,000
32.000 1,754,050
31.195.000
19.000 
[Stage Direction]

488,000
9,000
64,757,050
198/100
497,000
Departmental administration and passport offices	 316,000
Representation abroad		 85,000
United nations relief and	rehabilitation	administration..	55.000Legation building and	residence-Chungking,	China....	127,000Sundries	
88,000
The Budget-Appendix
[Stage Direction]
Finance
[Stage Direction]
Payment of premium on purchase of Dominion of Canada
registered stock	$	13,000
Comptroller of the Treasury's Office	 8,365,000
Wartime Prices and Trade Board-
Administration	$ 13,735,000
Canadian Wool Board, Ltd	 221,000
Commodity Prices Stabilization Corporation-Administration and Subsidies 81,552,000
[Stage Direction]
 95,508,000
Payments to millers and manufacturers of wheat products	20,500,000
Old Age Pensions including pensions to the blind	 3,062,000
Conversion of large dwellings into multiple housing units	816,000
Administration of Employees Instalment Purchase Plan,
Victory Loans	 126,000
Freight on shipments of scrap steel	 29,000
Sundries	 21,313
Fisheries-
Subsidies for the construction of packer-seiner vessels....
Subsidies for the construction of dragger vessels	
Construction, etc., of experimental long line vessel	
Expenses re supply of frozen fish for British Ministry
of Food	
Bonus to crews of fisheries vessels in war zones	
Salt Fish Export Regulations-administration	
Sundries	
Justice-
Defence of Canada regulations	 20,000
War Measures Act	    1,000
Penitentiaries Branch-
Purchase of materials re manufactures for war
departments	  51,000
122,000
22,000
47.000
11.000
15.000
15.000 2,010
Labour
[Stage Direction]
Industrial training for war work	
Training of young men for aircraft manufacturing, etc. ..
War emergency training

administration	
Vocational training for discharged members of the Canadian armed forces	
National War Labour Board	
Wartime Bureau of Technical Personnel	
Personnel management training	
National Selective Service-[DOT]
Office of Director	$	726,000
Mobilization Division	 3,221,000
Manpower records	 162,000
Expenses of work done by Unemployment Insurance Commission	 4,875,000
National Registration-Administration .	390,000
Payments to Post Office re delivery
of mobilization orders	 4,000
Co-ordination of shiploading and unloading operations-
Halifax	
Stabilization of longshore labour, Halifax	
Universities-Accelerating courses and loans to students. .
Construction of central dispatching office, Halifax ..
Canteen for longshoremen at deepwater terminals, Halifax General labour transference in war industries and
agriculture	
Harvest assistance to provinces	
British Columbia Security Commission	
Organization and operation of day nurseries, etc	
Japanese Wood Projects Account-Revolving Fund	
Prisi oners of War Labour Projects Account-Revolving
Fund	
Army Labour Account-Revolving fund	
Compulsory transfer of ex-coal mine workers back to the
coal industry	
Sundries	
3.528.000
1.361.000
39.000
137.000
453.000
169.000
20.000
9.381.000
67.000
461.000
205.000
56.000
20.000
312.000
519.000
2.150.000
99.000
500.000
225.000
100.000
99.000
53.000
128,470,313
2341)40
78,000
[Mr. Psley.J
20,254,000

The Budget-Appendix
Legislation-
Accountable advance to Empire Parliamentary Association
Mines and Resources-
Mines and Geology-
Development of tar sands	$
Geological surveys	
Oil explorations	
Strategic minerals-exploration and development work	
New metallurgical laboratory	
Explosives division-Administration of
regulation re explosives	
Assistance to provinces re transportation facilities to various wartime mining
projects	
Lands, Parks and Forests-_
Metallic Minerals Division-Services to
war departments	
Sundries	
National Parks Bureau-
Alternative service work camps		162,000
Dominion Forest Service-
Alternative service work camps	 89,000
Alternative service work camps,	B.C.	249,000
Internment and prisoners of	war
operations	  37,000
Forest Products Laboratories		30,000
Bureau of Northwest Territories and Yukon Affairs-
Expenses of liaison officers Alcan
and Canol projects	 6,000
Sundries	 7,000
900.000
32.000
154.000
118.000 189,000
25.000
136,000
236,000
5,000
Surveys and Engineering-
Engineering and Construction Service- Alternative service work camps... Prince Rupert - Terrace - Cedarvale
highway	
Employment of persons of the Japanese race and Japanese
nationals	
Sundries	
10,000
5,750,000
896,000
29,100
Immigration-
Canadian interests in enemy and enemy
controlled territory	[DOT] [DOT] [DOT] [DOT]
Canadian interests abroad apart from
enemy controlled territory	
Grants to National Advisory Committee
for children from overseas	[DOT]
Repatriation of wives and dependents of members of the Canadian forces overseas	 [DOT] [DOT][DOT] [DOT]
Evacuation of Canadian citizens from
the Far East	
Sundries	
245,000
7.000
4.000
39.000
16.000 40,600
[Stage Direction]
1,795,000
580,000
6,685,100
351.600
Munitions and Supply
[Stage Direction]
Administration	
Expansion of war industry	
Acquisition of United Kingdom interest in war plants...
National Defence-Army Services
Departmental administration	
Dependents' Allowance Board	
Dependents' Supplementary Grants Fund	
Army	
Internment operations	
Inspection Board-United Kingdom and Canada	
National Defence-Naval Services
Navy	
Royal Canadian Sea Cadets	
Temporary Building-Cartier Square, Ottawa	
10.000,000
710.000.000
5,000,000
1.421.000 673,000
2.747.000 1,319.035,000
1.024.000 10,545,000
369,400,000
393,000
34,000
20,000
9,411,700
725,000,000
1,335,445,000
369,827,000
The Budget-Appendix
[Stage Direction]
National Defence-Air Services
Mome War Establishment	$	M2,200,000
Overseas Establishment	 384,725,000
Departmental Adminstration, Air	 125,000
British Commonwealth Air Training Plan	 225,550,000
________________®
National Harbours Board
[Stage Direction]
Halifax-Operation of fire boat Rouille	 58,000
Extension of pier 9, Richmond Terminal....	4,000
Moorings for ships under repairs	 8,000
Installation of additional car dumpers at terminal grain elevator	 128,000
Special fire protection	   102,000
Saint John-Acquisition, etc., of heavy lift crane equipment	 151,000
West side wooden pile dock	 2,000
National Research Council-
Special war activities	 2,690,000
Extension of heating plant at Montreal Road Laboratones	 83,000
National Revenue-
Censorship of newspapers and other publications
National War Services-*
Departmental administration	 71.000
War Charities

general	 56,000
War Charities-Auxiliary Services	 10,912,000
Salvage Division	 172,000
Women's Voluntary Services	 35,000
Canadian Firefighters for United Kingdom	 755,000
Canadian Prisoners of War Next-of-Kin Division		12,000
Committee on Co-operation in Canadian Citizenship		9,000
Censorship Division	 1,727,000
Government Office Economies Control	 11,000
Canadian Broadcasting Corporation - Short Wave
Station	 210,000
National Film Board-
Special War Library	 32,000
Purchase of supplies revolving fund	 13,000
Wartime Information film program	 815,000
Training and equipping cameramen for active
service	   118,000
Purchase of equipment for the production of war films...	54.000
Sundries	 77,400
Pensions and National Health-
Treatment-
Defence Force	   6,456,000
Royal Canadian Mounted Police	 96,000
Pensions-Defence Forces	   5,637,000
Air Raid Precautions	 1,724,000
Investigations-Dependents' Allowance	Board	 70,000
Inspection of industrial plants	 19,000
Laboratory of hygiene	 20,000
Public Health Engineering	 30,000
Food and Drugs	 10,000
Quarantine Service	 74^000
Committee on demobilization	 5!000
Rehabilitation benefits	 473,000
Processing of blood for dried serum	 601,000
Maintenance of non-residence seamen	 34,000
Detention Allowances-Canadian seamen	 370,000
Additions, alterations and improvements to departmental
hospitals	 1,564,760
Reserve Stores-Revolving account	 40,000
Addition-John Street Laboratories, Ottawa	 ll'oOO
Grants to the Canadian Nurses Association	 200,000
Hospital Unit adjacent to Ottawa Civic Hospital	 158,000
Acquisition of land-Westminster Hospital, London, Ont.	203000
Chlorination of water systems-
Pacific Coast	 gg qqq
Dawson Creek-Water Supply	 90 000
Sundries	 36,000
922,600,000
453,000
2,773,000
4,000
15,079,400

17,959,700

The Budget-Appendix
Post Office-
Canadian Postal Corps	
Privy Council-
Statutory Orders and Regulations Division	$
Committee on reconstruction	
Wartime Information Board	
Expenses of Special Commissioner for defence projects in the Northwest	
Public Works-
Chief Architect's Branch-
Calgary-Purchase of the Traders' building, and alterations	$
Edmonton-Purchase of Massey-Harris
building, etc	
Ottawa-
Extension to Jackson building (including purchase of land)	
To provide for completion of temporary buildings Nos. 5, 6, 7 and addition to No. 1	
Temporary building No. 8 (Carling
Avenue)	
Hostels for junior employees in the public service-construction and furnishings	
Temporary building for Royal Canadian Mounted Police, north of Justice building	
Office building, shooting range, etc., for National Research Council .... Temporary Building for W P.T.B.,
Sussex Street	
Addition to film vaults, John and
Sussex Streets	
Armoury accommodation for Canadian
Officers' Training Corps Units	
Converting furnaces in public buildings
from oil to coal firing	
Repairs, alterations, operation and
maintenance of buildings	
Rental of premises occupied for war
purposes	
Furniture, etc. for war employees .... Sundries	
Chief Engineer's Branch-
Saint John Harbour (Courtenay Bay),
N.B.-dredging	
Ste. Anne de Bellevue, Que.-Military
Hospital	
Esquimalt, B.C.-Dry Dock	
Seymour Narrows, B.C.-Removal of ripple rocks and construction of dam North Sydney, N.S.-Reconstruction of
wharf and terminal facilities	
Post-War Construction Program-
Preparation of plans	
Sundries	
Telegraph Branch-
To provide for a 24-hour telegraph service on the Pacific Coast	$
Telephone service and unforeseen	
64.000
71.000
7.000
4.000
159.000
151.000
6.000
9,000
271.000
14.000
53.000
12.000 2,222,000
1,766 000
618.000 15,000
195.000
11,000
35.000
345.000
43.000
11.000
8,000
78,000
318,000
Royal Canadian Mounted Police-
Increased activities of the force due to the war Securities control	
Secretary of State-
Board of Management-Hostels for female employees.... Sundries8 m eounectlon Wlth the Quebec conference ....
36.000
41.000 764,000
10.000
5,442,000
648,000
396,000
4,193,000
98,000
50,000
355,000
8,250
281,000
851.000
6.486.000
4.291.000
413,250
The Budget-Appendix
[Stage Direction]
Soldier Settlement-
Purchase of right-of-way, etc, re Canada-Alaska Highway Trade and Commerce-*
Canadian Shipping Board	$
Export Permit Branch	
Shipping Priorities Branch	
Revolving Chartering Fund	
Gift of wheat to Greece	
Steamship Stabilization Fund	
Canadian Export Board	
Transport
[Stage Direction]
Departmental administration	
Transport Controller's Office	
Director of Merchant Seamen, including administration, Manning Pools, nautical schools and welfare facilities Air Service-Special radio interception and monitoring service, etc.-
Radio service	? i'ana non
Meteorological service	 non
Municipal terminal airports	 ozo.UUU
Moncton-Newfoundland airline	 8/7,000
Montreal (Dorval) airport, additional
facilities	 Go8,000
Civil Aviation-Extra airport control..	411,000
Canadian Government Trans-Atlantic
Air Service	 [DOT] [DOT] *	200,000
Acquisition of airfields and works from
United States Government	 66,600,000
Canals service	
Marine service-
Aids to navigation, including lightships Refloating and repairing "Cornwallis" . .
Marine Service Steamers	
Reconditioning "Chesterfield"	
Nautical services	 [DOT] [DOT]
Degaussing equipment for Canadian
vessels	 [DOT] *
Compensation to crews of Canadian vessels for loss of personal effects .... Expenses re C.G.S. Montcalm to Russia Purchase, etc., of machinery and equipment for l'Ecole des Arts et Metiers
de Rimouski	
Repatriation of Canadian seamen	
Railway Service-
Additional harbour and terminal facilities at Halifax	
Construction of buildings at Saint John
for the United Kingdom	 *
Construction of explosives pier, Halifax,
N.S	
Acquiring properties in Canada for U.S. Government	
101.000
544.000
253.000
36.000
47.000
380.000
55.000
1,000
45,000
393.000 72,000
182.000 130,000
[Stage Direction]
70.000
137.000
41.000
250.000 8,798.000
499.000 800
25,000
291,000
1,316,000
72,199,000
15,000
1,462,300
777,000
58,000
9,795,800
76,085,300
Total estimated direct War Expenditure, 1943-44, under War Appropriation Act	 3,711,993,613
24. Out of the 11,000,000,000 appropriated for Mutual Aid purposes, $912,603,000 was spent by March 31, 1944. Of this amount $723,754,000 was for the United Kingdom, $20,960,000 for Australia, $874,000 for the British West Indies, and $482,000 for India. Expenditures for Russia were $23,282,000, and for China $4,102,000 despite the difficulties of transportation to that country. The remain-
der, except for a. relatively small sum ($25,472.14) for administrative expenses, was spent for goods that were still in transit at March 31st, and not finally allocated among the recipient nations. The table on the following pages gives some further details as to both the distribution among countries and the type of aid involved in each case.

[Stage Direction]
(Thousands of Dollars)
United
Kingdom
Australia
India
British West Indies

[Stage Direction]
China
In
Transit
Total
Munitions
[Stage Direction]
Aircraft and parts	
Automotive equipment and mechanical transport....
Tanks and other fighting equipment	
Chemicals and explosives	
Guns and small arms	
Shells and ammunition	
Merchant vessels-construction, repairs and servicing.
Naval vessels and equipment	
Miscellaneous equipment and stores	
Aluminum	
Other base metals	
Locomotives and railway rolling stock	
Freight	
Total Munitions.
Food and Farm Products- Meat and meat products...
Fish	
Dairy products	
Wheat and flour	
Eggs nnd other foods, etc..
Total Food, etc.
Services-
Shipping services	
Training of Airmen under the B.C.A.T.P.
Total Services	
Total Aid, excluding administration.
Administration	
Grand Total	
34,532
81,139
43,522
12,275
61,262
80,341
159,048
12,298
59,703
556
1
1,300
3,097
6,681
3,789
211
554,720
7,308
89,613
7,569
18,535
44,396
8,921
169,034
13,652
13,652
723,754
20,960
617
4,134
93
129,713
5,082
2,346
3,480
3,004
6,821
3,951
1,129
554
11
19,348
4,102
138,934
874
2,791
874
2,791
1,143
1,143
482
23,282
4,102
139,124
35,274 212,269 49,314 16,511 61,627 86,173 160,348 12,403 68,179 6,822 7,259 822 7,411
724,412
89,613
7,569
18,535
48,543
8,921
173,181
1,333
13,652
14,985
912,578
912,603
a
ss
The Budget-Appendix
The Budget-Appendix

[Stage Direction]
25.	Expenditures classified as Special Expenditures for the fiscal year 1943-44 are estimated to total 837,458,000 compared with $31,288,000 for 1942A3. The largest single item, $30,097,000, represented payments of awards to farmers under the wheat acreage reduction plan administered by the Department of Agriculture. Administration costs of the plan amounted to $814,000. Advances to the Prairie Farm Emergency Fund and the costs of administration under the Prairie Farm Assistance Act are estimated at $2,578,000 and $217,000 respectively. Expenditure for Dominion relief projects and the Dominion's share of outstanding Dominion-Provincial relief projects amounting to $3,752,000 accounted for the remainder of the expenditures under this heading.

[Stage Direction]
This classification of expenditures comprises the losses of and non-active advances to Government-owned Enterprises which were established before the war and are operated as separate corporations. As the Canadian National Railways has shown substantial annual surpluses since 1940, charges to this account since the fiscal year 1940-41 have been of minor importance, the total for 194344 being $1,306,000.

[Stage Direction]
26.	The operating revenues of the Canadian National Railways for the calendar year 1943 totalled $440,616,000, an increase of $64,961,000, or 17-3 per cent over the former high record established in 1942.
Operating expenses of the railway amounted to $324,476,000, an increase of $35,477,000 or 12-3 per cent over the preceding year. In addition to the normal operating expenses for the year, the sum of $19,069,000 was appropriated from revenue for Pension Reserve.
After deducting the appropriation of $19,-
069,000	above referred to from the net operating revenue of $116,140,000, there remained a balance of $97,071,000. Various accounts consisting of taxes, equipment and joint facility rents totalled $15,437,000, leaving the net railway operating income at $81,634,000. Other income, less deductions, amounted to $3,668,000, and accordingly the net income available for payment of interest amounted to $85,302,000. After payment of interest charges of $30,998,000 on debt held by the public and interest charges of $18,665,000 due to the Government in respect of temporary loans for
[Mr. Hsley.l
capital and refunding purposes, there was a net cash surplus of $35,639,000. This cash surplus was paid over to the Government in redemption of loans and advances.
The operating deficit of the Prince Edward Island Car Ferry and Terminals during 1943 was $698,000.

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27.	The operations of the Canadian National (West Indies) Steamships Limited in the calendar year 1943 resulted in an operating profit of $1,303,610. After payment of $521,700 for bond interest and exchange, the remainder, $781,910, was paid to the Government as interest on advances (current and arrears). The amount received on account of 1942 profits was $781,215.

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28.	The operating income of the National Harbours Board for the calendar year 1943, after payment of interest to the public but before depreciation and interest on Government advances totalled $4,596,917 compared with $4,118,127 in 1942. Interest on government advances received during the year amounted to $3,250,069.
Financial assistance provided by the Government to the National Harbours Board and charged as expenditure under the heading of Government-owned Enterprises totalled $608,000, made up as follows: $29,000 for the operating deficit of the Churchill Harbour; $370,000 for non-active advances in respect of the deficit of the Jacques Cartier Bridge at Montreal; $41,000 for the retirement of maturing debentures of the Saint John Harbour Commission; and for capital expenditures, Saint John Harbour, $153,000; Halifax Harbour, $14,000 and Three Rivers, $1,000. Expenditures charged to the War Appropriation are shown under "War".
The elevators at Port Colbome and Prescott operated at a profit during 1943 and the Government received $97,905 from these sources.

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29.	The total of Other Charges, the final main category of expenditures, is estimated at $63,889,000.
Included in this total is $25,000,000 which has been added to the reserve to meet possible losses on ultimate realization of assets treated as "active" in the Dominion balance sheet. This is the same amount as was provided for in the Public Accounts for the last

The Budget-Appendix
three fiscal years and the total now provided to meet such possible losses is therefore $100,000,000. The annual write-off from active assets of Soldier and General Land Settlement Loans amounted to $553,000, and cancellation of Canadian Farm Loan Board Capital Stock amounted to $5,000. These two write-offs, and the provision for the further reserve of $25,000,000 resulted in a proportionate increase in the net debt of the dominion.
The total write-off from non-active assets includes two items: (a) $232,000 written off from the Canadian National Railways Securities Trust Stock representing line abandonments for the calendar year 1943; and (b) $29,000 representing the estimated yearly established losses on Seed Grain and Relief accounts administered by the Department of Mines and Resources. As both these items are non-active assets and are therefore already included in the net debt of Canada, they are offset by similar amounts on the Revenue side under "Other Receipts and Credits."
The remaining debit items, classified as Other Charges, and totalling $38,070,000, relate to the Canadian National Railways Securities Trust Stock. The value of this stock which represents the dominion's equity in the Canadian National Railways was increased by $35,640,000 due to the surplus earnings of the System for 1943 and also by $2,430,000 due to the capital gain in respect of Canadian National Railways sterling securities redeemed during the year at a price below par in Canadian funds. The Canadian National Railways Securities Trust Stock is carried in the dominion's books as a non-active asset, and as the two items just mentioned necessarily appear as credits under the heading Special Receipts and Credits, the net debt of Canada is not thereby changed.

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30.	The grand total of expenditure for the fiscal year 1943-44 under the various categories enumerated, namely Ordinary Expenditures, Capital Expenditures, War Expenditures, Special Expenditures, Losses of and nonactive advances to government-owned enterprises, and Other Charges, is estimated at $5,360,122,000.
31.	The following table shows the percentage distribution of estimated revenues and expenditures for a number of important items. Receipts from various taxes and other revenue sources, after deducting the $155,000,000 of income and excess profits taxes estimated as refundable after the war, are shown as percentages both of total revenues and of total expenditures. Similarly, several of the main items of expenditure or groups of such items are shown as percentages both of total expenditures and of total revenues. The purpose of this table is to enable broad conclusions to be drawn as to the relative burdens imposed on the public treasury by the war and the main services or obligations of government.

[Stage Direction]
(Thousands of Dollars)
Revenues	Amount (estimated)	Percentage of total Revenues	Percentage to total ExpendituresOrdinary Revenue-	s 1,036,757 428,718 304,915 214,792 167,882 142,124 118,912 15,020 7,692	% 38-39 15-88 11-29 7-95 6-22 5-26 4-40 0-56 0-28	% 19-34 8-00 . 5-69 4 01 3-13 2-65 2-22 0-28 0-14
Sales Tax (net)				
Manufacturers', transportation and communication, stamp			
			
			
			
			
			
Total revenue from taxes after deducting refundables.. Non-tax revenues				
2,436,812 139,865	90-23 5-18	45-46 2-G1Total ordinary revenues	
Special receipts and other credits	
Grand Total Revenues	2,576,677 124,024	95-41 4-59	48-07 2-312,700,701	100-00	50-38
The Budget-Appendix

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(Thousands of Dollars)
Expenditures	Amount (estimated)	Percentage of total Expenditures	Percentage to total RevenuesOrdinary Expenditure-	$ 242,681 19,285	% 4-53	% 8-990-36	0-71
261,966	4-89	9-70
			
	14,449 95,435 30,377	0-27	0-53
		1-78	3-53
		0-56	112
			
Pension and after-care of soldiers (War 1914-18)-	38,998	0-74	1-4414,069	0-26	0-52
53,067	1-00	1-96
			
	8,856 18,604 2,734 10,596 17,733 48,484 12,339 6,681 17,529 31,365	016	0-33
		0-35	0-70
		005	010
		0-20	0-39
		0-33	0-66
		0-91	1-80
		0-23	0-46
		012	0-25
		0-33	0-65
		0-58	116
			
	630,215	11-76	23-34
			
	2,657	005	0-10
			
	4,624,597	86-28	171-23
			
Special Expenditure-relief, prairie farm assistance including	37,458	0-70	1-39
			
Government Owned Enterprises		1,306	002	0-05
			
Other Charges-	25,819 38,070	0-48	0-95
		0-71	1-41
			
	63,889	1-19	2-36
			
	5,360,122	100 00	198-47
			
It should be noted that many expenditures attributable to the war are not charged to the war appropriation; for example all the interest on the public debt and practically all the expenses of war-expanded departments like the Post Office and National Revenue are charged to Ordinary Expenditure. So-called non-war
expenditures have therefore increased substantially during the war despite the fact that the controllable portion has been cut from $112,-
900,000	in 1938-39 to an estimated $106,400,000 in 1943-44-a decrease of 5-8 per cent-as the following table shows:-
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The Budget-Appendix
ANALYSIS OF NON-WAR EXPENDITURE (*) (Millions of Dollars)
	Fiscal Years Ended March 31:					
1939	1940	1941	1942	1943	1944 (*)1. Grand Total Expenditure	553-1	680-8	1,249-6	1,885-1	4,387-1	5,360-12. Less War Expenditure (J)	118-3	752-0	1,339-7	3,724-2	4,624-63. Total Non-War Expenditure 0)	553-1	562-5	497-6	545-4	662-9	735-5Deduct Uncontrollable Items: (4)	4. Unemployment Insurance (6)	01	9-8	16* 1	5. Public Debt Charges	133-1	134-6	145-7	171-6	202-5	262-06. Pensions, Superannuation, etc	74-1	75-0	74-2	73-0	72-4	72-07. National Revenue Department	11-9	12-1	12-2	13-4	15-2	17*78. Post Office Department	35-5	36-7	38-7	41-5	44*7	48*59. Subsidies, and Payments to Prov-	inces under Taxation Agreements.	21-2	19-2	19-2	35-5	108-7	109*910. National Defence Department	34-4	13-2	0-2	0-3	0*4	0*111. Special Expenditure	71-9	89-1	42-9	64-0	31-3	37*512. C.N.R. Operating Deficits	54-3	40-1	17-0	13. Adjustment of C.N.R. Securities	Trust Stock for Net Income Sur-	pluses and Capital Gains	5*5	4-1	14. Write-down of Assets	3-8	23-3	29-9	27-9	29-7	25-815. Total to be Deducted (4 to 14)	440-2	443-3	385-6	440-9	557-1	629-116. All Other Non-War Expenditure,	(6) (3 minus 15)	112-9	119-2	112-0	104-5	105-8	106-4
('-1) Estimated amounts.
(3)	Expenditure charged to war appropriations.
(4)	Including services initiated or expanded during the war as a matter of policy, such as Unemployment Insurance; certain expenditure showing increases largely attributable to the war, such as those of the Departments of National Revenue and Post Office; contractual items; expenditures classed as "Special" (mostly for relief purposes); and certain bookkeeping adjustments.
(s) The Government's contribution and the cost of administration.
(") Controllable expenditures not specially affected by the war. Note, however, that the war has increased the costs of many of the services concerned, for example by necessitating cost-of-living bonuses.

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32.	As total revenues for the fiscal year 194344 have been shown as $2,700,701,000 and total expenditures as $5,360,122,000, the estimated overall deficit (or increase in net debt) for the year is $2,659,421,000.


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33.	In addition to the estimated expenditures for the year as already outlined, disbursements are made for the acquisition of investments which are treated as active assets in the Public Accounts. The active assets are deducted from the total direct debt in arriving at the figure of net debt. The net increase in active loans and investments for 1943-44 was $119,314,000 compared with an increase of $523,791,000 in 1942-43. The net increase is fully itemized in the table in section 48.

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34.	As was shown in the Public Accounts for the fiscal year ended March 31, 1943, loans
100-266J
made to the Western Provinces under authority of relief legislation and outstanding at the close of that year totalled $156,775,604.70. Repayments received during the year totalled $312,548.70 as follows; Manitoba $153,589.82; Saskatchewan $42,648.83; Alberta $26,500 and British Columbia $89,810.05. The repayments left the net amount outstanding as of March 31, 1944, at $156,463,056.00, divided by Provinces as follows;-
Manitoba	$ 24,774,950 27
Saskatchewan	
71,247,784	25Alberta	
25,907,000	00British Columbia	
34,533,321	48
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35.	During the year the Province of Nova Scotia repaid $37,000, the last of its indebtedness to the dominion on account of Housing Loans made at the close of the last war (191418). This repayment by Nova Scotia completely liquidates all such loans made following the last war.
The Budget-Appendix
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36.	Subsidy overpayment to the Province of Alberta secured by a Treasury Bill of the Province was reduced during the year by a payment by the province of $50,000, thereby reducing this indebtedness to $350,000.

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37.	In the fiscal year the Canadian National Railways made net repayments to the government in the amount of $3,907,096, classified as follows:-
Repayments-
Application of 1943 Net Income Surplus-
Advances-Financing and Guarantee Act, 1941	$ 6.634,425
Advances-Financing and Guarantee Act, 1942	 5,754,914
Advances-Refunding Act, 1938	 22,622,073
Advances-War Appropriation Acts-Capital purposes in connection with
oil drilling campaign	 628,000
Total Net Income Surplus
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Surplus available from Depreciation Reserves and Debt Discount Amortization after providing for capital expenditures during 1943-Applied to
advances under the Refunding Act, 1938	 5,877,327
Financing and Guarantee Act, 1941-Purchase of securities from Canadian
holders	 1,323,604
Total Repayment of Loans	$42,840,343
Repayment of instalments under Hire-
Purchase Agreements:-
1936 Agreement	$	517,173
1940 Agreement	 991,968
1941 Agreement	 1,382,634
Total Equipment Repayments	$ 2,891,775
Total Repayments of Loans and Equipment Repayments	$45,732,118
Advances-[DOT]
Under Canadian National Railways Refunding Act, 1938-for retirement of
maturing issues	$17,200,637
Under Canadian National Railways Financing and Guarantee Act, 1940-Purchase of Grand Trunk Railway Company of Canada 4% Perpetual Consolidated Debenture Stock	  1,180,150
Under Canadian National Railways Financing and Guarantee Acts, 1941 and
1942-Purchase of Securities from Canadian holders	 78,022
Under the War Appropriation (United Kingdom Financing) Act, 1942-Purchase
of Securities from Government of the United Kingdom	 2,111,460
Under the War Appropriation Act, 1943-for capital purposes in connection with
oil drilling campaign	 593,000
Total Advances by way of loan	$21,163,269
Equipment purchased by Government and leased to Railway under Hire-Purchase Agreements:-	.
1941 Agreement	$ 3,295,250
1943 Agreement	 17,366,503
Total Equipment Purchased	$20,661,753
Total Loans and Equipment Purchased	$41,825,022
Net Repayments of Loans and Equipment Purchased	$ 3,907,096

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38.	Additional advances totalling $185,000,000 were made to the Foreign Exchange Control Board during the fiscal year bringing its total indebtedness to the Dominion to $585,000,000, this amount being shown as an active asset on the Dominion's balance sheet.
39.	The Canadian dollar obligation of the Government of the United Kingdom under authority of The War Appropriation (United

Kingdom Financing) Act, 1942 totalling $700,000,000 was reduced during the year by $42,-
392,000	leaving a balance outstanding of $657,608,000.
40.	Pursuant to an agreement between Canada and the Union of Soviet Socialist Republics for the purchase of Canadian wheat and flour, a further advance on credit was made during the year of $9,083,000. In 194243, $917,000 was advanced. Thus, the total credit of $10,000,000 has now been made use of.

The Budget-Appendix
41.	Accountable advances were made during the year to the Commodity Prices Stabilization Corporation Limited, the Canadian Wool Board Limited and Wartime Salvage Limited. The amounts which have been taken into the accounts as Active Assets represent cash and inventory holdings of the corporations as at March 31, 1944. The balance of advances made are included as war expenditures. The assets with respect to each corporation as of March 31, 1944 were:
The Commodity Prices
Stabilization Corporation ....$19,505,000
The Canadian Wool Board . . [DOT] * 23,745,000
Wartime Salvage Limited		321,000
42.	Advances to Commodity Corporations and other Companies by the Department of Munitions and Supply were reduced during the year by repayments of $7,272,000, leaving a balance outstanding of $44,474,000.
43.	The Canadian Farm Loan Board during the fiscal-year repurchased from the Government out of surplus funds $5,000,000 of its 3£ per cent bonds due January 2, 1960, reducing the total amount of its bonds held by the Government to $21,700,000.
44.	In the period from April 1, 1943, to March 31, 1944, 1,647 loans were approved under the National Housing Act for an amount of $5,209,745, bringing the total approvals to March 31, 1944, to $83,995,217. In this period the Dominion advanced $921.730, and borrowers' repayments amounted to $1,454,032.28, making net repayments for the period of S532,302.28. The net amount of loans under the authority of the National Housing Act and the Dominion Housing Act, estimated to be outstanding on the books of the Dominion at March 31, 1944, is $15,960,689.67. Loans under the authority of the National Housing Act are made jointly by the Government and approved lending institutions, and are secured by first mortgage or hypothec, running jointly to the Government and an approved lending institution. Previous to December 8, 1942, loans were normally made not in excess of 80 per cent of the cost or appraised value of the completed property whichever was the lesser. In the case of owner-occupied houses, where the lending value did not exceed $2,500, a loan might be made up to 90 per cent of the said lending value. On December 8, 1942, an Order in Council was passed enabling loans to be made up to 90 per cent of the lending value for any house where the lending value does not exceed $3,200, and on a sliding scale down to 80 per cent when the lending value does not exceed $4,000. Since January 1, 1940, new applications for loans are received only in respect of the construction of houses
containing one self-contained dwelling place and where the loan does not exceed $4,000.
45.	Under the Municipal Improvements Assistance Act, 1938, total loans approved to March 31, 1944, less amounts not required to complete projects, aggregated $7,036,000. The net amount outstanding as at March 31, 1944, totalled $5,711,000, being a net reduction from the previous fiscal year of $30,000. These loans bearing interest at the rate of 2 per cent per annum are amortized over a period not longer than the estimated useful life of the project. The province in which the municipality is situated guarantees the payments for interest on, and amortization of, each loan.
46.	Small amounts only were advanced during the fiscal year to the National Harbours Board for capital construction purposes at the ports of Montreal and Vancouver, totalling in all $14,000. Repayments of loans made in previous years amounted to $141,000, leaving a net credit for the year of $127,000. In addition, $140,000 was advanced for Churchill Harbour under Section 28 of the National Harbours Board Act, 1936, and repaid six days later with interest at the rate of three per cent per annum.
47.	Loans for Soldier and General Land Settlement were reduced during the fiscal year by payments of $1,537,000. In addition, $553,000 was written off and charged to Consolidated Fund.
48.	The following statement shows in summary form the net estimated changes in active investments for the current year, together with comparable figures for the four preceding years. It should be noted, however, that this statement does not include certain of the recoverable advances made under authority of section 3 of the War Appropriation Acts, as described in section 21 on page 4220; they are excluded from the statement because they will be substantially offset by amounts payable by Canada to allied governments. Accounts of this nature which show increases during the year with the increase in each case, were: (1) Department of Agriculture, purchase of food for United Kingdom, $13,246,000; (2) Department of Munitions and Supply, purchase of munitions for India, $2,782,000; (3) Department of National Defence for United Kingdom and other Allied Governments, (a) Army, $8,987,000;	(b)
Navy, $8,839,000 and (c) Air, $203,586,000 and (4) Department of Transport for British Air Ministry, $94,000. On the other hand, the Department of Munitions and Supply account for War Supplies, Limited, was reduced during the year by $11,884,000.
The Budget-Appendix
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LOANS AND INVESTMENTS, ACTIVE (Thousands of Dollars)
-	1939-40	1940-41	1941-42	1942-43	Estimated 1943-44	Foreign Exchange Control Board	325,000	400,000	Cr. 325,000	185,000Government of The United Kingdom,	The War Appropriation (United King-	dom Financing) Act, 1942	-	-	-	700,000	Cr.	42,392Government of The Union of Soviet	Socialist Republics	-	-	-	917	9,083Canadian Wool Board, Limited	-	-	-	9,966	13,779Wartime Salvage Limited	-	-	-	560	Cr.	239Commodity Prices Stabilization Cor-	poration	-	-	-	21,056	Cr.	1,551Department of Munitions and Supply-	Advances to commodity corporations	and other companies	-	9,891	24,657	17,198	Cr.	7,272Canadian Farm Loan Board	2,288	838	Cr.	975	Cr.	2,500	Cr.	5,000Dominion and National Housing Acts-	Loans	4,393	3,805	2,644	239	Cr.	532Municipal Improvements Assistance Act,	1938-Loans	3,111	1,718	332	Cr.	236	Cr.	30Provinces-Housing Loans, 1919	Cr.	699	Cr.	1,634	Cr.	740	Cr.	94	Cr.	37Provinces-under relief legislation	12,566	1,514	Cr.	217	Cr.	499	Cr.	313Province of Saskatchewan Power Com-	mission	-	58	Cr.	4	Cr.	4	Cr.	4Province of Alberta-Subsidy overpay-	ment	-	-	-	Cr.	69	Cr.	50National Harbours Board	947	Cr.	333	Cr.	980	Cr.	267	Cr.	127Canadian National Railways	21,479	105,573	251,723	127,632	Cr.	21,676Soldier and General Land Settlement	Loans	Cr.	1,116	Cr.	1,139	Cr.	1,521	Cr.	1,641	Cr.	1,537Railway equipment purchased	8,135	14,781	Cr.	1,586	2,094	17,770Sinking Funds	Cr.	2,798	Cr.	61,963	Cr.	5,233	-	Canadian Broadcasting Corporation	700	Cr.	364	Cr.	283	Cr.	503	Canadian Pacific Railway	Cr.	211	Cr.	211	Cr.	981	Central Mortgage Bank Capital Stock...	250	-	-	Canadian Government Merchant Marine	-	750	Cr.	750	-Net Advances	49,045	398,284	666,086	548,849	144,872Less write-offs-	Soldier and general land settlement	loans	-1,643	-1,011	-271	-51	-553Canadian Farm Loan Board-Capital	stock	-11	-12	-10	-7	-5Loans to Province of Saskatchewan-	Drought Area Relief, 1934-35	-1,374	-	Reserve for possible losses on ultimate	realization of active loans and advances	-	-25,000	-25,000	-25,000	-25,000Net change in active investments	46,017	372,261	640,805	523,791	119,314

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49.	In the fiscal year ended March 31, 1944, the Dominion issued in the domestic market securities in an estimated amount of $3,680,737,146. This amount includes the net increase of $60,000,000 in Treasury Bills outstanding and the net decrease of $30,000,000 in Deposit Certificates outstanding, but does not include the amount of recurring issues of Treasury Bills and Deposit Certificates made to refund similar securities during the year.

It is estimated that in the fiscal year $894,951,042 of Dominion obligations matured or were called for redemption, leaving the sum of $2,785,786,104 less cost of flotations, available for direct and indirect war expenditures.
50.	The following table gives the details of the issues sold during the year, divided as to original issue by sales to the Bank of Canada, the chartered banks and the general public (it does not include the $33,293,471 4 per cent School Lands Debentures which were again renewed for one year):

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Issue Date 1943	Maturity Date	Interest Rate	Price to Government	Yield at Price to Government	Total Amount Issued	Renewals or Conversions included in Amount Issued	Amount Issued for cash%	t	%	t 60,000,000	*	$ 60,000,000Sold to Bank of Canada One Year Notes	
Two Year Notes	April 15	
July 2	April 15, 1944... July 2, 1945	1 H 1} i ii 3 11 3 M3	100 00 100 00 100 00 100 00 99 50 99 29 (*) (*) 100 00 100 00	100 1-50 1-50 0-	75 1-	90 306 (*) (*) (<)3 00	250,000,000 56,000,000	250,000,000 56,000,000	Sold to Chartered Banks Two Year Notes	July 2	July 2, 1945	306,000,000	306,000,000	394,000,000 -30,000,000	194,000,000	200,000,000 -30,000,000Sold to General Public Fourth Victory Loan	
Fourth Victory Loan	
Fifth Victory Loan	
Fifth Victory Loan	May 1	
May 1	
Noy. 1	
Nov. 1	Nov. 1, 1946.... May 1, 1957	
May 1, 1947	
Jan. 1, 1959	364,000,000	194,000,000	170,000,000197,455,000 1,111,261,650 (*) 373,259,000\ (>) 1,197,318,300/ 37,157,202 992,523	195,591,500	197,455,000 1,111,261,650 M1,374,985,800 37,157,202 992,5232,917,443,675	195,591,500	2,721,852,1753,647,443,675	695,591,500	2,951,852,175
(') Deposit Certificates-
Amount outstanding March 31, 1943	
Amount issued April 1, 1943-March 31, 1944.
Less Amount redeemed April 1, 1943-March 31, 1944
[Stage Direction]
2.450.000.	000
1.660.000.	000
Amount outstanding March 31, 1944
790,000,000
Decrease during year.
$	30,000,000
(*) Final costs of Fifth Victory Loan not yet available.
(*) Estimated amount issued.	.
(*) Yield to investor if held to maturity, seven and one-half years after issue date.
The Budget-Appendix
The Budget-Appendix
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51.	In, the fiscal year under review the Fourth and Fifth Victory Loans were sold, both being larger than any previous loan sold for cash in Canada. The Fourth Victory Loan was sold entirely for cash in the amount of $1,308,716,650, the number of subscriptions being 2,668,420. The Fifth Victory Loan was sold in the amount of $1,374,985,800 for cash
and $195,591,500 in conversion of bonds maturing or called for redemption on October 15, 1943. The number of cash subscriptions was 3,008,336 and the number of conversion subscriptions was 24,715.
52.	The following table gives the details of Dominion of Canada estimated bond redemptions in the fiscal year ended March 31, 1944:

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Maturity or Call Date	Interest Rate	Where Payable	AmountApril 15, 1943	% 1	$ 250.000.	000 20,000,000 33,293,471 250.000.	000 30.000.	000 76.000.	000 147.000.	1eu 88,337,500 86,164 74,619 96,001 63,187June 1, 1943	2i 4	July 1, 1943	July 2, 1943	n 21 21 5	August 16, 1943 (*)	New York	
New York....	August 15, 1943 (')	October 15, 1943	October 15, 1943 (*)	4	October 1, 1947 (')	21 3} 4	London...	May 1, 1955 (5)	Sept. 1, 1958 (')	July 1, 1963 («)	31	
Total				RQ4 051 rM9
Less amounts renewed or converted (6)				728,884,971
			
Provided from cash resources				166,006.071
(')Maturity date January 15, 1944, called for redemption on A /ust 16, 1943 (') Maturity date August 15, 1945, called for redemption on August 15, 1943.
(J) Maturity date October 15, 1945, called for redemption on October 15, 1943.
(') This issue was vested by the Treasury of the United Kingdom in January, 1942. The amount (at par of exchange) purchased in the fiscal year 1943-44 was cancelled.
(6) These issues were vested by the Treasury of the United Kingdom in August, 1941. The amounts (at par of exchange) purchased in the fiscal year 1943-44 were cancelled
([DOT]) Total from previous table $695,591,500 and School Lands Debenture Stock viz. $33,293,471,
53.	The fortnightly issue of three months' Treasury Bills was continued during the fiscal year. The last issue in the fiscal year was sold at a discount of -387 per cent. The lowest rate on this class of financing was obtained on the March 3, 1944 issue, viz., -386 per cent. The amount of Treasury Bills outstanding at the close of the fiscal year was $360,000,000, an increase of $60,000,000 during the year.
54.	The average rate of interest on the Dominion's direct funded debt (including Treasury Bills and Deposit Certificates) outstanding on March 31, 1944, was estimated at 2-57 per cent. This compares with 2-60 per cent on the debt outstanding at the close of the preceding year.

[Stage Direction]
55.	It may be in order here to summarize the cash transactions of the Dominion before going on to the final sections, which will deal with the national debt and the statement of estimated assets and liabilities at March 31,

1944. The purpose is, firstly, to correlate the information already given, and, secondly, to show the total requirements for cash during 1943-44 and the ways in which those requirements were met. The table which follows gives such a summary. In general, it differs from what has already been given in the way that a statement of receipts and payments differs from a statement of revenue and expenditure; the footnotes give such information as is required for reconciliation. It should be noted that it includes as "active loans, advances, investments, etc." some items that do not appear in the statement of active loans and investments on page 4234. That statement treated only items which may properly be described as investments, in the sense that they represent agreed contractual amounts, whereas this table includes such items as recoverable advances and payments on behalf of other governments, where the total liability may not yet be finally determined and without any allowance for possible offsetting claims which the other party may have to present.
The table follows:

The Budget-Appendix
ESTIMATED REQUIREMENTS FOR AND SOURCES OF CASH, FISCAL YEAR 1943-44(*)
(Millions of Dollars)
Reouirements for Cash
Non-War Requirements(*)-
Expenditure-
Interest on the public debt	$	242-7
Payments to provinces under the tax agreements	 95-4
Other Ordinary Expenditure(3)	 281*4
[Stage Direction]
$	619-5
Capital Expenditure	 2-7
Special Expenditure	 37-5
Government Owned Enterprises	 1-3
Total Non-War Cash Expenditure (3)(4)	 661-0
Outlay that increased Assets or Decreased Liabilities-
Active loans, advances, investments, etc.-
Bond Holding Account (including repatriated securities and
bonds held under instalment purchase plans)	 150-4
Canadian National Railways(s)	 -24-1
Other (net)	 -7-4
Sub-total		  118-9
Cost of loan flotations, portion to be amortized	 17-1
Reduction of New York indebtedness(6)	   126-S
Less purchase price of decrease in holdings of gold and U.S. dollars(7)	 -115-6
[Stage Direction]
 147-2
War Requireinentsi})-	

$	808 2
Expenditure-
Department of National Defence-
Army	$ 1,335-4
Navy	 369-8
Air Force	 922-6
Department of Munitions and Supply	 725-0
Other departments	   359-2
Total War Appropriation Act	$ 3,712-0
The War Appropriation (United Nations Mutual Aid) Act 1943. ..	912-6
[Stage Direction]
Outlay that Increased Assets or Decreased Liabilities-
Active loans, advances, investments, etc.-
Department of National Defence recoverable advances		221-4
Foreign Exchange Control Board	  185-0
Canadian National Railways(6)	 20-3
Other (net)	 -27-3
Sub-total	 399-4
Reduction in revolving fund balances	(8)	 30-8
Reduction of London indebtedness(6)	 0-4
Less purchase price of decrease in holdings of sterling balances(7). -22-1
[Stage Direction]
 408-5
[Stage Direction]
* 5,033-1
Total Requirements for Cash	$ 5,841-3
Revenue-	Sources of Cash
Ordinary Revenue-
Customs duties, excise duties, and excise taxes	$	948 -6
Personal income tax	 813 -4
Corporate income tax	 311-4
Excess profits tax	 468-7
Other tax revenue	 49-7
Total tax revenue	S 2,591-8
Post Office revenue	 61-1
Return on investments	 52-2
Other Ordinary Revenue ([DOT])	 29-3
Gross Ordinary Revenue(9)	$ 2,734-4
Less estimated refundable portion of personal income tax and
excess profits tax	 -155-0
[Stage Direction]
Capital Refunds	
Special Receipts and Credits (10)	
2,579-4
82-6-
2,662-1
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(Millions of Dollars)-Concluded
Sources of Cash- Concluded
Other Receipts-
Estimated refundable portion of personal income tax and excess profits
tax	$	1550
Net receipts in trust, insurance, and superannuation accounts	 50-1
Miscellaneous receipts and credits-net	 39 0
[Stage Direction]
 244 1
Borrowing in Canada-
New Issues of Funded Debt-
Treasury Bills, net increase	$	60-0
Charteredbanks.net	 1700
General public(ll)	 2,732 0
[Stage Direction]
Less Maturities paid off in cash	 -59*7
Net increase in funded debt	$ 2,902-3
Less net decrease in floating debt	 -8-8
Net increase in funded and floating debt	$ 2,893-5
Decrease in Cash Balances held in domestic currency	 41-6
Total of borrowing plus decrease in cash balances (equals "cash deficiency")	$ 2,935-1
Total sources of Cash	$ 5,841-3

[Stage Direction]
(*) "Cash" and "non-cash" transactions are sometimes difficult to define; for example, interest payments to certain trust and other accounts are left on deposit with the Receiver General. Those here treated as non-cash are limited to adjustments to the valuation of assets and liabilities, and the amortization of loan flotation charges.
(*) War requirements means outlays under the war appropriation acts and such other accounts as obviously relate to the war; non-war means all other requirements.
(*) Excluding the amortization of bond discounts and commissions, $10-7 million.
(4) Excluding the write-down of assets, $25-8 million, and adjustments of the valuation of C.N.R. Securities Trust Stock due to the net income surplus and capital gain, $38-1 million.
([DOT]) For details see page 72. The advances treated as relating to the war are those for the repatriation of sterling securities, those for the oil drilling campaign, and the purchase of equipment leased to the railway under the terms of the 1940 and subsequent agreements.
([DOT]) Including both matured and unmatured funded debt, and the premium or discount on foreign funds.
O This represents that portion of the outlays that was met out of foreign exchange previously accumulated, and therefore was not a requirement for Canadian dollars during 1943-44. The figures exclude changes in funds held for special purposes.
(®) In effect this is expenditure deferred from 1942-43.
([DOT]) Adjusted by the addition of $2-7 million (net) with respect to Premium, Discount and Exchange, arising out of the fact that foreign exchange is valued at par on the balance sheet, but is valued at current levels for the purpose of this table.
(18) Excluding the adjustment of the reserve against losses of the Canadian Wheat Board, the entry recording the increase in value of the C.N.R. Securities Trust Stock as a result of the net income surplus and the capital gain, and the contra9 to the write-down of non-active assets, all of which total $41-3 million.
(u) Includes the increase in value of War Savings Certificates during the year due to interest accruals, $10-2 million.
The significant thing is that, whereas the budgetary deficit for 1943-44 is estimated at $2,659,400,000, the cash deficiency (that is, the excess of cash outlays over cash receipts other than from borrowing) was approximately $2,935,100,000. It is the latter sum, and not the former, which had to be met by borrowing from the Canadian people. (It is true that in fact some of the deficiency appears to have been met by drawing down free cash available at the start of the year, but when, cash requirements exceed cash receipts the change in cash is a residual item dependent largely on the timing of borrowing operations.)
(Mr. Ilsley.]

[Stage Direction]
56.	It is estimated that the gross unmatured funded debt (including Deposit Certificates and Treasury Bills) of the Dominion outstanding at the close of the fiscal year 1943-44 will amount to $10,689,491,000. Other liabilities consisting chiefly of Annuities, Superannuation and Insurance Funds, Post Office Savings Bank deposits, and various trust and contingent funds outstanding as at the same date are estimated at $1,841,097,000. The gross liabilities of the dominion therefore are expected to total $12,530,588,000 as

The Budget-Appendix
at March 31, 1944. On the other side of the balance sheet will be found active assets estimated at $3,688,318,000, consisting of cash and various active loans and investments, less a reserve of $100,000,000 to provide against ultimate loss on their realization. If, therefore, we deduct the amount of the net active assets from the amount of the gross liabilities, we arrive at a figure of $8,842,270,000, representing the estimated net debt of the Dominion as at March 31, 1944. This net debt shows an increase over the corresponding figure for the close of the preceding fiscal year of S2.659,421,000, which of course is the estimated amount of the over-all deficit for the fiscal year 1943-44.
57.	The following is a preliminary statement showing the liabilities and assets of the Dominion at March 31, 1944 as estimated:

[Stage Direction]
(estimated)
(Thousands of Dollars)
Bank Circulation Redemption Fund	$
Post Office Money Orders, Postal Notes, etc., outstanding	
Post Office Savings Bank Deposits	
Insurance and Superannuation Funds-
Government Annuities	g 213 600
Insurance f'und-Civil Service	  17^002
Insurance Fund-Returned Soldiers	 22,102
Retirement Fund	 19 (104
Superannuation Funds	 69| 472
Unemployment Insurance Fund	 190^299
Trusts Funds-
Indian Funds	 15,793
Common School Funds	 2] 678
Contractors' Securities Deposits	 4 j 997
Other Trust Funds	'	38i000
Contingent and Special Funds	
Department of Munitions and Supply-
United Kingdom Cash Receipts-Canadian Mutual Aid Board United Kingdom-Ministry of Supply	'	
Department of National Revenue-
Income and Excess Profits Taxes refundable after the war	
Province Debt Accounts	
Funded Debt, Treasury Bills and Deposit Certificates unmatured	 10,689,491
' 1 foating Debt-
Funded Debt matured and outstanding	 19,613
Interest due and outstanding	 19,240
Outstanding cheques	 60^000
t

[Stage Direction]
Cash, working capital advances and other current assets	$
Special Deposits	
Bank of Canada Capital Stock	
Central Mortgage Bank Capital Stock	!!""!!!!!
Foreign Exchange Control Board Loan	
Government of The United Kingdom-Loan under The War Appropriation (United Kingdom Financing) Act, 1942	
Department of Munitions and Supply-
Advances to commodity corporations and other companies	
Recoverable Advances-War Supplies Limited	'
Government of India-Munitions	j
Wartime Prices and Trade Board-
Commodity Prices Stabilization Corporation, Limited	
Canadian Wool Board, Limited	,,
Wartime Salvage, Limited	
100-267J
3,273
6,554
28,287
531,479
61,468
843,000
27,511
3,771
224,981
11,920
10,788,344
12,530,588
563,274
2,895
5,920
585,000
657,608
44,474
71,158
2,782
19,505
23,745
4240
[Stage Direction]
The Budget-Appendix
ASSETS-MARCH 31, 1944- Concluded (estimated)
(Thousands of Dollars)
Recoverable Advances from United Kingdom and other Allied Governments- Agriculture	
National Defence-Army	 Navy				
Transport-British Air Ministry	.	
Canadian Farm Loan Board-Advances and Capital Stock	
Canadian National (West Indies) Steamships, Limited-Loan	
Dominion and National Housing Acts-Loans	
Municipal Improvements Assistance Act, 1938 Loans	
New Westminster Harbour Commission-Loan	Loans to Provinces- Unemployment Relief Loan3	$ Province of Saskatchewan-Power Commission	
Province of Alberta-Subsidy overpayment	156,463 46 350Loans to National Harbour* Board- Montreal	
Vancouver	60,000 25,023Loans to Foreign Governments- Greece	
Roumania	
[DOT] 	
Government of The Union of Soviet Socialist Republics	6,525 24,329 10,000Railway Accounts- Canadian National Railways- Advances, Refunding Act, 1938	
Advances, Financing and Guarantee Act, 1940-Grand Trunk Railway Debenture Stock	
Advances, Financing and Guarantee Act, 1941-Purchase of securities Advances, Financing and Guarantee Act, 1942-Purchase of securities Temporary Loan, The War Appropriation Act, 1941	
Advances, The War Appropriation (United Kingdom Financing) Act, 1942-Purchase of securities	99,842 107,597 8,643 18,263 13,907 255,036Purchase of equipment leased to- Canadian National Railways- 1936 Agreement	
1940	Agreement	
1941	Agreement	
1942	Agreement	3,620 11,904 19,357 17,366Soldier and General Land Settlement Loans	
Seed Grain and Relief Advances	
Canadian Government Railways Working Capital.	
Bond Holding Account (including repatriated securities and bonds held under instalment purchase plans)	
Province Debt Accounts	
Unemployment Insurance Investment Account-Bonds and accrued interest	
Unamortized Discount and Commission on Loans	
20,000 12,700 16,750
370,000 303 29,025 450 15,961 5,711 [DOT]	275
156,859
85,023
40,854
503,288
52,247 30,107 2,357 16,772
184,624
2,296
184,368
81,416
3.788.318
Less-Reserve for possible losses on ultimate realization of active loans and advances.	100,000
3.688.318
Net Debt, March 31, 1944 (estimated)	S 8,842,270
[Mr. Ilsley.l

The Budget-Appendix
NET DEBT-MARCH 31, 1944 (estimated) (Thousands of Dollars)
Net Debt represented by-
(A) Expenditures for Capital Purposes and Non-Active Assets (estimated) March 31,
Public Works-
Canals	*	S 240,257Railways	'	
426,384Miscellaneous	
313,213Military Property and Stores	
12,617Territorial Accounts	
9,896Canadian Pacific Railway (old)	
62,791Canadian National Railways Securities Trust Stock	
336,681Canadian National Railway Stock	
18,000
Loans-N on-Active-
Canadian National Steamships	 13,707
National Harbours Board-
Chicoutimi	$	3,838
Churchill	 10
Halifax	 12,486
Montreal (Jacques Cartier Bridge)	 5,565
Quebec	 27,766
Saint John	 16,999
Three Rivers	 3,742
[Stage Direction]
	70,406
Soldier and General Land Settlement	 16,526
Seed Grain and Relief Advances	 275
Saskatchewan Seed Grain Loans Guarantee Act, 1936	 2,637
Seed Grain Loans Guarantee Act, 1937	 7,136
Miscellaneous Non-Active Accounts	 2,536
1,533,062
(B) Consolidated Fund-
Balance, Consolidated Fund brought forward from March 31, 1943. .$	4,689,572
Excess of expenditure over revenue, less amounts charged under A
above, fiscal year ended March 31, 1944 (estimated)	 2,619,636
[Stage Direction]
 7,309,208
$	8,842,270
58. The following table shows the various obligations included in the unmatured funded debt of the dominion estimated to be outstanding as at March 31, 1944, and the annual interest charges thereon:

[Stage Direction]
Date of Maturity	Rate Per Cent	Where Payable	Amount of Loan	Annual Interest Charges1944, April	15	1	Canada	$ 250,000,00000	$ 2,500,000 00April	15	U	Canada	100,000,000 00	1,500,000 00June	1	2	Canada	90,625,000 00	1,812,500 00July	1	4	Canada	33,293,470 85	1,331,738 83Sept.	1	H	Canada	150,000,000 00	2,250,000 00Oct.	15	41	Canada	50,000,000 00	2,250,000 00Oct.	16	U	Canada	200,000,000 00	3,000,000 00Nov.	15	21	Canada	20,000,000 00	500,000 001945, Mar.	1	2	Canada	105,000,000 00	2,100,000 00July	2	11	Canada	450,000,000 00	6,750,000 00
The Budget-Appendix
[Stage Direction]
UNMATURED FUNDED DEBT AND TREASURY BILLS AS AT MARCH 31, 1944 AND ANNUAL INTEREST THEREON-Concluded
Date of Maturity	Rate Per Cent	Where Payable1946, Feb.	1	4i	CanadaMay	1	n	CanadaNov.	1	i}	CanadaDec.	15	2	Canada1947, May	1	1}	CanadaOct.	1	2J	London1948, Jan.	15	2J	New YorkFeb.	1	31	CanadaMar.	1	21	Canada1949, Feb.	1	31	CanadaJune	1	31	CanadaOct.	15	31	Canada1950, Feb.	1	31	Canada1951, Feb.	1	31	CanadaJune	15	3	CanadaNov.	15	31	Canada1952, Feb.	1	31	CanadaOct.	1	3	CanadaOct.	15	4	Canada1953, Jan.	15	3	New York1954, Mar.	1	3	Canada1955, May	1	31	LondonJune	1	3	CanadaJune	1	3	Canada1956, Nov.	1	41	CanadaNov.	1	3	Canada1957, May	1	3	CanadaNov.	1	41	Canada1958, Jan.	15	3	New YorkJune	1	3	CanadaSept.	1	4	LondonNov.	1	41	Canada1959, Jan.	1	3	CanadaNov.	1	41	CanadaI960, Oct.	1	4	New York1961, Jan.	15	31	New York1963, July	1	31	London1966, June	1	31	CanadaSept.	15	3	Canada1967, Jan.	15	3	New York1968, Nov.	15	3	New York1944, April	14 Treasury Bills	[DOT]407	CanadaApril	28 Treasury Bills	[DOT]401	CanadaMay	12 Treasury Bills	[DOT]390	CanadaJune	2 Treasury Bills	[DOT]386	CanadaJune	16 Treasury Bills	[DOT]387	CanadaJune	30 Treasury Bills	[DOT]387	CanadaApril	4 Deposit Certificates.	[DOT]75	CanadaApril	11 Deposit Certificates.	[DOT]75	CanadaApril	18 Deposit Certificates.	[DOT]75	CanadaAug.	29 Deposit Certificates.	[DOT]75	CanadaSept.	5 Deposit Certificates.	[DOT]75	CanadaSept.	12 Deposit Certificates.	[DOT]75	CanadaSept.	19 Deposit Certificates.	[DOT]75	CanadaSept.	26 Deposit Certificates	[DOT]75	Canada1945, June	15 Non-Interest Bear-	ing Certificates	1947, June	15 Non-Interest Bear-	inc Certificates....	War Savings Certificates	t3	CanadaWar Savings Stamps	CanadaPayable in Canada	$Payable in New York	Payable in London	
Amount of Loan	
45,000,000	00
144,253,000	00
197,455,000	00
193,286,000	00
*373,259,000	00
172,030	01
30,000,000	00
50,000,000	00
269,879,000	00
50,000,000	00
33,500,000	00
138,322,000	00
50,000,000	00
50,000,000	00
643,534,250	00
60,000,000	00
50,000,000	00
324,945,700	00
56,191,000	00
30,000,000	00
669,658,900	00
5,092,478	51
40,000,000	00
55,000,000	00
43,125,700	00
847,136,050	00
1,111,261,650	00
37,523,200	00
30,000,000	00
88,200,000	00
3,435,663	63
276,687,600	00
T,197,318,300	00
289,693,300	00
100,000,000	00
48,000,000	00
3,705,478	17
54,703,000	00
55,000,000	00
55,000,000	00
40,000,000	00
55,000,000	00
55,000,000	00
55,000,000	00
65,000,000	00
65,000,000	00
65,000,000	00
70,000,000	00
100,000,000	00
105,000,000	00
57,100,000	00
88,920,000	00
128,980,000	00
110,000,000	00
130,000,000	00
7,738,617	38
2,305,907	89
232,957,190	30
*7,232,271	25
10,689,490,757 99
10,344,085,107 67 333,000,000 00 12,405,650 32
10,689,490,757 99
Annual
Interest Charges
2.025.000 2,524,427 3,455,462 3,865,720 6,532,032
4,300
750.000
1.625.000 6,072,277
1.625.000 1,088,750 4,841,270
1.625.000
1.625.000 19,306,027
1.950.000
1.625.000 9,748,371 2,247,640
900.000 20,089,767
165,505
1.200.000
1.650.000 1,940,656
25,414,081
33,337,849
1,688,544
900.000
2.646.000 137,426
12,450,942
35,919,549
13,036,198
4,000,000
1.560.000 120,428
1,777,847
1.650.000
1.650.000
1.200.000
223,850
220.550
214.500
250.900
251.550
251.550
525.000
750.000
787.500 428,250
666.900 967,350
825.000
975.000
6,988,715 71
274,291,929 43
96-77%
3-11%
0-12%
100 00%
* Preliminary figure, issue).
t 3 per cent on purchase value if held to maturity (7§ years from date of
8SSSSSooSSSSSoS§So£Soo88SS88o§o8SS8S888So88S8So8StnoSoS8

The Budget-Appendix

[Stage Direction]
59.	Bonds and debenture stocks bearing the guarantee of the dominion and outstanding in the hands of the public totalled $699,443,345 as at March 31, 1944, or a decrease of $17,466,516 during the fiscal year under review. This decrease is occasioned mainly by the redemption on February 1, 1944 of a Canadian National Railway Company bond issue in the amount of $15,500,000 by means of a loan from the government.
60.	There were also outstanding at the close of the fiscal year other contingent liabilities assumed under Relief, Seed Grain and other legislation.
61.	Guaranteed bank advances to the Canadian Wheat Board outstanding at March 31, 1944, on account of wheat amounted to $21,622,710. This amount constitutes the Board's gross liability to the banks and is related to the purchase of wheat for the 1943 crop.
62.	By Order in Council passed in 1943 the Canadian Wheat Board was empowered to deal in sunflower seed and rape seed. In order to finance these operations, guaranteed bank loans were obtained from certain chartered banks. The amount of such advances outstanding on March 31, 1944, was $214,783, all in respect of sunflower seed.
63.	Under the terms of an Order in Council dated February 16, 1943, the Commodity Prices Stabilization Corporation, a Government-owned corporation, was authorized to guarantee certain advances and interest thereon obtained by any person from a chartered bank in order to purchase coal, coke or briquettes in the summer of 1943. The liability of the Corporation is limited to fifteen per cent of the aggregate amount of advances made by each bank, but the maximum amount of guarantee is $500,000. The contingent liability of the Corporation at March 31, 1944, was $51,369.
64.	Under the terms of an Order in Council dated August 11, 1943, the Commodity Prices Stabilization Corporation was authorized to guarantee certain advances, obtained by any person engaged in the production of logs or lumber, from a chartered bank. The liability of the Corporation is limited to twenty-five per cent of the aggregate advances made by each bank. The contingent liability of the Corporation at the close of the fiscal year was $174,153.
65.	Under the terms of an Order in Council dated May 4, 1943, the government guaranteed bank overdrafts obtained by certain crown companies and management-fee companies doing business under the Department of Munitions and Supply. Prior to the establishment of this system of financing, funds advanced by the government to the contractors remained idle for considerable periods. The amounts of the various overdrafts are repaid monthly,- so no liability is outstanding at the dose of the fiscal year in connection with this guarantee. The maximum amount of guarantees authorized at March 31, 1944, was $190,985,000.
66.	Before operations under the Home Improvement Loans Guarantee Act were discontinued (October 30, 1940) 125,724 loans had been made by banks and other approved loaning institutions to home owners under the terms of this Act and the total amount of such loans was $49,959,055. The dominion's contingent liability arising out of these loans is limited to 15 per cent of the aggregate of such loans made by approved lending institutions, but as the balance of these loans on March 31, 1944, was $811,652.26, the contingent liability of the government is limited to this amount. Up to March 31, 1944, 1,224 loss claims for an aggregate amount of $446,234.17 had been paid. In terms of total losses to total volume of loans, this loss ratio is only *893 of one per cent.
67.	Under the provisions of the Appropriation Act No. 5, 1942, the home extension plan was started. It provided for loans not exceeding in the aggregate $2,000,000 by banks under *regulations similar to those of the Home Improvement Loans Guarantee Act for the purpose of financing the creation of additional self-contained housing units by alterations or additions to a building used solely or partially as a dwelling at the time application is made for the loan. To March 31, 1944, 56 loans for a total amount of $106,475.28 had been made. The dominion's contingent liability arising out of these loans amounted to 15 per cent of the aggregate of such loans made by the banks or $15,971.29. There have been no claims for loss made by the banks.
68.	Under the Dominion Housing Act, 1935, and the National Housing Act, 1938, the dominion has accepted and is accepting certain obligations arising out of its contracts with approved lending institutions which, while not
The Budget-Appendix
[Stage Direction]
expressed in the form of a guarantee, may nevertheless be regarded as contingent or indirect liabilities.
The manner in which losses in respect of any loan are to be borne by the dominion and the lending institution is fixed by the contract. The general principle is that the dominion bears two-thirds of the loss if at the time the loss is sustained the principal amount of the loan repaid, less any other amounts due, is equal to or less than the amount advanced by the dominion and one-third of the loss if at the time the loss is sustained the principal amount repaid, less any other amounts due, is more than the amount advanced by the dominion. In the case of small loans (that is, loans not in excess of $4,000 in the case of a single family dwelling or not in excess of $700 per habitable room in the case of a multiple family dwelling) the share of the loss to be borne by the dominion is not more than 80 per cent and not less than 50 per cent of the loss. The above provisions apply to loans made undeT both the National Housing Act, and its predecessor Act, the Dominion Housing Act. Under the National Housing Act, a new provision was added to encourage the making of small loans in such small or remote communities and in such districts of other communities as may be designated by the Minister of Finance in any contract. In respect of such loans, the dominion has agreed in contracts with certain lending institutions to pay losses sustained by any such lending institution up to certain amounts determined by the contract which are not less than 7 per
cent and do not exceed 25 per cent of the total amount of such loans made in such areas by each such lending institution.
Order in Council of December 5, 1939, provided that after January 1, 1940, applications would be received only for loans for the construction of houses containing one self-contained dwelling place and where the loan does not exceed $4,000.
An amount of $2,000,000 was appropriated for the fiscal year 1943-44, to provide for advances under the National Housing Act, not exceeding with the advance made jointly by the approved lending institution, $3,200 in respect of any one house, for the construction of houses where the minister is satisfied that permanent houses can be constructed to relieve a serious housing shortage without threatening to create post-war surplus. Loans to the number of 20,831 have been approved at March 31, 1944, under the Dominion Housing Act, 1935, and the National Housing Act, 1938, in the amount of $83,995,217. Losses recorded and paid to March 31, 1944, amounted to $2,644.78, covering the dominion's proportion of the loss on seven loans. This amount represents total losses to date under both the Dominion Housing Act, 1935, aind Part I of the National Housing Act, 1938. These losses are offset in part by a profit of $497.74 realized by the sale of eleven properties. The net loss to March 31, 1944, is therefore only $2,147.04.
69.	The following is a statement of bonds and debenture stocks and other indebtedness guaranteed by the dominion outstanding on March 31, 1944:	_
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Date of Maturity			Issue	Interest Rate	Estimated Amount Outstanding
				%	$
May	1,	1944....	Canadian National	3	35,000,000Jan.	15,	1946....	Canadian National	21	15,000,000July	1,	1946....	Canadian Northern	61	23,754,000April	1,	1948....	New Westminster Harbour Commissioners	41	700,000Dec.	15,	1950....	Canadian National	3	50,500,000Sept.	1,	1951....	Canadian National	41	48,022,000Feb.	1,	1952...	Canadian National	3	20,000,000Aug.	1,	1952....	Saint John Harbour Commissioners	5	667,953Feb.	15,	1953....	Canadian National	3	25,000,000July	10,	1953....	Canadian Northern	3	1,196,227Feb.	1,	1954....	Canadian National	5	50,000,000M ar.	1,	1955....	Canadian National (West Indies) Steamships	Limited	5	9,400,000June	15,	1955....	Canadian National	41	48,503,000Feb.	1,	1956....	Canadian National	4)	67,368,000July	1,	1957....	Canadian National	41	64,136,000July	20,	1958....	Canadian Northern	31	5,645,219Jan.	15,	1959....	Canadian National	3	35,000,000May	4,	I960....	Canadian Northern Alberta	31	551,50519,	1961....	3*	4,030,481Jan.	i.	1962....	Grand Trunk Pacific	3	26,465,130Jan.	i,	1962....	Grand Trunk Pacific	4	7,999,074July	i,	1969...	Canadian National... .[DOT]	5	56,684,000Oct.	i,	1969....	Canadian National	5	57,728,500Nov.	i.	1969....	Harbour Commissioners of Montreal	5	19,000,000Feb.	i,	1970....	Canadian National	5	17,338,000Various dates	1944-54..	City of Saint John Debentures assumed by Saint	John Harbour Commissioners	Various	637,7295	1,538,494U	5	991,389u	4	6,548,115u	Northern Railway of Canada Debenture Stock.	4	38,529$ 699,443,345
Other Guarantees or Contingent Liabilities
Estimated Principal Amount Outstanding March 31,1944
Bank Advances, re Province of Manitoba Savings Office	$	5,635,772
Province of Manitoba Treasury Bill	 4.805,723
Province of British Columbia Treasury Bill	 626.534
Bank Advances, re Canadian Wheat Board:
Wheat	 21,622,710
Flax	 15,009,427
Sunflower seed	 214,783
Bank Advances guaranteed under Seed Grain Loans Guarantee Act, 1938_______Not determined
Loans made by approved lending institutions under Dominion Housing Act,
1935, and National Housing Act, 1938	Indeterminate
Loans made by approved lending institutions under The Home Improvement
Loans Guarantee Act. 1935	 811,652
Loans made by approved lending institutions under the Home Extension Plan	15,971
Deposits maintained by the chartered banks in the Bank of Canada	 359,158,155
Bank Advances, re Government War Contracts-Department of Munitions
and Supply	 2.776.677
Bank Overdrafts-Government War Contracts-Department of Munitions
and Supply (closed out monthly)	 -
Bank Advances, re coal, coke or briquette purchases-Commodity Prices
Stabilization Corporation	  51,369
Bank Advances, re production of logs or lumber-Commodity Prices Stabilization Corporation	 174,153
Guarantee under Dominion-Provincial Taxation Agreements of Provincial receipts from gasoline taxes at amounts received in fiscal years ending nearest December 31, 1940	 Indeterminate
The Budget-Appendix
[Stage Direction]
(B.) CANADIAN ECONOMIC CONDITIONS

[Stage Direction]
Calendar Years
	1926	1928	1932	1937	1939	1942	1943
Group I.-Comprehensive Indexes (1935-39=100)							
Physical volume of business	87	103	69	107	107	202	236Volume of manufacturing	89	100	66	109	105	244	294Mining	55	65	59	104	118	209	242Forestry	84	87	57	117	103	131	123Carloadings	131	148	88	106	102	137	139Electric power output	46	61	61	106	108	142	154Employment (a)	100	112	88	114	114	174	184National income	110	129	69	107	112	184	216Retail sales	(e)	(e)	92	105	105	154	160Group II.-Price Levels and Financial Factors (1926=100)	Wholesale prices	100	96	67	85	75	96	100Farm product prices	100	101	48	87	64	82	96Cost of living (b)	122	121	99	101	102	117	118Common stock prices (b)	92	147	51	117	92	64	85Bank deposits	100	115	100	120	132	167	199Active currency circulation	100	105	81	103	111	268	353Group III.-Gross Value of Production in Major Industries ($ millions)	Agriculture	1,715	1,806	767	1,039	1,205	2,086	(c)2,126Forestry	556	5S6	267	494	466	716	(c) 721Fisheries	73	71	34	51	53	103	(o) 125Mining (including Smelting)	281	316	238	663	663	946	(o) 940Construction	452	578	271	352	373	636	(c) 577Manufacturing	3,101	3,582	1,980	3,625	3,475	7,554	(c) 8,833Group IV.-Foreign Trade and International Transactions ($ millions)	Exports (gold excluded)	1,277	1,364	498	1,012	936	2,386	3,001Net non-monetary gold exports (d)	30	40	70	145	184	184	142Total exports, including non-monetary gold	1,307	1,404	568	1,157	1,120	2,570	3,143Imports (gold excluded)	1,008	1,222	453	809	751	1,644	1,735Total trade	2,315	2,626	1,021	1,966	1,871	4,214	4,878Export balance	+299	+182	+115	+348	+309	+926	+1,408Net tourist receipts	53	79	65	79	68	55	(e)Net interest and dividends going abroad	201	221	262	226	249	203	203(a)	1926 = 100.(b)	1935-39=100.(c)	Estimated.(d)	Adjusted for changes in stocks of earmarked gold. These figures were computed by the Bank of Canada on the basis of official trade returns.(e)	Not available.


[Stage Direction]
-		Jan.	Feb.	Mar.	April	May	June	July	Aug.	Sept.	Oct.	Nov.	Dec.
Group I.-Comprehensive Indexes (a) (1935-39=100)													
Physical volume of business	.1941	144	145	145	153	156	164	167	172	178	179	184	1941942	192	193	196	198	196	200	204	206	206	207	208	2211943	226	227	232	237	232	232	236	241	237	240	243	249Volume of manufacturing	.1941	151	153	157	164	165	169	176	179	191	192	200	2071942	223	226	226	231	233	236	246	249	253	263	263	2761943	279	291	294	297	287	286	285	291	299	304	307	308Mining	.1941	158	157	183	186	1S3	182	172	169	187	186	180	1821942	196	196	206	210	213	209	216	217	207	211	209	2211943	224	218	245	248	255	245	253	254	243	240	232	245Forestry	.1941	131	131	134	132	127	128	137	138	149	141	133	1411942	138	148	148	138	133	131	129	121	116	127	117	1251943	106	121	124	116	119	132	127	127	127	114	126	132Carloadings	i	.1941	126	123	125	129	139	134	140	128	119	121	124	1391942	150	140	136	140	142	141	148	130	118	125	126	1451943	131	140	144	144	143	147	148	139	123	122	139	153Electric power output	.1941	117	116	116	126	129	123	131	126	136	137	138	1391942	143	138	142	144	146	147	146	143	140	139	137	1401943	143	142	147	153	161	162	167	164	161	151	149	154Employment (b)	.1941	139	140	141	150	151	153	155	156	156	158	160	1651942	172	172	172	175	174	172	172	173	172	173	175	1821943	191	188	189	191	185	181	180	181	179	179	181	186Retail sales (c)..	.1941	102	102	119	136	143	134	122	134	137	153	147	2021942	128	120	145	155	159	154	137	148	154	174	165	2131943	129	131	151	168	163	160	148	143	158	174	174	222Group II.-Price Levels and Financial Factors- (1926 = 100)	Wholesale prices	1941	85	85	86	87	89	90	91	92	93	94	94	941942	94	95	95	95	95	96	96	96	96	97	97	971943	97	98	99	99	99	100	100	100	101	102	102	103Farm product prices	1941	67	68	69	70	70	71	72	72	73	74	74	751942	77	78	79	80	80	82	81	81	84	86	86	871943	88	89	91	92	93	94	96	98	98	104	104	105
d
[Stage Direction]
2
T/(e Budget-Appendix

CANADIAN ECONOMIC CONDIT ONS-Concluded

[Stage Direction]
-	Jan.	Feb.	Mar.	April	May	June	July	Aug.	Sept.	Oct.	Nov.	Dec.Group II.-Price Levels and Financial Factors- (1936=100)-Concluded Coot of living (d)	1941	108	108	108	109	109	111	112	114	115	116	116	1161942	115	116	116	116	116	117	118	118	117	118	119	1191943	117	. 117	117	118	118	119	119	119	119	119	119	119Common stock prices (d)	1941	71	66	67	66	64	64	68	68	71	69	69	671942	67	65	62	61	62	63	62	62	63	65	68	711943	76	79	79	83	84	86	91	89	89	86	80	81Bank deposits (e)	1941	146	150	149	151	154	155	154	154	153	151	153	1541942	156	160	166	166	160	156	156	163	169	178	189	1811943	178	176	184	193	203	203	202	199	205	204	221	218Active currency circulation (e)	1941	169	175	182	186	187	194	198	206	211	217	222	2301942	225	234	241	245	250	254	265	278	291	305	309	3171943	312	320	331	341	341	344	352	362	372	382	382	394Group III.-Other Significant Factors Exports (f) ($ millions)	1941	89	100	103	118	163	147	171	150	143	140	164	1521942	152	168	177	170	263	205	199	178	208	213	209	2711943	179	169	207	229	253	251	307	295	247	263	293	308Imports (f) ($ millions)	1941	98	90	108	106	128	115	128	138	137	141	134	1261942	142	120	145	142	148	146	139	132	126	140	126	1381943	127	114	146	151	154	147	151	149	137	163	160	135Net non-monetary gold exports (g) ($ millions)	1941	19	15	20	14	16	18	17	13	21	17	15	171942	15	17	16	14	16	17	16	13	15	19	13	141943	14	13	13	14	13	12	10	10	12	n	9	12Construction contracts awarded ($ millions)	1941	27	25	14	24	41	86	32	36	39	29	23	191942	13	11	18	23	24	47	32	32	30	21	22	101943	12	19	11	16	23	20	16	24	19	19	14	12War contracts awarded (h) ($ millions)	1941	87	56	67	192	124	80	128	96	54	134	59	1031942	84	113	58	113	108	133	129	118	128	141	106	2301943	117	96	349	113	84	104	101	83	74	180	69	65Canadian war expenditure ($ millions)	1941	88	83	(i) 104	46	90	65	108	99	91	111	120	1241942	145	133	(i) 208	142	205	138	190	173	207	176	210	2191943	185	200	(i) 679	137	272	256	264	436	247	355	271	543(a)	Indexes seasonally adjusted unless otherwise indicated.(b)	As at'first of month. 1926=100.(c)	Unadjusted.(d)	1935-39 = 100.(e)	Based on daily average figures; index unadjusted.(f)	All gold excluded; includes exports of foreign produce.(g)	Adjusted for changes in stocks of earmarked gold. These figures were computed by the Bank of Canada on the basis of official trade returns.(h)	Contracts awarded by Department of Munitions and Supply on Canadian Account, including Capital Assistance; subject to revision.(i)	Includes year-end expenditure.
s
s
o
[Stage Direction]
The Budget-Appendix

Department oj Reconstruction


[Stage Direction]
The house resumed in committee consideration of bill No. 82, to establish a Department of Reconstruction-Mr. Mackenzie King -Mr. Bradette in the chair.
Section 13 agreed to.
On section 14-Duration.
Mr. ROSS (St. Paul's):: Does the Prime Minister propose to bring in legislation in connection with housing?


William Lyon Mackenzie King: Housing is
mentioned in the speech from the throne as one of the subjects that will be further dealt with at this session. It is the intention of the government to bring in further legislation on the subject.


Douglas Gooderham Ross: At this session?


William Lyon Mackenzie King: Yes.


[Stage Direction]
Section agreed to.
Bill reported.
Mr. ILSLEY moved the third reading of the bill.
Mr. C. E. JOHNSTON (Bow River):: I should like to say a few words before this bill gets its third reading. There is no doubt that this new department which is to be set up is one of the most important acts that the government has performed so far this year. It has the prospect of being a very important department in the coming days after the war is over. This afternoon some hon. members expressed the opinion that this was not the time to be wasting our efforts in trying to set up anything in regard to reconstruction. It was suggested that that should not be done until the war had been definitely won. I do not agree with that idea. Along with the other hon. members of this party I say and have always maintained that the very first consideration of this country should be the successful prosecution of the war and that everything that is humanly possible should be done to facilitate that objective in every shape and form. While that is going on I would not agree with the opinion of the hon. member for Yrork-Sunbury (Mr. Hanson) that at this time we should not make some preparations for the period after the war and that we should not be setting up a department of reconstruction. I think that is one of the necessary steps.
When the men and women of the armed forces come back they must be properly cared for. If we are to rehabilitate them as they have every right to expect, we must begin to prepare now. It will not do to wait until they return home and then start preparing.
I take it that in setting up the department at this time the government intends to start now. Unless we take some constructive and active action with regard to those who returned from the last war I fear we shall not do as much as we should do for those who come back from this war. I was very much impressed with the views expressed by the hon. member for Battle River (Mr. Fair) this afternoon when he spoke of the veterans of the last war and advocated that they be given free titles to their land. He pointed out, and I think rightly so, that one of the first things that should be done is properly to care for those who came back from the last war, and then we could go on and prepare for those coming back from this war.
He pointed out that one of the government officials, with approval of the present Minister of Mines and Resources (Mr. Crerar), had made a statement to the effect that nothing could be done for those old veterans who are now on the land; that they should be satisfied and abide by the contracts into which they entered. That is not good enough for our returned men of the last war. If we are to use that as a precedent and treat the men and women coming back from this war in the same way, then I am afraid that things will not be arranged satisfactorily. I think we can rightly judge what the government is going to do in regard to the men and women returning from this war by what they have done for those who came back from the last war. I am sorry that such a statement should have been made by a government official at this time, because it certainly does not give those old veterans of the last war much encouragement.
It is true, as the Minister of Finance (Mr. Usley) has indicated in his budget speech this evening, that when a nation is at war it reaches the peak of production. We in this country are exceptionally fortunate in that we have never been invaded. We have not had those terrible air raids to contend with, nor have there been battlefields on our territory as is the case across the seas. Our productive capacity is at its maximum and will continue to be or should continue to be at its maximum until the war ends, because we have had nothing happen to this country which would affect that production. It is also true that when the war ends and the armed
Department of Reconstruction

forces are being demobilized the production of those industries will begin to slow down. As soon as those industries begin to slow down, and in some cases shut down entirely, a loss of purchasing power in the hands of the people immediately becomes evident, because the industries are beginning to release men from employment. These men become unemployed unless arrangements have been made to employ them in some other places. When the men and women of the armed forces return they, too, will be out of a job and their purchasing power will decrease. There you have a piling up of the unemployed; you have an ever-decreasing amount of purchasing power in the hands of the people, and the vicious circle begins which will lead us straight to the depression which we had before unless we make proper arrangements now. That is why I say I do not agree with some of the statements that have been made in this house to the effect that we should not prepare now; that all our attention should be given to the war.
Certainly no one in this house or outside it can point a finger at the Social Credit party and say that we have ever belittled our war effort in any sense of the word. In fact, we were the ones who were first for an all-out war effort and we are still for it. But at the same time I think we can and should begin to prepare now for the post-war period. Unless we are extremely careful we are bound to have after this wrar periods of depression with all the misery and poverty that go with them That is bound to happen unless we begin to prepare now. Therefore I say that one of the first things which must be done by this new department is to make a complete survej' forthwith to ascertain the nature and the volume of the products of industry which will be required by the Canadian people for purposes of rehabilitation after the war and to raise their standard of living to the level which our natural resources consistently can maintain. That is one of the first steps necessary; we must ascertain the nature and the volume. That entails a tremendous amount of research work. In my opinion there is no use in going to those industries now and saying to them that they must carry on their production after this war and that they must give full employment when no proper guidance has been given to them beforehand. . We should find out, for example-and I think we are capable of doing it with the intelligence we have here-the amount of farm machinery that it will be necessary to manufacture in Canada. We should be able to find out the number of automobiles that will be required in this 
country. When that is done we shall be able to go to those concerns and point out to them with some definiteness what will be required. Having that information, they in turn will be able to arrange and plan their production accordingly.
Not only will it be necessary for us to find out the nature and the volume of the production which can and should be carried on for our home markets, but there is a field farther away that must be thoroughly investigated so that those industries will be properly guided in their establishments after the war. The field I refer to is the foreign market. I think there will be a great potential market there if the industries are properly guided in that respect. Some provision will have to be made by this department to enable business firms to go farther afield, into those countries which have been ravaged by war and which have been released from the slavery and drudgery imposed by the enemy, in order to estimate the kind and volume of production that will be required from Canadian industry for those markets. Then, when our industries have that information, they will be in a much better position to carry on the work that is expected of them.
The next step which I think must be taken is a complete survey of Canadian industries to determine the extent to which they can be adapted to peace-time requirements, and to make the necessary preparations for conversion at the end of the war. I believe this is one of the most important steps that will have to be taken, but as far as I know nothing is being done along that line. It may be the intention of the minister in charge of this new department to carry on that work, but unless that is done I see great dangers ahead of us. For instance, I fear that after the war some of our great industries will close up, because they will not know what will be required of them. An example that comes to mind is the automobile manufacturing industry. I do not believe these companies will be able to continue, at least for very long, their present rate of production. There must be some survey made to determine whether these industries are capable of being adapted to some other type of production. Their equipment may be such that they can convert to the manufacture of farm implements. These plants should be surveyed very carefully; instead of having these big factories tom down and the machinery thrown on the junk heap, we should make every effort to convert them to peace-time production. Some may not be adapted to the production of farm machinery; some may be more adapted to the manufacture of cream

Department of Reconstruction
separators, or household requirements, or boots and shoes, or something else. Certainly I see a great danger that these industries may be scrapped instead of being properly converted to peace-time production. The other day, as reported at page 3980 of Hansard, the Prime Minister (Mr. Mackenzie King) dealt with that point; at least I believe it was in his mind, although I do not believe it has been given proper attention. He said:
There is one aspect of reconstruction which might be termed economic reconstruction. That *has to do largely with the transforming of industry from making war supplies to making goods for human consumption and with restoring and increasing the capital equipment of the nation, together with the provision of employment for those who are being transferred from the one activity to the other.
I believe that can be done if we have proper supervision. Then he went on to say:
The great industrial plant created for war purposes must be transformed to meet peacetime demands in Canada or abroad.
That is one of the matters to which I think great consideration must be given; otherwise we are not going to have the proper results. I am very much concerned about this. What are we doing in that regard? In my opinion we are doing just the reverse. What have we done so far in the matter of the actual preparation for the conversion of industries from wartime to peace-time production? The only concrete step we have taken so far has been to set up Surplus Crown Assets Corporation. In my opinion that corporation has not been set up primarily for the purpose of converting industry from war-time to peace-time production. It is only necessary to look at the bill to see the purpose for which the corporation has been set up, or at least what a large part of its work is going to be. I refer to section 12:
Subject to general or specific instructions given by the minister, the corporation may, when so directed by the minister,
(a) sell, exchange, lease, lend or otherwise dispose of or deal with surplus crown assets either gratuitously or for a consideration and upon such terms and subject to 6uch conditions as the board may consider desirable.
Some other recommendations are set out, but one of the purposes of the Crown Assets Corporation is to dispose of all this material; to get rid of the factories that now belong to the government, to deal with the machinery which is now in the possession of the government. I am not for a moment advocating that the government should take over these factories and this machinery and go into the production of consumer goods, but the whole purpose of the Crown Assets Corporation is to dispose of these assets without giving consideration to their conversion to peace-time production. I think that is bad; I do not believe these assets should be disposed of by the government in too much of a hurry. I can see some benefit in disposing of much of this material now, instead of holding it until it becomes obsolete, but one of the purposes of this new department should be to make this survey before the Crown Assets Corporation takes over all these materials and disposes of them recklessly. We have great aircraft factories, great ship building plants, great munitions factories. These are wonderful institutions, equipped with the most modem and up-to-date machinery. I have visited many of these factories, and I say that the production organization that has been created during the period of this war is a marvellous achievement. I have never belittled the work of the government in building up such a machine. In travelling from one end of Canada to the other with the war expenditures committee I have seen a wonderful example of industrial organization in this country. That industrial organization has been carried to the point where, if we take proper care, we can convert from war-time to peace-time production and have the greatest nation the world- has ever seen. Certainly there should be no lack of consumer goods in this country if we take the proper care. I do say, however, that if the Crown Assets Corporation carries on its work without the new Minister of Reconstruction having some control over it, we shall lose a wonderful opportunity. Instead of this great industrial expansion for which we all hope when our men and women come back from the war, by our own acts in this parliament we may put ourselves in an unfortunate position, when that could be avoided1 by the proper control.
It is true, as has been stated, that you cannot go on and produce these goods unless you have markets. Already we have some markets and we hope we may have more in future. I believe that great attention should be paid to the foreign field; yet I do not think that is the primary market for our producers. After we have properly surveyed the Whole field of domestic production and consumption-which is vital, since without proper consumption there is no use in having production-then we may turn our attention to the foreign field.
In my opinion the only time that we should be allowed to ship goods out of the country is when we have a true surplus. I do not mean just a surplus like those we had in the days of the depression. All of us remember those dreadful days, those days referred to
Department of Reconstruction

as the hungry thirties. We had an abundance of production, but the vital thing then was underconsumption. When you have that state of affairs you have a surplus of goods, but the effective demand in the hands of the people is not sufficient to buy the goods that they require. But when you have completely satisfied the home market, then you should pay attention to the foreign market. That is the only time we should look for foreign trade.
There is going to be a good field for foreign trade in those countries that have been ruined by the war. We are going to have to assist in building up those countries, but by the use of modern methods of invention and the great genius that man has to-day it will not be long before we have built them up to the point where they themselves will be looking for foreign markets. The more they get built up to the point where they themselves are looking for foreign markets, the fewer foreign markets we shall have.
I am not one of those who look forward with a great deal of pleasure to the building up of foreign credits in foreign countries. The greater the foreign credit you build up, the poorer you are going to be. It is all right to ship out surplus goods, provided that we get back goods in return. It is all right to do that if you have purchasing power in the hands of the people to buy them.
I do not underestimate the importance of foreign markets, but I think the first and most important market we must look to is our home market. We have a tremendous industry in agriculture. In his budget address to-night the Minister of Finance pointed out the possibilities of agriculture. Agriculture is one of those industries which will enable us to ship out more goods to foreign nations. If we cannot make it possible-it is not a case of being able because we can make it possible -for agriculture to produce goods and still have the cost of production plus a fair profit, then we shall be sadly lacking in our organisation under this department.
I said a moment ago that there was no use in producing abundantly unless our people have the purchasing power with which to buy. During the period of reconstruction after the war there will be a large field for employment, but if we are to continue that employment we must make sure of the income of the people. I suggest that one of the best ways of ensuring continued purchasing power for the people so that they will be able to buy the goods we produce, is the old age pension.
I think it has been generally recognized in this parliament during the last year or two

that when you give out money in the form of old age pensions you are establishing a great consumer market; you are creating a home market. We could very well lower the age limit to sixty years and increase the amount above what it is at the present time. I would suggest $50 a month. In that way we would ensure purchasing power being put into the hands of the people so that they will be able to buy the goods which industry will make.
There is no doubt that as time goes on there will be an unemployment problem with which we shall have to deal. If we can take a greater number of people out of active production by lowering the age limit for the payment of old age pensions, then we shall be solving to a degree our unemployment problem.
Then, as has been indicated, we could start at the other end and provide the young people with an educational grant sufficient to enable them* properly to fit and equip themselves intellectually to be able to assist us in our production when they come to that time of life. Here again we shall be providing purchasing power with which to buy a portion of the goods which industry can produce. We shall thus be providing a market for industry.
I believe that too much is being expected of agriculture and other secondary industries. It has been said that industry must put everybody to work, but I do not agree with that. I do not think that is the function of industry. The purpose of industry is to produce goods as cheaply as they can be produced by using the most modern methods of machinery and intellectual abilities that our organizers have. We have plenty of inventive genius. If industry could employ all the people in this country it would be a utopia; it would be wonderful, but I do not think that can be done. But everyone who is capable of working, everyone who is desirous of increasing his purchasing power, everyone who is physically and mentally fit to work should be given that privilege. Every encouragement should be given to these people to work.
The Prime Minister was speaking about this previously, and I should like to quote what he said as to how this was to be done, how we were to keep our industries in operation, how we were to put purchasing power in the hands of the people. I was very much disappointed at the answer given by the Prime Minister to a question asked by the hon. member for Lethbridge (Mr. Blackmore) as to how he proposed to do this. I have marked carefully what he said because I think it holds the key to the success or failure of this new department which is to be set up.

Department oj Reconstruction
I agree with the hon. member for Parry Sound (Mr. Slaght) and the hon. member for Acadia (Mr. Quelch) when they say that we shall not be able to do this unless there is a proper and systematic and scientific change in our financial system. Apparently the Prime Minister did not agree with them. This new Department of Reconstruction null not have a chance unless it is given the power to provide the people with the necessary additional purchasing power to carry them through this reconstruction period. I am afraid that every time this new department want to do anything and they go to the treasury board, the treasury board will kick them out of the office and say, "We cannot do that because of the expense."
Look at the way in which we are treating our returned men from the last war. A minister, a member of the treasury board, makes a public statement through a i civil servant that we are not going to do anything more for the returned men from the last war, that they should abide by their contracts. No matter how sincere this minister may be, that is what will happen with this department. That is the way in which the Prime Minister said the thing would be carried on financially. The hon. member for Lethbridge asked how it would be financed and the Prime Minister said:
I will put it this way to my hon. friend. In this period of war we have been able to raise money through loans and taxation, for what purpose? For the purpose mainly of spending the money on destruction, on -the destruction of property, the destruction of community and national life, and human lives; all of which indicates that instead of having our taxes serve a useful constructive purpose, they are serving, of necessity-it is not our fault, it is the part of the penalty of war-the needs of destruction. When the whole picture is reversed, and it comes to be a matter of carrying out constructive work-
Mind you, this is the reconstruction period to which he was referring.
-work for the rebuilding of communities, for the supplying of homes, and the needs of homes, the necessaries and conveniences of life, many of which have been absolutely prohibited in the period of war, there is going to be a demand for employment the like of which has not arisen at any other time, and as one want is satisfied another want is sure to be created.
He said further:
That is the way progress is made, through demands which arise from conditions of peace and prosperity; and where you get demands of the kind which lead to the fuller employment of labour I do not think my hon. friend need fear about the increase of public debt or taxation to accomplish these things. If-
And this is the big question:
If we can get a sufficiently large demand for labour through an increasing demand for goods and commodities and things which are constructive and serviceable, I believe the nation can go ahead with the great work of construction and reconstruction and at the same time reduce its taxation and reduce its debt. That at least is what I would hope to do if this government is in office when that period comes.
These are pious hopes, hopeful platitudes, but I hardly think the Prime Minister really believes that they will bring the results for which he hopes.
We have the banking and commerce committee discussing the Bank Act and the changes that should be made in it. While I cannot prophesy what their conclusions will be, I think it is safe to say that there will be no major changes in the financial policy of this government. The Prime Minister in his speech here indicated that he hopes that this period of reconstruction will be a success, though financing it in exactly the same way that we followed before, by loans and taxation. The Minister of Finance, in his budget speech to-night, indicated that he intends to follow the same course. Yet our national debt is climbing and climbing and climbing, and while interest rates have been lowered, annual interest charges are climbing and climbing and climbing. Every loan means an additional interest charge on the incomes of the people.


Thomas Vien: Order. The hon. gentleman is now dealing with the budget.


Charles Edward Johnston: I am not attempting to deal with the budget, Mr. Speaker, but when the hon. member for Vancouver-Burrard (Mr. McGeer) was speaking he gave figures of the national debt and it was those figures I had in mind. I did not have in mind the figures given by the Minister of Finance. The hon. member for Vancouver-Burrard, speaking on this bill, referred to the national debt. He gave the public debt of Canada as $335,000,000 in 1914 and showed that the national debt had increased by 1918 to $1,191,000,000. Then he gave what I thought was an excellent comparison. He gave the national debt in 1939, when the war started, at over 4i billion dollars. In 1943 up to December 31 the debt had risen to nearly lli billion dollars. He did not make reference to the debt as of to-day, but the Minister of Finance indicated that it had increased in the last year by about two billion dollars. At all events our public debt on December 31, 1943, was about lli billion dollars. ' In other words, it had increased about 6i times since 1914-18. The annual interest charges, according to the figures that have been put on Hansard by the hon. member for Vancouver-Burrard, are over $304,000,000, or an interest charge for every man,
Department oj Reconstruction

woman and child in this country of over $27 per annum. That is a tremendous load to carry and the charges are continually rising, with no prospect of lowering them. Yet the Prime Minister vainly hopes that we shall be able to carry on through the reconstruction period by following exactly the same financial policies of the past. It does not take any stretch of the imagination, for anyone who sits down and analyses these figures and sees the tremendous increase which there has been from year to year ever since confederation almost, in our national debt and in the interest charges, which have increased year by year, to see that we cannot continue financing like that.
I recall the Prime Minister's great expression in 1935 when he said that if he were elected he was going to do battle with the money powers. Well, we see the results of his battle to-day, and if this is the great battle that he was going to carry on, then I have not great hopes for this reconstruction period, and I feel that the Prime Minister himself has no very great hopes in that regard either.
There must be some change in the financial policy of the government. I have already indicated two of the major steps which must be taken. Regardless of the pious hopes expressed by the Prime Minister, without some change in our financial policy there is no chance of success in the reconstruction period, nor shall we have a success made of the reconstruction department, for which we all hope, not only the minister but all of us. One of the major steps that must be taken, a step essential to the satisfactory establishment of Canadian industry to peace-time conditions is that the control of currency and credit should be removed from present private monopoly and restored to parliament and that parliament should so order the financial policy of Canada as to make available sufficient money for the financing of post-war rehabilitation and reconstruction and to ensure the consuming public of sufficient purchasing power to enable them to enjoy a standard of living limited only by the productive capacity of industry and the natural resources of the country instead of by a man-made scarcity of money.
At the present time we have a man-made scarcity of money. Without going into details of the financial reconstruction that is necessary, it seems to me that if we are to have a proper Department of Reconstruction charged with the responsibility of seeing that our country is changed over from a war-time industrial nation to a peace-time industrial

nation, we must have proper control of our currency and credit, and it must be issued in terms of public need, and not of private gain. Until we have achieved that goal I am convinced that we shall never have the success we hope for, and those who have been overseas will find, when they return home, that they have fought their fight in vain. We cannot afford that; this country cannot afford it. Therefore, let us start by putting our own house in order, getting the finances of this country on a scientific and sound basis, establishing such a financial structure that we can make financially possible anything which is physically possible and desirable. Then we shall have a Canada that our men and women overseas will be proud to return to and we shall be proud to say to them when they return: We appreciate the job which you have done, and we are going to reward you in part for all you have accomplished.


Walter Frederick Kuhl: Mr. Speaker, I crave your indulgence for just a few moments. I am rising more on a question of privilege than for the purpose of attempting to argue any points in connection with this bill.
Several of the members who have spoken on this bill found occasion during the course of their addresses to refer to the remarks which I made on the bill. I feel that several of them either deliberately or otherwise misconstrued and misinterpreted what I said. In fact, I consider that some of the members went so far as to question even my character. I therefore wish to rise on a question of privilege in that connection.
I believe that there were as many as four members who referred to my remarks, the hon. member for Victoria, British Columbia (Mr. Mayhew), the hon. member for Essex East (Mr. Martin), the hon. member for Fraser Valley (Mr. Cruickshank), and the hon. member for York-Sunbury (Mr. Hanson), and indicated that I in my remarks had advocated a set of circumstances in which there would be maximum idleness-in other words, a loafer's paradise. Read the remarks of the hon. member for Victoria, British Columbia. He said, as reported in Hansard, at page 4109:
We listened to the hon. member speaking the other night, and if I remember rightly he implied that it was humiliating to work.
The hon. member for Essex East said, as reported in Hansard, at page 4015:
Our people will not want to subscribe to the doctrine of the hon. member for Jasper-Edson. . . . They do not want to be idle.

Department of Reconstruction
These statements, Mr. Speaker, definitely imply that I advocated idleness in the postwar period for our people.


Gordon Graydon: The hon. member did
not advocate much harder work, anyway.


Walter Frederick Kuhl: Neither does the hon. member.


Gordon Graydon: I have to do it, though.


Walter Frederick Kuhl: So do I.


Charles Edward Johnston: What?
being a lawyer, and having to work hard?


Walter Frederick Kuhl: I wish to reiterate for the
information of these hon. gentlemen and others who, perhaps, think like them, that at no time have I advocated idleness. I challenge the hon. members I have named and any other hon. member now in the chamber to read my address through and pick out one sentence, one phrase, in which I advocated idleness in the post-war world. I should like to see them take up the challenge. Yet each one of these hon. members implied and, indeed, stated directly that I was advocating idleness. The type of activity to which I took exception and against which I protested was that of artificial work.
Let me give you an example of what I mean by "artificial work." In my own constituency in the so-called depression years, under tooth Liberal and Conservative administrations, roads were built with pick and shovel. Young men, some of them university graduates, were out building highways in my constituency- the Jasper-Edson highway and other roads- with pick and shovel, and machines were standing everywhere which could have been used in their place. I call that artificial work, and that is the type of work I protest against and object to. As the hon. member for Bow River (Mr. Johnston) indicated in his remarks to-night, it is certainly the privilege of mankind to take advantage of all that inventive genius and productive enterprise can devise, and machinery of this kind should certainly be used to the maximum advantage. But we did not do that in the so-called depression years. It is the type of work to which we resorted then that I referred to as slavery. I did not advocate idleness; what I advocated was an opportunity for the people to put themselves to work; and if hon. members will take the trouble to read my remarks through they will find that I proposed that we so arrange our economy that all the people, instead of merely a select few, shall have an opportunity to indulge in voluntary activity.	*
Some hon. gentlemen went so far as even to bring my character into question. I hesitate to make an issue of this, but no other hon. member would take it lying down, nor do I intend to. The hon. member for Victoria, British Columbia, made this statement, as reported ini Hansard, at page 4109:
Work is the fibre of achievement that makes a nation great, and you cannot have the fibre of achievement unless you have something to do and are willing to do it.
He concluded by saying this:
That is what my hon. friend lacks.
I consider that a definite questioning of my character.


William Lyon Mackenzie King: You ought to hear some of the things they say about me. I would not worry about that.


Walter Frederick Kuhl: I observe that whenever any remarks of that kind are made in the house concerning the right hon. gentleman, he is always very quick to rise to a question of privilege.


William Lyon Mackenzie King: No.


Walter Frederick Kuhl: So that I say I do not think it is becoming for any hon. member to question the desire of any other hon. member to perform his share of responsibility in the national life of this country; and I think, if the hon. member is the gentleman that he wishes me to believe he is, he will make appropriate apologies for such a remark.
I wish to make one observation only with regard to the principle of the bill; it has been referred to repeatedly, but I think it will bear repetition. According to this bill, the whole success of reestablishment of members of the armed forces as well as of civilians in civil life after the war will depend upon finding jobs. I would ask the Prime Minister (Mr.'Mackenzie King), or the government as a whole, or anyone, what will happen in the event that jobs cannot be found? The whole success of reestablishment in civil life of these people, two millions or thereabouts, is to depend upon finding jobs. We know that the Liberals and the Conservatives had five years each in which to attempt to find jobs, and they were unable to do so. How do they expect us to believe that, if given another five years, they will do any better?


Charles Edward Johnston: They do not. That was just for public consumption.


Walter Frederick Kuhl: What is to be the condition of the people of Canada if these jobs are not forthcoming? Are wre going back to the dole, the relief line and the soup kitchen? What has the government to say with respect to this question? The hon. member for Bow River has again indicated as we in this corner
Department of Reconstruction

of the house have always insisted, that the purpose of industry is not to provide employment but to supply goods in the greatest abundance with the least amount of work and trouble. Of course the government, realizing that there will not be places in industry for all these people, are suggesting tremendous schemes of public works. When it comes to public works, is it going to be possible for the government to find jobs in public works if they are not available in industry? I happen to have on my desk a pamphlet illustrating some of the most modern machines. On the back cover is illustrated one of these huge modem dredgers, capable of lifting thirty-two tons of earth in one bite. I should like to know whether in the post-war period the government intend to permit machines of that and similar types to be used in carrying out public works of various kinds, or are they again going to do as was done before the outbreak of the war, namely, leave the machines sitting on the side of the road and put people to work with picks and shovels?
For curiosity's sake, I figured this ma'chine out on the basis of manpower-thirty-two tons of earth in one bite. If men were put to work with picks and shovels to do the work of that machine, how many men would be required? Five pounds of earth to one shovelful would be 12,000 or more shovelfuls of earth; in other words, this machine would do approximately the work of 12.000 individuals. One can go all the way through industry and public works or any other activity of man in these days and duplicate incidents of this kind. Personally, I think it is folly on the part of this government or any other government to suggest that they will be able to reestablish the members of the armed forces and others by finding jobs for them or making their entire source of income depend upon jobs that will be found either in industry or in public works.
Motion agreed to and bill read the third time and passed.



NATIONAL HEALTH AND WELFARE


[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved that the house go into committee to consider the following resolution:
That it is expedient to provide for a Department of Social Welfare to include that part of the Department of Pensions and National Health not to be included in the Department of Veterans' Affairs and to assume the management and control of and to consolidate in such department matters relating to the social security and welfare of the people of Canada

as may from time to time be assigned to it; and to provide further for the appointment of such officers, clerks and employees as are necessary for the proper and efficient administration of the act.
Grote Stirling: Is the Prime Minister going to make a statement?


William Lyon Mackenzie King: I was going to ask in the first instance that this resolution be amended by substituting the words "Department of National Health and Welfare" for "Department of Social Welfare." I spoke of this a day or two ago and mentioned that when the resolution was drafted it was thought that social welfare being a wide term would probably serve to include health as well, and that there was an advantage in having a short title. But there has been a very natural feeling that, as the department of health has existed since 1919, and as the new department will take over that part of the work of the Department of Pensions and National Health which will be left after what has been taken out of the department by the war veterans' measure, it would be desirable to continue specifically to associate the words "national health" with that department. Further, changing the name might give the impression that the government was not as much concerned with national health as with some other features of the measure, whereas the contrary is the fact. National health will continue to be, through the years, more and more an all-important consideration of the government. I would ask my colleague the Minister of Pensions and National Health (Mr. Mackenzie) kindly to move the necessary amendment.


Ian Alistair Mackenzie: With the consent of the house I move accordingly.


[Stage Direction]
Motion agreed to.
Grote Stirling: This resolution anticipates the passage of a bill, the purpose of which is, in the words of the resolution, to assume the management and control of the social security and welfare of the people. I think it would be a highly desirable thing if such a department were set up to do this, if it has the power to do it. The department of health has existed for some time, as the Prime Minister (Mr. Mackenzie King) said, and it will be incorporated in this new department. The department of health has not entered into the life of the people to any considerable extent. If one examines the terms of the British North America Act and looks through the twenty-nine matters which are referred to the jurisdiction of the dominion, one finds no mention

Department of National Health and Welfare
of either health or welfare. In fact, all that one does find is that quarantine and marine hospitals are put under the direction of the dominion government. It is not wonderful to me, therefore, that in these twenty-five years the department of health has existed it has not entered into or directed the life of the people. It has accomplished very little in preventing disease or preventing those mischievous actions of people who might do things deleterious to the health of the nation.
If one looks at these matters which are directed by the British North America Act to the jurisdiction of the provinces one finds several guides thereto-the establishment, maintenance and management of hospitals, asylums, charities, eleemosynary institutions other than marine hospitals. One will find property and civil rights and all matters of a purely local and private nature. So that all the nine provinces have provided themselves with departments of health or branches of welfare, and the dominion government seems to me to be assuming a very large task and perhaps an impossible one when it undertakes the management and control of the social security and welfare of the people. It does appear to me that it would be not only undesirable but harmful if this went out to the public of Canada, giving them the idea that the dominion government is able to accomplish a great deal more than in my opinion it will be able to do under this department. It is that note that I wish to sound at the very commencement of the discussion, and I call it to the attention of the Prime Minister.


Gordon Graydon: I do not know whether the Prime Minister intends at this stage to say anything with respect to the matter, but if he desires to make a statement on the second reading I have no objection. At any rate, I wish to identify oiir party with the position which has been taken by the hon. member for Yale (Mr. Stirling). The situation with regard to the name of such a department does not go very deep so far as the problem of social welfare, social security and health as a whole is concerned. All we.are doing is to establish under a certain department, the department of social welfare, a new department which will take over the departmental duties of health and additional duties which may be assigned to it in connection with social welfare legislation such as the dominion may be competent to deal with within its jurisdiction.
I think it should be made clear, and the hon. member for Yale did make it abundantly clear, that it would be a great mistake if the
people of Canada got the idea that by means of a high-sounding name the government through some magife would do something to benefit the whole dominion in social welfare when, as the Prime Minister will readily agree, a great deal of that work is within the jurisdiction of the provinces themselves under the British North America Act
In agreeing t,o the resolution going through and allowing the introduction and the first reading of the bill, we should like to make our position clear, namely, that we at this stage reserve the right to take a position in the discussion which will indicate our stand perhaps more clearly than it has been indicated in a general way to-night.


Mr. HARRY LEADER (Portage la Prairie):: Before the resolution passes I should like to have an opportunity of discussing a question which, in my opinion, has been delayed too long. If it will facilitate matters I have no hesitation in allowing the resolution to pass to-night, but I would rather say what I have to say on the resolution than on the bill. As a reason for my stand may I state that it is not always possible for me to be in the house. This is one of the very few evenings that I have imposed upon myself the task of being here after the dinner recess. Rather than sit around day after day and hour after hour waiting until I have an opportunity to speak on a matter upon which I must speak I would prefer to go on now, but I wish to intimate to the Prime Minister (Mr. Mackenzie King) that it will take at least forty minutes for me to say-


William Lyon Mackenzie King: May I say to my hon. friend that I think the house would like to have the bill based on the resolution before it. The bill cannot be presented to the house until the resolution is passed. It was my hope that the house would permit the bill to be introduced to-night and then to-morrow we might go on with a discussion of its provisions. If my hon. friend is going to take forty minutes, I should think that it would be in his interests, as well perhaps facilitating the business of the house, if he were to wait until to-morrow when the bill is taken up again rather than speak for fifteen minutes now and twenty-five minutes to-morrow.


Harry Leader: I will agree with what the Prime Minister has said in his last sentence, if the bill is taken up to-morrow.


William Lyon Mackenzie King: I hope it will be.


Harry Leader: I would not have the temerity to suggest terms to the Prime Minister, but if the bill is to be taken up to-morrow
4258	COMMONS
Department of National Health and Weljare
well and good. If not, I do not want to miss this opportunity of discussing this subject which I believe in some ways is more important than the war itself. If it is the understanding that the bill will be proceeded with to-morrow, and if the Prime Minister will be kind enough to allow me to adjourn the debate or something like that, it would suit me fine.


William Lyon Mackenzie King: My hon. friend realizes that adjournment of the debate would not help matters any. It would not enable the bill to be introduced. The bill is not before the house at the present time. All that is before the house is simply a resolution to permit the bill to be introduced. I hold in my hand a memorandum of what I was intending to announce at the end of the evening as to to-morrow's business. I cannot say whether the house will permit it or not, but the government's thought was first of all to take the two measures which were mentioned by the Minister of Finance (Mr. Ilsley) this afternoon, amending two banking bills, to provide an additional two months before their expiration in order to afford opportunity of discussing matters at greater length than would be the case if we had only until July 1 to discuss them. Immediately after that I intended to suggest that the national health and welfare bill be taken up. Of course, I wish I could give my hon. friend an undertaking as to what hon. members of the house generally would do, but he will recognize I cannot do that. As far as the government proceeding with the matter is concerned, I have indicated our intention.


Harry Leader: I will await my chance.


John Horne Blackmore: Briefly I wish to say that we have no objection to the resolution passing and the bill being introduced. I should like to say, though, as has been pointed out by the hon. member for Yale (Mr. Stirling) and the leader of the opposition (Mr. Graydon), that there is a possibility that the dominion government is intruding itself into a sphere that properly belongs to the provinces. I realize, as everyone does who understands the situation confronting the Canadian economy, that there are a good many items which properly come within the jurisdiction of the provinces in which they need a good deal of assistance, in which they need that assistance from the dominion government because the dominion government is in a position to have more money than the provinces.
There is no danger involved in so far as the British North America Act is concerned if

everything that the dominion government does is designed to supplement what the provinces do. If it is definitely recognized that this is a matter of provincial jurisdiction and that the problem of the dominion is simply that of helping the provinces, then all is well. But ever since the iniquitous Rowell-Sirois report and the attempt of the government at Ottawa to jam that thing down the throats of the provinces, there has been suspicion from all over this land that the administration in Ottawa is not friendly to the British North America Act; that it is seeking to destroy the British North America Act and centralize control over the affairs of Canada in Ottawa, control that the fathers of confederation in their wisdom put in the hands of the provinces.
May I just make this suggestion, that in all these matters where the central government thinks it advisable to supplement the work of the provinces it be recognized that the provinces should take the steps and that the central government put at their disposal the means to accomplish the ends which the provinces themselves may consider ought to be accomplished, so that the dominion government does not exercise control-it may exercise administrative direction but not control. May I suggest, too, that the all-important matter in all these affairs is money. There is not a province that does not know what it wants to do with respect to health and social services if it could only find the money with which to do it. The dominion government is in a position to get that money. All the dominion government needs to do is to exercise the power which was conferred upon it by the British North America Act when it was given control over money and banking. It can make available to the provinces the money which they need. Until the men in power in Canada come to realize that, they will be faced with difficulties and do things which will endanger the Canadian commonwealth.
I have nothing more to say except to urge that the dominion government take the attitude that it will find the money with which these fine projects are to be achieved and will supply that money to the provinces in accordance with their need and then work with the provinces toward the attainment of the objectives of sound social security and social programmes in Canada. That being understood, I do not hesitate for a moment to support the resolution and the bill to be founded on it.
Motion agreed to and the house went into committee, Mr. Bradette in the chair.

Department oj National Health and W elf are


William Lyon Mackenzie King: I should like to say just one word. I would have made a statement on the resolution were it not that I was anxious to get the bill introduced to-night so that hon. members might have it before them at once, and we might take up second reading to-morrow. All I wish to say is that this is one of three measures referred to in the speech from the throne which have to do with post-war planning. The first one is the war veterans' measure; the second, the one on reconstruction, and the third, national health and welfare. To-morrow on second reading I shall have something to say about the matters which have been referred to more particularly to-night.
Resolution reported, read the second time and concurred in. Mr. Mackenzie King thereupon moved for leave to introduce bill No. 149, to provide for a Department of National Health and Welfare.
Motion agreed to and bill read the first time.
On motion of Mr. Mackenzie King the house adjourned at 10.55 p.m.
Tuesday, June 27, 1944