1945-10-12

Hon. HUMPHREY MITCHELL (Minister of Labour):: I wish to lay on the table copies of order in council P.C. 6481, passed on October 11, 1945, which provides that effective from twelve o'clock noon to-day, October 12, the dominion government has taken over control of the packing plants of Bums and Company at Winnipeg, Prince Albert, Regina, Edmonton and Vancouver.
Under the order the government has appointed Mr. J. G. Taggart, chairman of the meat board, as controller of these plants. The government made this decision because it was apparent that strike action was contemplated by the employees of these plants for Monday, October 15, and in view of the grave consequences which would result from any interruption of meat shipments to Britain and *other European countries.
The reasons were explained to the management and to Mr. Fred Dowling of the united packinghouse workers of America, CI.O., and to Mr. A. R. Mosher, president of the Canadian congress of labour.
The order in council requires that the company and the union shall proceed with negotiations towards a mutually satisfactory settlement of their dispute without delay, in accordance with regulations.
In all probability deputy controllers will be appointed for each branch plant. Provision for this is made in the order.
Even if Canada succeeds in keeping up the present rate of meat exports, there is a danger of many persons dying from starvation in Europe this winter. Break-down in negotiations between employers and employees in respect to working conditions in packing plants, to the point where it means a stoppage of work, creates a national emergency which under the circumstances I think would be considered by most Canadians as little short of criminal.
I am convinced that both parties to the dispute will accept the intervention of the government and that the plants will continue to operate.
On the orders of the day:


Mr. M. J. COLDWELL (Rosetown-Biggar):: Arising out of the minister's statement, may I ask a supplementary question? Were the provinces consulted in connection with the proposal he has made in the order in council? I ask the question because the minister says the provinces are involved in these matters. If the provinces were consulted, what were their replies?


Humphrey Mitchell: Communications were addressed to the provinces, but at the moment I have no knowledge of their replies.


Major James William Coldwell: Has this been done without receiving their replies?


Humphrey Mitchell: I would not like to speak from memory. Frankly I would say that in view of the gravity of the situation and in the national interest I took the responsibility of making this recommendation to the government.


Mr. HOMUTH:: Then might I interpret the minister's statement to mean that he has not received the acquiescence of the various provinces in the move he has made?

Criminal Code


Humphrey Mitchell: I will say this to my hon. friend, that this action was taken under the War Measures Act, in the national interest. You cannot afford to fiddle while Rome is about to bum; that is the sensible way of looking at it.



ALBERTA AND BRITISH COLUMBIA COAL MINES

[Stage Direction]
On the orders of the day:
Humphrey Mitchell: Mr. Speaker, during the debate on the motion to go into supply on Tuesday evening of this week, I stated, as will be noted on page 866 of Hansard, that I had been informed the 9,000 coal miners on strike in western Canada would return to work the next morning. That was the information which came to my office from Calgary.
The latest reports we have in connection with this matter are that following the decision of the district executive board at its meeting on Tuesday to recommend to the local unions a return to work, the members of the board returned to their own districts to place before the locals this recommendation. Meetings were held yesterday and to-day in various points, but no votes on the recommendation have yet been taken and it is not anticipated that these votes will be taken before Saturday or Sunday.
Although it cannot be forecast with any certainty, I am informed there is every indication that work will be resumed next Monday.



CRIMINAL CODE


[Stage Direction]
Mr. WILLIAM BRYCE (Selkirk) moved for leave to introduce bill No. 18, to amend the criminal code.
Some hon. MEMBERS:: Explain.


Mr. BRYCE:: The proposed amendment
deals with appeals from summary convictions under part XV of the criminal code. The present condition of the law works great hardship and injustice in the case of convicted persons who reside and are tried in remote and outlying localities, such as some in my own and other northern constituencies. Because of communication and transportation difficulties it is physically impossible to serve and file the notice of appeal within the statutory period of thirty days. The purpose of the amendment is to give the judge of the court appealed to a wider discretion in extending the time for serving and filing notice of appeal to three months, and in fixing the particular sitting of the court at which the appeal is to be heard, as the extended time may overrun the next sitting. The amendment will thus allow residents of remote areas who feel aggrieved by a conviction to have recourse to an appeal, which reoourse now seems to be barred to them because of the transportation and communication difficulties I have mentioned. The proposed amendments are indicated by the added words underlined in the text.
Motion agreed to and bill read the first time.



AERONAUTICS ACT


[Stage Direction]
Hon. C. D. HOWE (Minister of Reconstruction) moved1 for leave to introduce bill No. 19, to amend the Aeronautics Act.
Some hon. MEMBERS:: Explain.


Mr. HOWE:: I am informed that this bill
amends the Aeronautics Act in minor particulars. In the act, which I believe was passed at the last session, there are one or two obvious errors which will be corrected by this amendment. I am sorry I have not a memorandum on the subject, but I think hon. members will find it is not a very important matter.


Karl Kenneth Homuth: There is no change in
the act?


Clarence Decatur Howe: No material change.
Motion agreed to and bill read the first time.



TRANS-CANADA AIR LINES INCRBASE OF CAPITAL-CREATION OF CORPORATION TO OPERATE SERVICES UNDER CONTRACT

[Stage Direction]
Hon. C. D. HOWE (Minister of Reconstruction) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to amend The Trans-Canada Air Lines Act 1937, to increase the capital from five to twenty-five million dollars and to authorize the Canadian National Railways to issue securities to twenty-five million dollars for acquiring the stock of the corporation; to provide authority in the governor in council to create corporations to operate and maintain air services under contract with Trans-Canada Air Lines such corporations to be controlled by Trans-Canada Air Lines;
External Affairs
[Stage Direction]
also to make provision for the payment of subsidies to such corporations payable out of moneys to be appropriated by parliament, and with provision for the termination of the present contract for the transport of mails and for a new contract for mail transport.
He said: His Excellency the Administrator having been informed of the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.

[Stage Direction]
On the orders of the day:
. Mr. GORDON GRAYDON (Peel): Has the Canadian government been officially or unofficially approached by the government of India with a view to an exchange of high commissioners between the two countries? If so, when was such approach first made, and why has Canada so far not completed her part of the suggested diplomatic exchange? Ie it anticipated that a move in this direction will be made by this government at an early date? I ask this question because on April 6 of this year I made a similar inquiry of the Prime Minister, based upon certain news dispatches, and at that time the Prime Minister replied that he intended very soon to have an exchange of diplomatic representation between India and Canada. Now that six months have elapsed I think we should have some indication as to the present position in the matter.
Hon. L. S. ST. LAURENT (Acting Secretary of State for External Affairs): I am not sure the summary the hon. gentleman gave of the reply on April 6 is quite complete. The note I have here is that the answer was:
May I say in reply to my hon. friend that the matter of exchange of high commissioners between Canada and India has been under consideration for some little time. It is wholly correct to say that Canada intends to send a high commissioner to India and that India intends to send a high commisisoner to Canada. The exchange of high commissioners will be reciprocal. The government up to the moment have not been able to decide on the particular person to be appointed as high commissioner from Canada but I hope that an appointment may soon be made.
This was the answer given at that time. There has been some further informal discussion of the matter since then, and I am informed that probably it will not be long now before an announcement can be made.


[Stage Direction]
On the orders of the day:
Mr. D. S. HARKNESS (Calgary East):: In view of the protest meeting held in London, England, by wives of Canadian servicemen in regard to their transportation to Canada, and meetings of ex-servicemen in Canada to protest the delay in bringing their wives to this country, is the government in a position to make a statement as to when these women and their children may expect to obtain transportation to Canada?


Hon. DOUGLAS ABBOTT (Minister of National Defence):: There is a similar question on the order paper already. Replying to-my hon. friend may I <say that every effort is being made to obtain additional shipping to bring wives and dependents back to Canada, but priority is being given to returning servicemen, for obvious reasons. Up to V-E day approximately 5,000 wives and 3,500 ohildren had been repatriated to Canada. Since Y-E day, as at the end of August an additional 7,000 wives and 4,600 children have been repatriated, making a total of some 20,000 odd. But there are a great many servicemen overseas who have been away from their wives for a number of years.


Mr. GREEN:: Arising out of the last question, has the Minister of National Defence seen the reports in to-day's press to the effect that the Queen Elizabeth and the Aqmtania are being taken out of the troop movement service? If so it might be possible to have representations made to the end that these ships continue to do this work.


Douglas Charles Abbott: I have seen the reports to which the hon. member has referred. They are newspaper reports. We are in close touch with the shipping situation. Every effort is being made to obtain every available ship to bring our people back. I think that up to the present we have done very well

better, I may say, than we had anticipated we would be able to do last July. I must be cautious in making any predictions, but I have every reason to believe that the results in the future will not be out of proportion to what we have been able to do in the past.


Mr. ADAMSON:: Does the British ministry of shipping control shipping on the North Atlantic?


Douglas Charles Abbott: My understanding is that all the shipping is subject to the control of the united nations shipping pool, aad that from.

United Nations Food Agreement
that pool we get our proportion. I am told that up to the present we have had our fair proportion of the available shipping. As the house knows, there are a very large number of troops, dependents, prisoners of war and others who have to be repatriated from the far east. These are composed of British, Americans and others. I am informed we are getting, and I am sure we will continue to get, our fair share of all available shipping.



UNITED NATIONS


[Stage Direction]
The house resumed from Thursday, October 11, consideration in committee of bill No. 14, for carrying into effect the agreement for a food and agriculture organization of the united nations between Canada and certain other nations and authorities-Mr. Gardiner- Mr. Macdonald (Brantford City) in the chair.
On section 2-Powers of governor in council to carry out agreement.
Mr. CASE:: Mr. Chairman, my understanding is that the amendment now before the committee seeks to commit us to the articles of agreement. As I read it, we approve those articles of agreement. However, before I could vote I would want to have an explanation from the Minister of Agriculture with respect to article XIV, which deals with supervision of other organizations. It says:
The conference may approve arrangements placing other public international organizations dealing with questions relating to food and agriculture under the general authority of the organization on such terms as may be agreed with the competent authorities of the organization concerned.
Would this in any way interfere with empire trade agreements or with the British preference? I am convinced that in Canada we have made remarkable progress as a result of the British preference and empire trade agreements, and I should like to feel that we are secure in that regard.


Hon. J. G. GARDINER (Minister of Agriculture) :: Before answering the question asked might I be permitted to read to the committee the suggested amendments, some of which were agreed to last night, and others of which were drafted following a meeting last night with some who had raised the objections to the form of the bill as.it then stood.
I am sorry that the bill as now printed is not in the hands of every hon. member, although I had understood it would be here at three o'clock. However, it is not here because in the rush between the time we adjourned last night and this morning some things were put into the bill which were not intended to be
there. That is, some of the motions, rather than sections of the bill, were reprinted, with the result that we had to have it printed over again. The reprinted copies will be available in a short time.
I would refer to section 2 of the bill, which was under discussion last night. The new subsection I is as follows:
(1)	The constitution of the food and agriculture organization is hereby approved.
I think that is the amendment to which reference has just been made.
Then, subsection 2 is amended to read:
(2)	The governor in council may make such appointments, establish such offices, make such orders in council and do such things as appear to him to be necessary for carrying out the provisions of the constitution set out in the schedule to this act.
That is word for word with the first part of subsection 1 as it appears in the bill as first printed. In the new subsection, however, the remainder of the section is left out. The effect is that the new section takes in all those words down to the word "act" in line 24 of the old bill. Then the remainder of the subsection is struck out as was agreed last night.
Subsection 2 in the bill as we had it yesterday will remain the same as it appears in the copy now before us, with the exception that the word "one" in the second line of the subsection becomes the word "two." The subsection would now read:
All expenditures incurred in carrying out the provisions of subsection two of this section shall be defrayed out of moneys provided by parliament.
I have not yet had an opportunity to ask the Minister of Justice, and also to confer with those who have made this suggestion, as to whether I should not include the words "one" and "two." It would then read:
All expenditures incurred in carrying out the provisions of subsections one and two of this section shall be defrayed out of moneys provided by parliament.
In my view both words should be included. I may be wrong, and I am asking for information on the point.
I shall discuss other points when we reach later sections.
Replying to the question asked by the hon. member for Grey North, may I point out that article XIV reads:
The conference may approve arrangements placing other public international organizations dealing with questions relating to food and agriculture under the general authority of the organization on such terms as may be agreed with the competent authorities of the organization concerned.
I am just giving my own opinion on the matter, but I would think that any decision
97S

United Nations Food Agreement
that is made would have no influence whatsoever upon or relate to any decision that might be made in connection with such matters as preferences. This is simply an arrangement whereby this organization can work in cooperation with other organizations, all of which come under the general council, as I understand it, as set up at San Francisco.


Wilfrid Garfield Case: The minister says "as I understand it," but is there any absolute authority for his view? We are going to pass something which will delegate to them the power to do as they see fit, but subject to certain limitations.


James Garfield Gardiner: I read it very carefully and I did not see anything in the article which would give any such authority over this organization.


Mr. FLEMING:: In view of the fact that the amendments agreed to last night propose the addition of a further subsection., I suggest that the minister read the subsection so that the committee may have the complete proposed section before it.


James Garfield Gardiner: Subsection 2 of the old section becomes subsection 3, and then there will be a subsection 4, which reads:
Any order in council made under this act shall be forthwith published in the Canada Gazette and laid before parliament as soon as may be after it is made.


Mr. LOW:: I think this is just as good a place as any to follow up what I said yesterday I might do, namely, ask for answers to certain questions. It is well known to hon. members that the delegation which went from this parliament to San Francisco did not include a member of this group. That being so we are somewhat in the dark as to the whole mechanism of the specialized agencies and so on that were discussed at the San Francisco conference.
I indicated yesterday that I was in sympathy with the two objectives that are. set out in this measure, first, to see to it that Canada's house is set in order as a nation, and, second, to put ourselves in such a position as to be of the greatest assistance in the furnishing of food or whatever we can produce in this country to help the war ravaged and worthy nations to rehabilitate themselves and to raise the standard of living of their peoples. I am in sympathy with those two objectives. I want it known definitely that we are not opposed to helping as far as we can these other nations, to reaching out the hand of brotherhood to them; but inasmuch as the Social Credit movement was not represented at the conference I am anxious to settle in my own mind the relationship of this measure

to other international measures which will be before this house and which obviously were discussed at San Francisco.
I did ask certain questions, but in the light of information that has been brought out before the committee since those questions were asked I have reworded some of them and have perhaps deleted others. I am quite sure the minister will not mind answering these questions to-day so far as he is able to do so. I am sincere and earnest in trying to get this information and I do not mean to embarrass him or anyone else.
I think it is vital that the people of this country should know what Canada can do if she becomes a part of this permanent world food and agriculture organization, first, about setting her own house in order that she could not do without becoming a member. I should like to have that question answered, because I am not quite clear that she could do anything more with membership in this organization than she could do without it.


James Garfield Gardiner: I think it is agreed by everyone that thirty nations working in cooperation can do more, for themselves individually, for the whole group of thirty nations and for the world in general, than any one nation can do working by itself. All this bill really does is to make it possible for thirty nations at the present time, and possibly in the end forty-four or forty-five nations, to meet together from time to time-it is presumed they will meet at least once a year-to discuss problems that may arise and endeavour to help one another to work out some solution for problems that relate to food. I do not think any one nation, and particularly Canada with 12,000,000 people only, in a world of nations like China with 450,000,000 people, can do as much by itself as it could working along with thirty other nations.


Solon Earl Low: I do not want to debate the question at this time, except to say that we have a very fine example to the south of us which could be placed before the committee. Hon. members should think about it. There we have a nation of forty-eight states known as the United States of America. Each state is capable of a certain production; they have a great variety of productions, they have tremendous possibilities. They have no trade barriers; they have no restrictions whatever as to the passage of goods from one to the other. They have no tariffs; they have no exchange problems. They are united in purpose, and yet I would remind the minister that those free forty-eight united states, with all their vast possibilities, operating under the present financial system, in close cooperation

United Nations Food Agreement
and collaboration, have failed to achieve a high standard of living for all their peoples. There is no other nation in the world so nearly self-sustaining as those forty-eight states of the United States of America. I fail to see how a united states of the world will assure any greater success in obtaining a higher standard of living for the various peoples of the world than has been achieved by the United States of America, for the people of the various states of that nation, so long as we continue to operate under our present vicious financial set-up.


Mr. LESAGE:: It is clear that they need social credit prophets in the United States.
Mr. LOW. The young man is beginning to understand a little. My second question is this:	If Canada does become part of the
permanent world food and agriculture organization, what can she do about assisting other nations to raise their standard of living that she could not do without becoming a member?


James Garfield Gardiner: The answer is not very different from the answer to the first question. She can do far more working in cooperation with them to help other nations than she can by simply operating from Ottawa as a government in order to look after her own interests. These people will meet together, they will discuss these matters cooperatively and then they will make recommendations to us. We will consider those recommendations and act upon them if we see fit, or otherwise. I think we can accomplish more, both for ourselves and for other nations, by acting cooperatively than we can by acting individually, for the same reason that forty-eight states acting cooperatively under the one government can perhaps accomplish more for that great mass of people than they could if they were acting as forty-eight different states.


Solon Earl Low: The Falk Foundation report
states that they expect by July, 1946, to have 20,000,000 unemployed in those forty-eight
states.


Humphrey Mitchell: Who said it?


Solon Earl Low: The Falk Foundation report. I go to the next point. I should like to ask the question I asked yesterday because it is important to me, and I believe to the people, that we should know. Is this measure before us designed to set up one of the various specialized agencies established by intergovernmental agreement and having wide international responsibility as mentioned in article 57 of chapter 9 of the united nations charter? I have quoted almost the exact wording of article 57.


James Garfield Gardiner: Has the hon. member got -the article there? Will he read it?


Solon Earl Low: I will send and get it, but I have quoted exactly from it. It says: the various specialized agencies established by inter-governmental agreement and having wide international responsibility as mentioned in article 57 of chapter 9 of the united nations charter.
While I am waiting for the text of the article I should like to refer to a statement that was made by the hon. member for Rosetown-Biggar last night as recorded at page 969 of Hansard. This is what he said, following a question asked, I think, by the hon. member for Acadia:
What I was wondering was this. I take it that the general international organization is the united nations international organization which was established at San Francisco. Under that charter we have set up the social and economic council, and that social and economic council provides that certain specialized bodies shall be set up, of which it is anticipated this will be one.
That seemed to throw some light on the matter, and because of that statement and the further statement made by the Minister for Justice as recorded on the same page at the bottom of column 1 and the top of column 2, I asked my question. This is what the Minister of Justice said:
... it would appear to me that this organization is being set up now in accordance with the terms of this constitution-
Referring to the constitution in the schedule. It goes on:
-and the united nations charter has not yet come into operation. When it does come into operation it will be dealing with the food and agriculture organization as an entity existing under its own constitution, and then some modifications may have to be made in order to adopt the food and agriculture organization as the specialized agency provided for under the united nations charter.
Those two quotations, one from the member for Rosetown-Biggar and the other from the Minister of Justice, seem to indicate that this is one of the specialized agencies referred to in article 57 of the united nations charter. Would the minister say at this time whether that is so?


James Garfield Gardiner: I think perhaps the Minister of Justice or the hon. member for Rosetown-Biggar had better answer that.


Major James William Coldwell: It is anticipated, as I said last night, that a number of specialized agencies will be set up. When we were at San Francisco there were several specialized agencies already in existence and recognized by governments. This was one. Another was the international labour organization;

United Nations Food Agreement
another the secretariat of the league of nations on economics and finance. It does not necessarily follow that any of these organizations will be the specialized agency to be brought into relationship with social and economic council. That is a matter for future agreement. But it is anticipated that those inter-governmental agencies that are in existence and have performed a useful function, such as the ones I have mentioned, may become the specialized agencies under the charter. We are not dealing here with the charter of the united nations, but, as the Minister of Justice said last night, with an organization that has its own constitution and is self-governing in every respect, which may or may not come under the social and economic council as the specialized agency. It seems to me that it would be better to leave the united nations charter out of the discussion until we come to deal with it on the resolution now on the order paper.
Mr. ST. LAURENT: So that the hon. member may have no misgivings of there being any possibility of divergence of view between the hon. member for Rosetown-Biggar and myself, in view of the fact that we were both at San Francisco, I wish to add that although it was not expressly stated in the charter, all those who discussed with me the terms of article 57 anticipated that this organization would likely become one of the specialized organizations referred to, and article 57 was, by those who talked to me about it, accepted as being something which would enable that to be done if agreement were reached afterwards.


Major James William Coldwell: That is right.


James Garfield Gardiner: I think the answer to the question is to be found in articles XII and XIII of the schedule to the bill. Article XII reads:
1.	In order to provide for close cooperation between the organization and other public international organizations with related responsibilities, the conference may, subject to the provisions of Article XIII, enter into agreements with the competent authorities of such organizations defining the distribution of responsibilities and methods of cooperation.
They may do that. Then the second paragraph reads:
2.	The director-general may, subject to any decisions of the conference, enter into agreements -with other public international organizations for the maintenance of common services, for common arrangements in regard to recruitment, training, conditions of service, and other related matters, and for interchanges of staff. That is, they may cooperate in administration. Article XIII reads:
1. The organization shall, in accordance with the procedure provided for in the following

paragraph, constitute a part of any general international organization to which may be entrusted the coordination of the activities of international organizations with specialized responsibilities.
2. Arrangements for defining the relations between the organization and any such general organization shall be subject to the approval of the conference. Notwithstanding the provisions of Article XX.
That does make provision for this organization working in cooperation with any other world organization in order to bring about the objective set out in these articles.


Solon Earl Low: Yes, all of which, it seems to me, indicates that it was unfortunate that someone from the Social Credit group was not down there to make sure whether this food and agricultural commission was or was not designed to be a part of the united nations charter.


Major James William Coldwell: You should have joined us. But there was trouble trying to get the I.L.O. organization recognized.


Solon Earl Low: I do not doubt that there was a lot of trouble; I can understand that. May I set my hon. friends' minds at rest by saying that I am not attempting here to discuss the united nations charter. I quite realize that that will come up in due course, and I realize the impropriety of bringing it up here, except that I am trying to establish whether this is one of the specialized agencies mentioned and closely related to the united nations charter. Of course the united nations charter has not yet been adopted so far as Canada is concerned. I have now before me article 57 of chapter 9 of the united nations charter, which reads:
The various specialized agencies established by intergovernmental agreement and having wide international responsibilities, as defined in their basic instruments, in economic, social, cultural, educational, health, and related fields shall be brought into relationship with the united nations in accordance with the provisions of article 63.
That is the reason I asked the question.
Growing out of that is another question which I think it is wise for us to consider and upon which we ought to have some information. This question arose in my mind as a result of something said by the hon. member for Rosetown-Biggar (Mr. Coldwell) last evening as reported in Hansard, page 969, and immediately following the quotation which I placed on Hansard a moment ago. He said this:
At San Francisco, Argentina was admitted as a signatory to the charter. I must say I did not approve that, and I am sorry Canada cast her vote in favour of it, but I am not going into that matter now.

United, Nations Food Agreement
In my thinking that indicates that there may be some penalty-or perhaps I should modify that and say, some disadvantage- which might accrue to a nation if it fails to become a member of this permanent world commission. What I wish to ask is, what penalty or disadvantage would accrue to Canada in her efforts, first, to raise the standard of living of her own people, and second, to extend help towards needy countries, if she should not become a member?
Mr. GARDINER. Mr. Chairman, I have not been able to read into the articles of this constitution any suggestion that anyone is going to inflict penalties on anybody. That is not the intention of this kind of arrangement. It is simply that a group of nations are asked to come together and try by discussion to find some way in which they can help one another and help the world. I do not see that any harm can come out of that. I do not think any country is going to be punished if it does not attend, and nobody is likely to be penalized if he does attend. Simply an effort is being made on the part of a group of nations to help one another and help themselves while they help one another. I do not think there is any penalty which Canada would incur by being out, other than -we might not get all the benefits of cooperation if we were to stay out, and I imagine that any other nation which stayed out would suffer from the same absence of benefits.


Major James William Coldwell: May I say that the
hon. member for Peace River is reading something into the remarks I made last night regarding Argentina which should not be read into them. I felt sorry that Canada cast her vote in favour of the admission of Argentina, because of the situation in that country. It was a fascist power under a dictatorship, with all the leading democrats in goal, including outstanding professors and newspaper men, with a police controlled press, and all the rest of it and I thought it was rather a pity that Canada recognized Argentina as among the peace-loving nations. But I realized that there -was probably another side to 'the argument; and while I feel very strongly about it still, there are others who feel just as strongly that there would be considerable advantage to the world organization and to the hemisphere in bringing Argentina in. That, I believe, was the point of view of the United States State Department, and I think it was the view which prevailed in our
own delegation. On balance I feel very strongly that it should not have been done-but not in the sense in which the hon. gentleman raises the question on this particular bill.


Solon Earl Low: Just in that connection I wish
it to be made perfectly clear that my point would have been the same had the nation in question been Bulgaria or any other state. The point was simply that there seemed to be some indication in that action that there might be a disadvantage or penalty or something of the kind, active or passive, which would grow out of not becoming a member. I did not want to impute any motives to the hon. member for Rosetown-Biggar.


Major James William Coldwell: I do not wish to have
something read into my words which should not be read into them. I think the Minister of Agriculture has given the answer-that there is advantage in cooperation.


Solon Earl Low: Another question grows out of
this. I do not wish to cut anybody else out of the discussion, but I do want to know these things. Has the minister assured himself that if Canada should fail to satisfy the permanent commission that she has done her best to put into effect any of the commission's recommendations, some other agency under the united nations charter will not be called upon to invoke sanctions of one kind or another which will or might contribute to the ruination of our whole economy, and with it, the solidarity of the British empire?


James Garfield Gardiner: I am not going to try
to predict what will be included in all the articles which may be drawn up in an attempt to bring about a friendly relationship among the nations of the world, but I feel confident that no group of men meeting for the purpose of trying to bring about better relationships among the world's peoples would inflict upon the world ideas of that kind. I do not anticipate any such thing, and it is certainly not to be found in this document. Nothing in this constitution would make it possible for anyone to dictate to anyone else, and it is this document that we are dealing with at the moment.


Solon Earl Low: That may be correct, but we
must not overlook the point that this may become an agency under the united nations charter, and if it does become an agency, we have to consider the possibilities which should arise in that event. I will not labour the point at this stage. I have one other question. Has the minister assured himself that this measure is not a step towards a world coupon or rationing system? I asked the question yesterday, and with the answer to it I will let my case rest.

United Nations Food Agreement


James Garfield Gardiner: Well, I am convinced, myself, that it is not.


Mr. DIEFENBAKER:: There is one question to which I did not get an answer yesterday, no doubt through inadvertence on the part of the minister. It had to do with the Argentine, which was mentioned here again this afternoon, and which is not a member of the signatory countries or among those which were represented when the constitution was drawn. Yesterday the minister pointed out the position in which Argentina stands by reason of her tremendous export potentialities-a position of danger as far as concerns any international organization designed to adopt international policies with respect to agricultural commodity arrangements, which is referred to as one of the functions of the organization.
I asked whether the Argentine had made any application, and the minister's answer was in the negative. One question I asked to which he has not given an answer is this: if the Argentine-necessary as it is to the success of any hemispheric or world organization respecting agricultural production-makes an application for membership in this organization, what will Canada's vote be? What consideration is being given to the attitude which Canada's delegation to the Quebec conference should take? As the hon. member for Rosetown-Biggar points out, there was some division of opinion, and the Prime Minister, casting a vote on behalf of Canada, did so in favour of the admission of Argentina. I for one agreed with the stand taken by the Prime Minister, for two reasons. One was the necessity of mobilizing the support of all the South American and Central American republics at the united nations conference, thus assuring in return their support to Soviet Russia having three representatives. Second, *the United States had agreed at Chapultepec, Mexico City, to the admission of Argentina provided that it did certain things and declared war on Germany. Besides, Canada was in this position: had she voted against the admission of Argentina she would have been the only nation in North or South America that had done so, and instead of being the interpreter as between Great Britain and the United States, both of whom were supporting Argentina's application for admission, she would have found herself not the instrument joining these two nations together but actually the very reverse.
While I feel very strongly, as does the hon. member for Rosetown-Biggar, that Argentina's whole attitude throughout the period of the war was one destructive of the united nations, nevertheless, now that this nation is a mem-

ber of the united nations, everything should be done to support her application, provided that she makes an application to become a member under this constitution.
As it requires a two-thirds majority for any nation who was not a member at the time of the Hot Springs conference to become a member of this organization, will the minister tell us whether or not the Canadian delegation will in fact support Argentina's application in that regard?


James Garfield Gardiner: Mr. Chairman, I think the hon. member for Lake Centre has given the best reasons that I can think of why delegates should not go to the conference instructed. The reasons which he gave-and I am not stating that they are the reasons which were in the minds of the delegates who were there; I am not in a position to know- for the vote that was cast at San Francisco by Canada would necessitate the delegates being in possession of all the facts, as they were at that time and at that place.
I believe that any delegate going to this conference must be just as free to consider all the facts as they then are as were the other delegates. I would hope that the thirty nations, which have indicated their intention of meeting at a certain place to discuss our different problems, are not going to be tied up before they hear those problems discussed from one another's point of view, and that the decision will be reached only after they are discussed and when all the facts are known.
Since the hon. member for Lake Centre is still satisfied with the vote cast at San Francisco after all the facts were heard, I am sure that he will be just as well satisfied with any vote that will be cast by representatives of Canada at any conference that is held under this set of articles. I am not stating here or anywhere else on behalf either of myself as Minister of Agriculture or of the government, and I do not think any other member of the government would state, that this goverment is going to commit its delegates, in advance of the application being made, as to how the delegates should vote.


John George Diefenbaker: Does the minister admit that unless Argentina is a member of this organization it is going to be very difficult, if not impossible, to establish international relationships in regard to agricultural production and the like that will be effective all over the world?


James Garfield Gardiner: I would say this; the more nations that are great producers of agricultural products, as Argentina is, that come into this conference the better it will be for all of us.

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John George Diefenbaker: And the greater
the prospects for success.


James Garfield Gardiner: The more that come in, the easier it will be to get the arrangements that we are all looking forward to in this conference. As to what the proper time is for nations to come in, that will pretty much be decided by those who make their applications; and the members of the conference will have to consider the applications on their merits as they are made. If two-thirds of them vote to allow them to enter, they will enter.


Major James William Coldwell: Conditions too have
changed to some extent, because lately the dictator Peron has been overthrown, and the people who were imprisoned because of their progressive and democratic views have been largely liberated. We may find an entirely different Argentina government from the gov-erment that was in power at the time of the San Francisco conference.


Mr. GRAYDON:: There is an election in
April.


Mr. REID:: There is one more question I should like to put to the Minister of Agriculture, but before doing so may I say that while I believe every hon. member agrees with the object of this agreement and the setting up of this organization, I for one, Mr. Chairman, am not so sanguine of its outcome. I ask any hon. member to read over the international agreements, and the story of international agreements, of the past few years, and then ask himself what has been accomplished to date that is really worth while.


Mr. HERRIDGE:: We won the war by
international agreements.


Thomas Reid: That does not enter into the picture. It is a question that can be debated at another time. Be that as it may, I repeat we have only to read the history of international agreements and what has taken place-I leave out the war for the moment-and ask ourselves what has really been accomplished.
I notice that when we come to fish and forest products we find that they are placed under agriculture. There is no more important food in the world to-day than fishery products. There is no more controversial subject among nations to-day than fishery products; because, as many hon. members realize, prior to the war with Germany and Japan the Japanese government had fishing boats along the Pacific which were a source of irritation. The Japanese, of all people, were not preservers of food products. There are only two countries in the world that have set out to preserve and conserve and build up the fisheries, namely, the United States and Canada. Personally I
should like to see fisheries predominantly mentioned in the constitution .of this organization, because if they are to deal with the conservation of natural resources, especially the natural resources of the sea outside of the three-mile limit, they are going to run into a controversial question among the various nations that are gathered together when they begin to talk of fishing and of fishing rights outside the three-mile limit. I intend to deal with that later.
I rose particularly to ask this question. If my memory serves me rightly, there were many signatories to the league of nations, but very few nations paid their contributions. If nations that are signatories to this agrement do not pay, who is to be responsible for the expenses? That is a practical question, and I should like an answer.


James Garfield Gardiner: I think the only answer that can be given is the one that is found in the articles which are on the desk of every hon. member. Section XVIII reads as follows:
1.	Subject to the provisions of article XXV, the director general shall submit to the conference an annual budget covering the anticipated expenses of the organization. Upon approval of a budget the total amount approved shall be allocated among the member nations in proportions determined, from time to time, by the conference. Each member nation undertakes, subject to the requirements of its constitutional procedure, to contribute to the organization promptly its share of the expenses so determined.
2.	Each member nation shall, upon its acceptance of this constitution, pay as its first contribution its proportion of the annual budget for the current financial year.
So for one year it will be taken care of: these thirty nations who have indicated their acceptance must send their money along with their membership.
3.	The financial year of the organization shall be July 1 to June 30 unless the conference should otherwise determine.
As I said a moment ago, as far as I know no real penalties can be imposed in an organization of this kind, but it is assumed that these nations will carry out their obligation, which is that having made the first payment they will continue to make the four additional payments. Then if at the end of that time they are not satisfied with the way the money has been expended or with the activities of the organization generally, any nation can give twelve months' notice that it is withdrawing, the definite understanding being, as stated here, that it will pay its fees for twelve months. I quite agree that if some of the greater nations were to say, "Well, we are out of this thing," they could blow it to pieces in the interval. But I do not believe anyone anticipates this happening, and I

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would expect that the terms here laid down will be carried out. We must remember that forty-four nations met and set up this interim commission. The interim commission drew up these articles of constitution, and those who have come into the organization have agreed to this constitution. They have all said they are prepared to make these payments, and, barring unforeseen accidents such as none of us expect at the moment, I believe the payments will be made.


Howard Charles Green: This food and agriculture organization of the united nations is to have certain jurisdiction over fisheries and forestry, and I think it would be very helpful if the Minister of Fisheries would make a statement to the committee outlining generally the effect of the organization on Canadian fisheries, and if the Minister of Mines and Resources would do the same in respect to forestry.
Dealing first with fisheries, questions such as this come to mind. We have certain conventions between Canada and other nations; for example, there is the whaling convention, which I think is a multilateral agreement, and we have conventions between Canada and the United States, as the hon. member for New Wetsminster ha3 said. For instance, we have a convention under which was set up the international Pacific salmon fisheries commission, of which the hon. member for New Westminster is a distinguished and very useful member. I believe the Minister of Fisheries should tell us just what will be the effect of this new organization as far as the international Pacific salmon fisheries commission is concerned. Which organization is to be preeminent in the fisheries field? These are questions that come to mind, and I think they should be carefully considered by hon. members of the committee.
In the first report to the governments of the united nations made by the interim commission on food and agriculture, the present body which will pass out of exitsence when the new food and agriculture organization is set up, we find on page 16 certain statements with regard to fisheries. For instance it says that the plan is to encourage systematic exploration for virgin marine resources, and to evaluate the possibilities for their development. Does this mean that this international organization can send men into our coastal waters or into waters beyond the three-mile limit, to which the hon. member for New Westminster referred, in order to make these explorations? That, too, I think is an important question to the Canadian people. Reference is also made to the new organization performing certain functions in relation 
to credit. What is the idea? To whom is this credit to be given? Is it to be given to the fisheries industry in certain nations? Would credit be available to the fisheries industry of Canada, or what is the plan?
Then with regard to forestry, it does seem to me that the delegates who drew up this convention were a little over-anxious to obtain powers. They have included forestry in agriculture, though someone had to stretch his or her imagination a bit in order to do so. From what the Minister of Agriculture said last evening when I questioned him on this subject, I am quite sure he feels that they went rather far. The problems of forestry, speaking of forestry in the accepted sense; the problems of getting out lumber and the problems of the associated industries, are so different from those of agriculture that there is really no connection whatever between them. Yet this international organization is given very wide powers over forestry; and the unfortunate part of it is that this has not been done directly by calling this a food, agriculture and forestry organization. The only place in which we find forestry mentioned in the whole convention is in article XViI, which says that the term "agriculture" includes forestry and primary forest products. I am quite sure the provincial governments of Canada and the people engaged in the forest industries do not realize that such extensive powers are being given to this international organization. Last evening the minister said the provinces had not been consulted about that control, and I do suggest that the Canadian delegates should try to have an amendment put through deleting the words "forestry and primary forest products." Unfortunately we cannot change it here. As I understand it we have to take the whole convention or none at all; we cannot qualify our acceptance of it, and I would not be in favour of attempting to do so. But I do suggest that the ministry give consideration to having the Canadian delegate or delegates propose that an amendment be put through removing jurisdiction over forestry.
I believe it would :be helpful if the committee could be given a statement now by the Minister of Fisheries and the Minister of Mines and Resources, who are the ministers concerned.


James Garfield Gardiner: I have just suggested to the ministers mentioned that if they care to make statements it will be quite all right, but I should like to say a word in regard to the general statements that have been made. I think some hon. members are reading far too much into this constitution. No powers are given to anyone to provide credits. No powers are given to anyone to do any of these

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particular things. The powers given are to explore the possibilities in different countries and under different forms, then to make recommendations to the governments of the different countries as to what they think would be a good way to provide credits. They do not undertake themselves to provide any credits. They do not undertake to determine finally anything that is to be done in connection with any of these matters. They simply say, "We are going to study them all and, after a full study, we are going to make certain recommendations to the different members as to how we think they can solve some of their problems." Then it is up to the nation itself to find ways and means of putting such recommendations into effect, or to decide not to adopt them at all. Having said that, I think the ministers will be prepared to say a word.


Howard Charles Green: I think the minister is not entirely correct. Let us, for example, take paragraph 54 of the first report to which I referred. It states:
It should also perform functions in relation to credit which will be needed for the development, expansion and rehabilitation of many fisheries enterprises, similar to the functions suggested elsewhere in this report in connection with agriculture.
Then, in the convention itself we find this in article I, paragraph 2:
The organization shall promote and, where appropriate, shall recommend-
The minister will see there is both the power to promote and the power to recommend. Then at a later point in the paragraph we find this:
(c)	The conservation of natural resources and the adoption of improved methods of agriculture production.
This, of course, also means fisheries and forestry production, under the defining article. Then it refers to-
(d)	The improvement of the processing, marketing and distribution of food and agricultural products;-
Which of course means fisheries and forestry products.
Then it also provides in paragraph 3 of article I:
3.	It shall also be the function of the organization:
(a)	To furnish such technical assistance as governments may request;
(b)	To organize, in cooperation with the governments concerned such missions as may be needed to assist them to fulfil the obligations arising from their acceptance of the recommendations of the united nations conference on food and agriculture;
And then:
(c)	Generally to take all necessary and appropriate action to implement the purposes of the organization as set forth in the preamble.
So that I think it was the intention of those who drew up the constitution that this international body would go a good deal farther than merely making recommendations, as the minister has suggested. At this time I am not arguing whether that is a good or a bad thing; but it is the fact. In any event the constitution can be read in that way.


Mr. GLEN:: In answer to the hon. member for Vancouver South, as to why forestry was brought into the constitution, may I say that some of the reasons are given as follows:
In the attainment of freedom from want, shelter is the complement of food. Wood is the largest single item in the provision of shelter.
Forestry is a form of land use complementary to agriculture. Forests regulate stream flow and thus stabilize water tables and prevent erosion. They also have a modifying effect on climatic extremes, which is favourable to agriculture.
In many sections of the world the farm woodlot makes an important contribution to farm income, besides providing for the farmers' fuel requirements.
In connection with the world situation today, investigations being made in Germany disclose that apparently in that country processes have been developed in connection with the making of sugar from wood. These are some of the considerations which were in the minds of those who framed the convention when they included forestry.
I believe those reasons are given very fully and completely, and they have already been set out by the Minister of Agriculture. I would refer the committee particularly to page 16 of the first report to the governments of the united nations by the interim commission on food and agriculture. We will find there the reason why forestry was included in agriculture. In paragraph 56 we find this:
56.	Forests occupy approximately 22 per cent of the land surface of the earth. They play so important a part in the conservation and building up of soil and water resources that it is impossible to plan conservation measures on any extensive scale without including forest management-and frequently afforestation-in the plans. In most countries forestry and farming or grazing constitute possible alternative uses of much of the land, and a significant part of the forest land in many countries is owned or operated by farmers. Indeed, forests are perennial crops, natural or man-made, and their products compete with or supplement other farm products for certain important uses. Farmers are among the larger users of forest products, especially for fuel, buildings, and equipment.


Howard Charles Green: We all use forest products
for fuel, buildings and equipment.

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James Allison Glen: Yes, that is so. The paragraph continues:
For these reasons many countries include forestry as a part of agriculture in their governmental organization.
Paragraphs 57 and 58 read as follows:
57.	World forest supplies have been altered by the war. New supply problems have been created and new uses developed. In some countries progress in improved methods of forest management and utilization is being made at a faster rate than ever before. Thus there are now especially urgent reasons to consider forestry in "world terms and to take concerted action to bring about more efficient growing, processing, and distribution of forest products, the balancing of production and distribution with needs on a world scale, and the prevention of disastrous overuse of forest resources in some countries while those of other countries go to waste for lack of effective demand, to the end that the world's forest resources may make their full contribution to the needs and the well-being of the people of every nation.
58.	As in the case of food and other agricultural products discussed in this Report, these objectives would be accomplished through international cooperation in bringing all branches of science to bear upon the biological, technological, economic, social, and other problems involved in the production, distribution, and use of primary forest products; in establishing a factual basis upon which nations, individually and in concert, could build policies and programmes; in helping to work out such programmes; and in promoting widespread education and public understanding of forestry problems. The organization's work in forestry would thus closely parallel that in other fields.
The hon. member for Vancouver South is concerned about the effect that may have upon Canada. I refer him to article IV of the constitution, and the functions set out therein. Paragraphs 3 and 4 are of importance in this connection, and particularly paragraph 4 which states that:
The conference shall make rules laying down the procedure to be followed to secure:
fa) proper consultation with governments and adequate technical preparation prior to [DOT]consideration by the conference of proposed recommendations and conventions;
These are the words to which my hon. friend referred when he was speaking a few moments ago. Then paragraph (b) of article IV continues:
Proper consultation with governments in regard to relations between the organization and national institutions or private persons.
And then follow paragraphs 5 and 6, which are most important:
5.	The conference may make recommendations to any public international organization regarding any matter pertaining to the purpose of the organization.
6.	The conference may by a two-thirds majority of the votes cast agree to discharge any other functions consistent with the purposes of the organization which may be assigned to it by governments or provided for by any arrangement between the organization and any [DOT]other public international organization.

If I read this convention, correctly, any conclusions that are based upon these recommendations are not binding upon any country unless that country through its recognized form of government shall accede to them. I fail to see what danger there could be in the recommendations, and in their including forestry, if they have to be ratified and approved by the government of Canada. It seems to me that article IV meets the objection raised by the hon. member.


Howard Charles Green: What about the provincial governments? They are primarily concerned.


James Allison Glen: My personal view would be that the dominion government certainly would not come to any conclusions in connection with including forestry within the definition of agriculture without consultation with the provinces. In fact we are doing that to-day. All matters concerned with natural resources of the dominion are considered after consultation and cooperation with the provinces.


Howard Charles Green: That is one complaint. It is not being done with regard to forestry. The dominion government has not consulted any provincial governments about the fact that the convention covers forestry. The Minister of Agriculture said that last night.


James Garfield Gardiner: The constitution of the dominion settles that point.


James Allison Glen: I am quite sure that any recommendation that will be made at this conference will have to be subject to the jurisdiction of the dominion, and any action would be taken only after consultation with the provinces. Otherwise we could not get unanimity of opinion; there would be no unanimous consent with regard to any of the proposals affecting all the provinces. These proposals will affect not only individual provinces, but all of them. I do not think the hon. member need be alarmed that the rights and privileges of the parliament of Canada are likely to be infringed upon by commitments made at the international organization which would be binding on Canada without any reference to the jurisdiction and powers of parliament.


Howard Charles Green: I may be wrong, but I venture the guess that the Department of Mines and Resources, which is the department responsible for forestry in so far as the dominion government is concerned, has had very little to do with this convention or with the negotiations that led up to the submission of this convention. Forestry is one of the major industries of Canada, and surely steps should be taken to see that some of the Canadian delegates understand the forestry

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industry of this country and that proper provisions are made to protect it. If some international direction or assistance is to be given to forestry, perhaps it would be wiser to set up another international organization which would have that as its main job. I am afraid the two objectives cannot be met by the one international organization. I would ask the Minister of Mines and Resources to give consideration to these two suggestions: first, that Canada should have delegates or representatives who understand forestry, and, second, that a separate international organization be set up to deal with forestry.


James Garfield Gardiner: The gentleman who has been nominated to represent us, and whose nomination will go forward immediately this legislation is passed, is Mr. D. Roy Cameron, dominion forester. He is one of the delegates to the conference who has been appointed by the minister, and he will deal with forestry as related to the production of food.


Howard Charles Green: It does not say that.


James Garfield Gardiner: That is really what it is, as is indicated in the document quoted from, and it is being discussed from that point of view. I agree with the minister when he says that no matter what is discussed, the recommendations will be referred to the national government of Canada. Then if the matter involves provincial jurisdiction, it would require to be referred by the government of Canada to the provinces. It could not be done any other way under our jurisdiction. The terms used in the articles are "legally," "constitutionally" and so on. The matters will be dealt with in whatever is the proper manner.


Mr. BRIDGES:: Mr. Chairman, little did I think when I left Germany on the first day of May last that I would be called upon within a few months to stand up in the House of Commons to answer questions regarding such an important bill as this. Surely I can say, to use the words of another, that the whirligig of political fortune has hurled me into high office in a very short time.
The hon. member for Vancouver South was kind enough to advise me this morning that he was going to ask some questions along the lines of those he has already asked. I appreciate his courtesy. So far as the bill is concerned, the preamble to the constitution'-I do not intend to read it all-sets out four purposes, as follows:
(1)	Raising levels of nutrition and standards of living of the peoples under their respective jurisdictions,
(2)	securing improvements in the efficiency of the production and distribution of all food and agricultural products,
(3)	bettering the conditions of rural populations, and
(4)	thus contributing toward an expanding world economy.
It can be seen that these functions are phrased in very general language, are idealistic in their nature, and there can be no doubt that everyone in the world, not alone in Canada, would welcome their achievement.
So far as fisheries are concerned, it is realized that these broad idealistic conceptions must be reduced to something which can be practically applied to the bettering of the livelihood of fishermen, which is in turn tied up with the welfare of the people to whom they sell their goods.
It is felt that before such practical aims can be realized there must be a full and free interchange of thought and consideration on the part of any and all nations that will be affected. The food and agriculture organization furnishes a means of bringing together the experts in fisheries marketing and nutrition to consider the problem and to explore for the terms in which practical approaches may be recommended to their respective governments.
Under the interim commission, certain interchanges of ideas between the nations signatory to the final act of the Hot Springs conference have already taken place, and so far as fisheries go there have been certain recommendations made which will be considered at the Quebec conference.
It is realized that an approach to the fishery problem from the international point of view will have to be slow and that there will be many difficult and contentious problems to discuss. It is felt, however, there are certain of these in which there can be obtained measures of agreement; they are:
1.	The developing of comparable statistics by fish producing and consuming nations which must be the basis for any intelligent consideration of the position of any nation in its economy, and it is expected that one of the aims of the organization will be to form a clearing house of world statistics.
2.	It is also expected that they would act to collect, analyse, and disseminate world information relating to fisheries and fisheries products.
3.	It is expected that it would foster the improvement of education relating to the fisheries and the spread of knowledge of fisheries science and practice.
4.	It is also expected that it would play a very important part in bringing the fisheries nations of the world together with respect to
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the conservation of fisheries in international waters. A very large percentage of the thirty-seven billion pounds of fish that are yielded annually by the world come from international waters where every nation has a right to fish, and it is highly essential that nations come together in such a way as to see that the limited resources of the sea are not exhausted or wiped out. It is expected that from the deliberations which will occur under the food and agriculture organization certain recommendations will be made to governments concerning the desirability of their coming to an agreement, one with the other, with respect to conservation on the high seas. The existing agreements between nations-I think this is what my friend is most interested in- would, of course, continue to be effective, such agreements as are embodied in the various fisheries treaties between the United States and Canada, and which have meant so much benefit to our two peoples. It is the hope and the purpose of the food and agriculture organization to bring nations of the world together to consider whether an expansion of this method of approach to a common fisheries problem would be desirable and possible of recommendation to their respective governments.
I can go further and say that before we can arrive at a practical way of realizing the ideals and objectives as set forth in this bill there must be international discussion, and the purpose of this organization is to provide the means for that international discussion. I think we should all keep in mind that this organization-I think I am right in this; if not, the Minister of Justice can correct me- can only make recommendations to their respective governments for their consideration. This organization cannot bind their respective governments.
I do not know whether I have answered in their entirety the questions asked by the hon. member for Vancouver South, but I think I have dealt with what he has in mind in so far as existing international agreements are concerned. I think I am correct in saying, although I am not an authority on international law, that the present agreements will be paramount over any other agreements that may be made at a later date.


Howard Charles Green: Did the minister say that the present agreements would be paramount, or the new organization?


Hedley Francis Gregory Bridges: I would say that the
present agreements would be paramount.


Howard Charles Green: In other words, there is no
intention that the food and agriculture organization of the united nations should take over

the administration of the convention between Canada and the United States with regard to the international Pacific salmon fisheries convention?


Hedley Francis Gregory Bridges: That is my understanding.
Mr. ST. LAURENT:	If the hon. member
wishes me to express the understanding which has been that of the Department of Justice, it has been that this organization would have no mandatory powers at all. Its function would be, as the Minister of Fisheries has pointed out, to gather information and coordinate it and make recommendations, but it has no power at all to interfere with the sovereignty of any nation. Those recommendations, in order to be implemented, would have to be considered by the legislative body competent to deal with the subject matter of the recommendation. It might be parliament; it might be provincial legislatures. The existing agreements between this country and other countries with respect to fisheries will not be affected in any way until action is taken by the competent bodies to affect them. The food and agriculture organization would be competent only to make recommendations.


Howard Charles Green: I thank the ministers for
their statements. They have been very helpful. There is one other question: What about the future? Suppose Canada wants to make an agreement with the United States next year concerning some other aspect of the fisheries; would she be free to do so without having first to get the approval of this united nations organization?
Mr. ST. LAURENT: Our understanding is that she would be perfectly free to make any kind of agreement in that regard. It might be considered more courteous to the members of the food and agriculture organization to apprise them beforehand of what Canada's intentions were in that regard, but our understanding is that there would be nolegal requirement to do so.


Howard Charles Green: If we advised them through
courtesy, the result would be that a procedure would then be initiated that would have to be followed in all other cases, and the practical effect would be that every one of these agreements would have to go first to the united nations organization. Does the minister not agree that that would probably be the result?
Mr. ST. LAURENT:	No, I would not
fully agree with the suggestion of the hon. member. My understanding is that this organization is designed to furnish a forum where information can be pooled and from

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*which recommendations can be made. If it were performing the function that we all hope it will be competent to perform it would seem natural that in making any arrangements which were going to have a substantial effect upon the production of food supplies, the information would be available to the organization and an effort would be made to have that fit into the general plan for the attainment of the purposes set out in the charter.


Mr. FERGUSON:: There is one thing
that has struck me, as I am sure it must have most of the other new members. The subject matter of this bill an international matter, was discussed in 1943, and apparently a tremendous amount of time has been spent on it, and yet this government waits until after the war to call a dominion-provincial conference to discuss matters that vitally affect this country. To-day there is hardly a man or a woman in Canada who has not grave doubts as to the future for some years to come. That is true of the soldier, of the farmer, and of men in all lines of business. I think that if more attention were given to national affairs and the affairs of the provinces, this country would not be in the state in which it is to-day and we would not find the government taking over the Burns company or see the chaos now existing in the automobile industry at Windsor. As I said, this international matter has been under discussion since 1943, and even yet full preparations do not seem to have been made.


James Garfield Gardiner: While this matter was
discussed in 1943, the bill itself was not discussed in 1943. The first report of the interim commission is dated Washington, August 1, 1944.


Julian Harcourt Ferguson: But there was a body
called together before that.


James Garfield Gardiner: That body set up an
interim commission, and the interim commission made its first report on August 1, 1944. This government as such had nothing more to do with that than that we had a delegate as one of the forty-four nations represented. We did not call together the conference at Quebec. The interim commission made suggestions as to the holding of a conference, and we extended an invitation to them to hold the conference in Canada at Quebec. As a result of that invitation they decided to come to Canada and to Quebec. They might have gone to any other of the countries represented, but they are coming to Canada. That is not the action of this government but of the group
with its headquarters in Washington representing forty-four nations. The constitution which is here before us is not a product of ours at all, but a product of that organization set up by the forty-four nations. We are simply asked to accept it. I just wanted to make that clear in view of the hon. member's remarks.


Julian Harcourt Ferguson: It probably would have been better to extend an invitation to the provinces to meet with the dominion government to discuss national affairs.


[Stage Direction]
Section agreed to.
Section 3 agreed to.
Mr. JAQUES:: Before the bill passes I should like to ask a question arising out of a statement that was made in the British House of Commons by Mr. Robert Boothby, M.P. He said:
"Why do we repose such childlike faith in what it is now fashionable to call economic "experts"? They have seldom been right in the past. After the last war they put us back on a gold standard, at the pre-war parity of exchange. The results were catastrophic. We emerged from that war potentially a rich country. We had fine capital equipment, the best skilled workers in the world, a prosperous agriculture. It took the "experts" less than ten years to turn us into a country which, in terms of real wealth, was poor. Upon industrial output they imposed deliberate restrictions. They reduced wages, and with them the purchasing power of our people. They forced our skilled workers to migrate. They scrapped the factories, the machinery and the shipbuilding yards with which we might have achieved a greaer prosperity than we have ever known. They put 2,500,000 acres of cultivated land down to grass, and drove a quarter of a million agricultural workers from the countryside to swell the growing numbers of unemployed in the towns. They doubled the real burden of our national debt. By linking us rigidly to Wall Street they ensured that if Wall Street crashed we crashed too. And that is precisely what happened in 1929. In the circumstances, their credentials for tendering advice as to the monetary policy we ought to pursue after this war are, to say the least of it, doubtful.
Can the minister give the house any good reason to believe that these experts will be any better able to bring prosperity after this war than they did after the last?


James Garfield Gardiner: All I wish to say in that regard is this: I am sure that even if I were to give any guarantee it would not be taken very seriously. After all, I am only one minister in a government of twenty, and we are a country of only twelve million people in a world of many millions. I do not know that it would be taken very seriously if I were to say that our passing this bill is going to give prosperity to the whole world.

United Nations Food Agreement


Norman Jaques: No; that was not quite the point, Mr. Chairman. There is no doubt that, although they may not be the same lot of experts, they hold the same ideas as those held by the experts of 1929. The question I asked was, what reasons are there for believing that present-day experts can bring any better results than experts holding the same ideas were able to bring in 1929? Why should they be able to solve the problem, merely by making it bigger, by making it international instead of national, any better than they did in 1929? What is the purpose of it all?


James Garfield Gardiner: I think the only answer I can give to that is that all of us have changed our minds considerably since the end of the last war. I think even the experts have done that. Sometimes I am inclined to think that we on this 6ide of the house have been converted a little by our friends who sit in your comer.


Mr. BLACKMORE:: Let us hope so.


James Garfield Gardiner: Family allowances, for example, have in them an element of an idea which was advocated some years ago by the Social Crediters.


John Horne Blackmore: That is right.


James Garfield Gardiner: And we all change.
We do so by listening to experts talk, whether we agree with them or not-that is, provided that experts can get together and do some talking as is provided by this measure ; and I hope they may convert us to some more advanced points of view than some of us hold.


Mr. FOURNIER (Hull) moved:: That section 4 of the bill be deleted, and that the bill come into force after assent.


John George Diefenbaker: What is that
amendment?


James Garfield Gardiner: Section 4, which merely says that the bill is to come in by proclamation, is being dropped, in order that it may come into force immediately upon its having been given the royal assent.


Mr. BRACKEN:: Does the minister know what expenditures have been made already in connection with this food and agriculture organization?


James Garfield Gardiner: I think that all that has been expended is any necessary expenses, and I assume they are subject to this bill being passed. For example, we are making arrangements under subsection 2 of section 2 for offices and persons to go down as advisers to Quebec City. Naturally this had to be done in advance, and it has been arranged for, but it will be paid for under this bill.


John George Diefenbaker: Possibly the minister is now in a position to give the list of the advisers and officials who are going.


James Garfield Gardiner: I will give the list of those whom we intend to recommend immediately this legislation goes through. Would this committee like to have it read or have it tabled?


John Horne Blackmore: Have it read.


James Garfield Gardiner: I think probably I
should read it. This is the recommendation made to council for the passing of an order in council to provide for the appointments, and the active part of it is as follows:
1.	That the Honourable J. G. Gardiner, Minister of Agriculture, be the member of the conference for Canada and that Doctor G. S. H. Barton, deputy minister of agriculture, be appointed as his alternate;
2.	That the following be appointed as associate members of the Canadian delegation:
Department of External Affairs: Mr. L. B. Pearson, Canadian ambassador, Washington;
Department of Agriculture: Doctor George Bouchard, assistant deputy minister of agriculture; Doctor E. S. Archibald, director, experimental farms service; Mr. J. G. Taggart, chairman, agricultural prices support board;
Department of Fisheries: Doctor D. B. Finn, deputy minister of fisheries; Professor A. F. Cameron, chairman, fisheries research board;
Department of National Health and Welfare: Doctor F. S. Parney, chief, industrial hygiene division;
Department of Trade and Commerce: Mt. George Mclvor, chairman, Canadian wheat board; Doctor S. A. Cudmore, dominion statistician;
Department of Mines and Resources (Forestry): Mr. D. Roy Cameron, dominion forester;
Wartime Prices and Trade Board: Mr. K. W. Taylor, coordinator, foods administration;
Canadian Federation of Agriculture:	Mr. H. H. Hannam, president, Canadian federation of agriculture.
3.	That the following advisers be assigned to the delegation:
Department of Agriculture:	Doctor J. F.
Booth, associate director of marketing, agricultural economics alternating: Mr. R. S. Hamer, director production service;
Department of Agriculture: Mr. A. M. Shaw, director marketing service, Department of Agriculture;
Department	of	Fisheries:	chief, economics
division, Department of Fisheries; Doctor Georges Prefontaine, department of biology, University of Montreal;
Department of National Health and Welfare: Doctor L. B. Pett, chief, nutrition division; Doctor C. A. Norrell, assistant chief dominion analyst;
Department	of	Trade and	Commerce:	Mr. G. R. Paterson, executive officer, combined food, board; Mr. J. B. Rutherford, chief, agricultural branch, Dominion	Bureau of	Statistics;Department	of	Mines and	Resources	(Forestry) : Mr. J. D. B. Harrison, chief, forest economics division; Mr. T. A. McElhanney, superintendent, forest products laboratory;
_____________United, Nations Food Agreement
Canadian Federation of Agriculture:	Mr. W. J. Parker, vice-president; Mr. J. A. Marion, vice-president;
British Columbia Lumber and Shingle Manufacturing Association:	Mr. L. R. Andrews,
Ottawa representative;
Pulp and Paper Research Industries: Mr. A. Koroleff, director of woodlands research;
Fisheries Council of Canada:	Mr. C. J.
Morrow, president; Mr. S. K. Murray;
Press Relations: Mr. Bruce West, Canadian representative. Washington office of the Canadian information service;
Joint Secretaries: Mr. Mark McClung, Privy Council office; Mr. Jean Louis Delisle, Department of External Affairs.


[Stage Direction]
Amendment agreed to.
On the schedule:
John Bracken: I wish to ask one more question. Under this head has the government made any contribution to the interim commission?


James Garfield Gardiner: I am not aware that they have, although I would not be certain. I would think some contribution would have to be made by someone at some time.


John Bracken: The reason I ask, Mr. Chairman, is this. Paragraph (b) of article XXV reads as follows:
The amounts to be contributed by the member nations shall be in the proportions set forth in annex II to this constitution: Provided that each member nation may deduct therefrom the amount already contributed by it toward the expenses of the interim commission.


James Garfield Gardiner: I should have said there have been votes of money put through in the estimates of previous sessions to provide for the expenses of all officials going to the Hot Springs conference and to the setting up of the organization at Washington.


John Bracken: That brings up the next point I wish to raise. Under what authority were such expenditures made?


James Garfield Gardiner: The expenses that were paid were paid under the authority of previous estimates passed here.


John Bracken: Could the minister be more specific than that?


James Garfield Gardiner: I would have to get the estimates and go through them and find out the different items, if that is what is required. A vote will be found in some of the past estimates to cover those items.


Howard Charles Green: War appropriation?


James Garfield Gardiner: It would be under the War Measures Act, yes.


John Bracken: The minister read a long list of delegates who are to go to the conference next week. Will the cost of sending
those delegates be in addition to the contribution we are asked by this bill to make to the food and agriculture organization?


James Garfield Gardiner: I had better read what it says:
That the expenses incurred by the members of the Canadian delegation be paid out of funds to be appropriated by parliament for the purpose of Canadian participation in the above-mentioned organization.
I presume those funds will be voted this session.


John Bracken: There is as yet no
estimate in any of the supply bills brought down.


James Garfield Gardiner: I think there will be an estimate, probably under the war appropriation vote; it will come in there somewhere. Those expenses are not itemized in the sense that the supply votes are usually itemized.


John Bracken: Could the minister say what the total expenditures will be for any fiscal or calendar year as a result of the passage of this bill? I refer to the contribution to the organization and the supplementary expenditures. I think that item should be set out by itself somewhere in the estimates and not distributed through other expenditures, so that the house can see exactly what this measure is to cost us.


James Garfield Gardiner: When my estimates are up I shall be pleased to answer all these questions. The item will be in our estimates in some form if it is going through the house this session. I shall be glad to make at that time all the explanations that are required with regard to it. The total amount is as has been set out here two or three times. All that it could amount to in the first twelve months is S126,500.


John Bracken: That does not give the answer, because the minister is planning to send a large delegation to this conference. This apparently would be in addition to what is being offered the organization.


James Garfield Gardiner: I would not like to say it would be an addition.


John Bracken: With all deference to the minister, I think he ought to put himself in a position to be a little more definite.


James Garfield Gardiner: Judging by what the leader of the opposition has just said, I would say that this should be made a part of the charges. I am not taking for granted-


John Bracken: With all deference, the minister ought to be more definite when he is asking the house to approve a measure which requires these large expenditures.


[Stage Direction]
Schedule agreed to.
[Stage Direction]
United, Nations Food Agreement
On the preamble:
John Bracken: I wish to refer to article XVIII of this measure, which reads as follows:
Subject to the provisions of article XXV, the director general . . .
Of this new organization.
. . . shall submit to the conference . . .
That is, the conference of the organization.
... an annual budget covering the anticipated expenses of the organization.
If that means anything it means that the conference works out its own budget. I continue:
Upon approval of a budget the total amount approved shall be allocated among the member nations in proportions determined, from time to time, . . .
If that means anything it means that the 5-06 per cent is not a fixed percentage for Canada.
... by the conference. Each member nation undertakes, subject to the requirements of its constitutional procedure, . . .
That clause does not mean anything because money could not be obtained from this country' in any other way than by constitutional procedure.
... to contribute to the organization promptly its share of the expenses so determined.
The only point I wish to make is by the passage of this bill we are in effect issuing a blank cheque to this organization, because as the Minister of Justice pointed out last night, and as others have done to-day, once we accept this constitution we are in honour bound to carry it out. I am not very much afraid that they are going to run away with us in the matter of expenditures, even though we have only one man on that body; but I suggest it is not a businesslike procedure to have us voting on a bill-which is a money bill-which is not specific as to what our obligations under it may be. That is my criticism; that was the burden of my criticism yesterday. The only defence we have is in the instructions given or the action taken by our representatives on that organization to see to it that they do not commit themselves to larger expenditures without first having the approval of parliament.
I make these observations in passing. I am not very much afraid that the expenditures are going to be multiplied, but I repeat, it is not good businesslike procedure. I suggest to the government that our representative, whoever he may be-I gather for the present he is to be the Minister of Agriculture-should let this organization know that a larger contribution by Canada ought not to be expected
[Mr Bracken.]
until this parliament at least approves of making it.


[Stage Direction]
Preamble agreed to.
Bill reported.
Mr. SPEAKER:: When shall said bill be read a third time?


Mr. MACKENZIE:: Now, with the consent of the house.


John Horne Blackmore: Next sitting.
Mr. GARDINER moved the third reading of the bill.


Mr. E. G. HANSELL (Macleod):: Before the motion is put, Mr. Speaker, I should like to say a word. I am not going to take up very much time, but it may appear to some that this group does not want this bill to pass. So far as I am concerned, speaking for myself only, that is not altogether the case. With me the point is that I do not want it to pass too rapidly.
In that connection I want to say only one thing. When measures are brought into this house concerning matters which affect the entire world, as this measure does because it has to do with other nations in the world, we should proceed with some care. I make that statement for the reason that those responsible for world movements, whether or not we should personify them, do not view things as to how they are going to affect the world to-day or next week or next month. They look at these things as to how they are going to affect civilization, or perhaps their own interests, in generations or centuries to come. What may appear to us today to be perfectly plausible and perfectly safe in generations or ages to come may prove to have worked to the detriment of civilization. That is why I say that the greatest possible care should be taken in all measures of this kind.
Let no one be under the impression that we want to oppose anything. We are in favour of anything we believe to be in the interests of this country or of civilization; but we do believe we should proceed with some measure of care in respect to anything affecting the world at large. For that reason we desire not to rush into things we do not altogether understand the possibility of future implications, or the significance of which may not be fully obvious to all.


John Horne Blackmore: I should like the
minister to explain why it is necessary to give this bill third reading to-day.


James Garfield Gardiner: I did explain that last week, when I said I was very sorry the situation this session had not made it possible for us to bring down this bill earlier. I repeat that I am very sorry we did not have

Health and Welfare
sufficient time, as our experiences up to the moment have indicated, to have this bill and the resolution preceding it go through all the regular stages, which would have permitted discussion on two or three different occasions instead of trying to have it all at one time. We were further delayed, of course, by the fact that another resolution came in ahead of this matter on Tuesday. I am not criticizing anyone for bringing in the other resolution; it was considered important and it was brought in, but it took the day we had all arranged should be given to a discussion of this measure. Monday next of course is private members' day, when measures of this kind are not considered. The conference is meeting on Tuesday. I understand that if this bill goes to the senate and is passed there before a quarter to six, it can be given the royal assent. That is just half an hour from now, and that royal assent should be given before we ask our delegates to appear at the conference next Tuesday.
I believe the bill has been very fully discussed, and I thank hon. members for the cooperation they have shown. I am sure our friends of the Social Credit group will agree that we have tried, though perhaps not very successfully, to answer any questions or objections they have raised in connection with the legislation, and I would only ask their cooperation in having the bill pass now so that it may go to the senate and be assented to this evening, in order that we may be able to take our legal part in the conference.


Norman Jaques: I just want to make my position clear in this matter. If this bill means that Canada is to lose the power to determine our standards of living; if that power is to go under international control, then I am opposed to the bill. If on the other hand the minister guarantees that Canada will retain control of our economic policies and of our standards of living, then I have no objection to the bill passing. Otherwise, speaking for myself, I am opposed to it.


James Garfield Gardiner: It has been repeated on many occasions that there is nothing mandatory about this bill. No right is taken away from Canada; no authority of any kind is taken away. It is simply an effort to get the cooperation of other nations to help us deal with our own problems, and offering our cooperation to them. I think I can assure my hon. friend, without any fear of contradiction from anyone, that his fears are not well founded. If that assists him in any way in deciding to support the measure, I am most happy to be able to make this statement.
Motion agreed to and bill read the third time and passed.



HEALTH AND WELFARE AMENDMENT OF ACT OF 1944-45

[Stage Direction]
Hon. BROOKE CLAXTON (Minister of National Health and Welfare) moved the second reading of bill No. 9, to amend the Department of National Health and Welfare Act.
Motion agreed to and the house went into committee thereon, Mr. Golding in the chair..
On section 1-Substitution of department, minister and deputy minister in certain other acts.
Mr. CLAXTON:: Perhaps I might repeat
the explanation I gave on the first reading of the bill. It is designed to correct a typographical error which appeared in the bill and act as passed in 1944. This measure would substitute for the word "nine" the word "eight" in the reference to the act setting up the Department of Veterans Affairs.
Upon inquiry I found that the error occurred through one of the sections of the bill which intends to establish the Department of Veterans Affairs having been struck out when in committee. The persons responsible for proof reading, or doing whatever was necessary, had not observed this error in printing the bill. This bill is designed purely to correct that error.


Gordon Graydon: Is no other change suggested in the measure? This is the only alteration in the proposed legislation?


Brooke Claxton: Yes.


John George Diefenbaker: I notice that the
change is made retroactive to October, 1944. Are the rights of any individuals interfered with by this change?


Brooke Claxton: None whatsoever, or
at least certainly none of whom I have heard, and I cannot conceive of any.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
Bill reported, read the third time and passed.


[Stage Direction]
Hon. LIONEL CHEVRIER (Minister of Transport) mpved the second reading of bill No. 11, to amend the Canadian National Railways Capital Revision Act, 1937.
Gordon Graydon: Mr. Speaker, before this measure is given second reading, it would seem to me that the amendments are of sufficient importance to call

C.N.R. Capital Revision Act

upon the minister for a statement giving the full purport of the changes he proposes to make. My suggestion would be that the minister should speak now.


Mr. CHEVRIER:: Mr. Speaker, when
first reading of the bill was moved I explained that the only amendment suggested was that having to do with section 12. The amendment is, not for a different set-up in the trustees of the Canadian National Railways securities trust, but a different method of appointing the two trustees representing the railways.
When the bill was introduced I stated that the position of vice-president of finance and accounting had been abolished. I find since, however, that I was in error when I made that statement, and that Mr. D. C. Grant, who was formerly vice-president of finance and accounting recently retired on superannuation, and that two new positions have been created, one of vice-president and treasurer, and the other of vice-president and comptroller.


Mr. MacNICOL:: One more than there
was before.


Lionel Chevrier: With reference to section 12, the Canadian National Railways now seeks to appoint their two trustees by resolution, of the board of directors rather than as set out in the original section. The section states first of all that the trustees shall be three deputy ministers, and then it proceeds to state that the other two trustees shall be the chairman of the board of directors of the national railways, and the vice-president of finance. The former vice-president of finance, Mr. D. C. Grant, has retired and two new positions have been created. But it is not sought by this amendment to create three rather than two trustees. In the event of a reorganization in the future, the Canadian National Railways would be able to appoint their two trustees by way of resolution.
Then, I believe the amendment respecting the three deputy ministers is only technical. If hon. members will look at the act they will see that the section as it reads to-day is as follows:
There shall be a corporation to be known as the Canadian National Railways Securities Trust, hereinafter referred to as the "Securities Trust", consisting of five trustees, being the deputy minister of finance, the deputy minister of transport, the deputy minister of justice-
And so on. The section now seeks to enact that the three trustees shall be those persons who respectively hold the offices of the

deputy minister of finance, the deputy minister of transport, and the deputy minister of justice. It is just a technical amendment, and does not in any way change the substance of the section as it now stands.


Gordon Graydon: Does the minister think the suggested amendment brings about any clarification?


Lionel Chevrier: The Department of
Justice advises us that that is the manner in which we should proceed.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Macdonald (Brantford City) in the chair.
On Section I-Corporation securities trust; constitution.
Gordon Graydon: The Canadian National Railways securities trust, which was set up by section 12 of the Canadian National Railways Capital Revision Act, 1937, is described in section 13 of the act as the corporation which shall take over and hold, as authorized by the act, the indebtedness to His Majesty, together with the collateral securities held by the minister in respect thereof, as set out in schedule A of the act. In other words, the responsibilities and powers of the securities trust are very important.
Could the minister indicate whether there is any representation of the railroad brotherhoods or the workers on that board and whether or not under this bill the railway workers will have any say in so far as the securities trust is concerned? As I see it, this securities trust constitutes a link between the financing by the government and the operation of the railways. It is a vital part of the constitution of the railway set-up, and I should like to know whether any provision has been made whereby the workers will have a. say in regard to this matter or others of a like nature.


Lionel Chevrier: The only provision having to do with the question asked by the hon. member for Peel is that contained in the section itself, namely, that the trustees shall be the three deputy ministers and such two officers of the railway as may be appointed by resolution of the board of directors. I do not know whom the resolution will appoint. If the resolution appoints those who have been appointed in the past, I presume the representatives of the railways will be the president of the board of directors and perhaps the vice-president and treasurer, one of the new positions set up, or the vice-president and comptroller. So far as representation of

C.N.R. Auditors
995.
the brotherhoods is concerned I shall be glad to bring the suggestion of my hon. friend to the attention of the board of directors of She railway.


Gordon Graydon: That does not quite
answer my question. As I see it, the present amendment, as well as the original act, apparently confine and restrict the appointment to certain officers of the corporation. I want to know whether among those officers who may be appointed under the terms and provisions of this amended legislation there will be anyone who may be said to be a representative of the railway workers.


Lionel Chevrier: I would not think so.


Mr. COLD  WELL@: I think this may be an opportune time to ask a question I have in mind. The securities of the Canadian National Railways under this board of trustees include, I take it, securities which have been repatriated from Great Britain during the war. Grand Trunk securities and others amounting to some hundreds of millions of dollars were brought back to Canada. I want to seize this opportunity to ask if they are still held by the government or by the railways under this trust, or perhaps by some other similar body. T should like to know what disposition has been made of them.


Lionel Chevrier: I cannot tell the hon. gentleman whether any securities have been repatriated from Great Britain. All I can say is that the annual report of the Canadian National securities trust for the year ended December 31, 1944, which is the last one, sets out a detailed list of the indebtedness transferred from the government to the securities trust. Whether securities have been repatriated since this statement was compiled, I am not in position to say.


Major James William Coldwell: I think it was two years ago, or possibly three, that provision was made for the repatriation of a large block of Grand Trunk bonds and I was wondering what has become of them.


Clarence Decatur Howe: The bonds were repatriated by the Bank of Canada and1 the cost of acquisition stands on the books of the Canadian National Railways as a loan from, the dominion government. The dominion government lent the railway money to repatriate the bonds which are lodged with the Bank of Canada as security.	.


Major James William Coldwell: They have not been disposed of otherwise?


Clarence Decatur Howe: No.
47696-63i	-


John Ritchie MacNicol: I should like a little further clarification of the question asked by the hon. member for Peel. Is there anything in the act that would prevent the Canadian National Railways from appointing to one of these offices the head or some member of the railway employees unions?


Lionel Chevrier: I do not think there is.


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

[Stage Direction]
Hon. LIONEL CHEVRIER (Minister of Transport) moved the second reading of bill No. 12, respecting the appointment of auditors for national railways.
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Macdonald (Brantford City) in the chair.
On section 1

Appointment of auditors.
Lionel Chevrier: Perhaps I should say a word in connection with this section. This is the annual bill appointing auditors for the Canadian National Railways and it takes the same form as it has taken over a period of some twelve years or more. It seeks to appoint this year the firm of George A. Touche and Company of Toronto and Montreal.


Major James William Coldwell: Has this firm been the auditors for a number of years and, if so, how many?


Lionel Chevrier: This firm has been the auditors for practically all the years since 1932, except perhaps one or two.


Major James William Coldwell: I know this is a most reputable firm and I do not want my remarks to be construed as criticizing them in any particular, but I think it is sometimes advisable to change the auditors in connection with public bodies. I know that from experience I have had in public affairs. I recall when I was a member of the Regina city council we had a firm of auditors in whom we had every confidence. They were doing a good job, but over a long period of years they had become, shall I say, a little careless. The result was that when a new firm of auditors went in they were able to see things which perhaps the other firm had not been able to see up to that time. I am not suggesting that we change the auditors to-day, but I am placing these thoughts before the minister so that, when the matter is again considered, some thought
Canada Prize Act

may be given to the advisability of continuing for such a very long period of time-it will ibe now almost a quarter of a century-


Lionel Chevrier: If my hon. friend will
permit me, the appointment was made in 1932 and they have continued to be the auditors since that time with the exception of perhaps one or two years.


Major James William Coldwell: I thought my hon.
friend said that they had been auditors since the organization of the Canadian National Railways, which would be about a quarter of a century ago. The minister's statement makes a difference to my argument.


Gordon Graydon: My memory may not be very good, but I rather thought George A. Touche and Company were appointed auditors for the Canadian National Railways in the special legislation brought down by the then Minister of Transport, now the minister of several departments, one of which is munitions and supply. I thought the appointment first took place in 1936 and I should like the confirmation of the minister, who just mentioned 1932.


Lionel Chevrier: They were appointed in 1936, but this bill has been before the house in one form or another since 1932. I think it was the government of the Right Hon. Mr. Bennett which appointed this firm, and then for a period of one or two years another firm was appointed. I would say that since 1932, with the exception of one or two years, the firm of George Touche and Company have been acting.


Clarence Decatur Howe: Perhaps I can straighten this out by drawing on my memory. The firm of George A. Touche and Company were auditors for the Canadian National Railways up until 1932. The act providing for a change in the management of Canadian National Railways and the replacing of directors by trustees was put through in 1932, and the firm of Clarkson, Gordon, Dilworth and Nash were appointed auditors. In 1936 there was a change in auditors; George A. Touche and Company were appointed and they have been the auditors since.


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


[Stage Direction]
Hon. L. S. ST. LAURENT (Minister of Justice) moved the second reading of Bill No. 10, to provide for a prize court and prize law in Canada.	[DOT]
He said: Mr. Speaker, this bill is necessary for the following among other reasons.

Prior to this war all prize courts in Canada were established under imperial legislation and acquired their authority and jurisdicton under imperial legislation. In the last war the Exchequer Court of Canada as a Colonial Court of Admiralty, under the Imperial Colonial Courts of Admiralty Act, 1891, had prize jurisdiction under the Imperial Colonial Prize Courts Act, 1894. After the Statute of Westminster, Canada enacted the Admiralty Act of 1934, which made the exchequer court on its admiralty side a Canadian admiralty court. The Imperial Colonial Prize Court Act of 1894 does not therefore apply to it now as it has ceased to be a colonial court of admiralty, and there was no provision made in the statute of 1934 to give the exchequer court, admiralty side, jurisdiction in prize. There was, therefore, at the beginning of this war no prize court in Canada under Canadian legislation and no imperial legislation applicable to establish a prize court in Canada.
By order in council P.C. 2489 of September 5, 1939, under the War Measures Act, the exchequer court was first constituted a prize court. Prize court rules were made by order in council P.C. 2682 of September 14, 1939. Then a slight modification was made on September 27, 1939, by P.C. 2892. These orders in council were respectively published in volume 1 of Proclamations and Orders in Council, the first one at page 28, the next one I have referred to at page 61, and the third one I have referred to at page 107. These orders in council were made under the authority of the War Measures Act, and it is hoped that the authority of the War Measures Act will not now long remain a basis for the provisions in question.
The purpose of the bill is to give to the exchequer court jurisdiction in prize and to declare what is the prize law in Canada.
There have been twelve prize cases instituted in Canada since the beginning of the war, only two of which have been finally disposed of. The proceedings in the prize court were in most cases taken for the purpose of clearing title to ships and were allowed to remain in abeyance as soon as that purpose had been served and the ships made available to the allied nations. That is perhaps all I need say on the principle of the bill. There probably will be explanations that members will wish to have in committee, and I shall be glad if I can to answer any questions that may then be asked.

The Budget-Mr. Ilsley

[Stage Direction]
A message was delivered by Charles H. Larose, Esquire, Acting Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, His Honour, the Deputy Administrator, desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly the house went up to the senate.
And having returned.
Mr. SPEAKER informed the house that the Deputy Administrator had been pleased to give in His Majesty's name the royal assent to the following bills:
An act for granting to His Majesty certain sums of money for the public service for the fiscal year ending March 31, 1946.
An act for carrying into effect the agreement for a food and agricultural organization of the united nations between Canada and certain other nations and authorities.


[Stage Direction]
The house resumed consideration of the motion of Mr. St. Laurent for the second reading of Bill No. 10, to provide for a prize court and prize law in Canada.
On motion of Mr. Hackett the debate was adjourned.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Hon. J. L. ILSLEY (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said:



FINANCLAL REVIEW

[Stage Direction]
Mr. Speaker, in presenting to the house tonight the government's proposals for meeting the financial requirements of the present fiscal year in a budget, which is the first to follow
the cessation of hostilities both in Europe and in the Pacific, I am reminded that six years and one month ago, on September 12, 1939, I presented at the special session of parliament, on behalf of the then Minister of Finance, the first budget following the outbreak of war.
I was impelled to warn at that time against expecting the war "to be a short and only moderately expensive one" and said further, "We must make our plans now with the full realization that we may be in for years of strenuous national effort". Though we foresaw the kind of problems we would have to meet and something of the magnitude of the effort, none of us realized how strenuous or how long those years would be.
It is a matter for great thankfulness that we have accomplished the task and that we can now confront, in good order and in good heart, a future which is filled with problems and difficulties but also with promise.
It was helpful to me in preparing this budget, and I think it will be helpful to the house, to take a glance back over the rugged path which we have travelled before turning our attention to the road ahead.
In the budget speech of September 1939, certain broad principles of war finance were laid. down. The first one was that we should "follow as far as may be practicable a pay-as-you-go policy". It was explained that in the view of the government this meant a rapid increase in the level of taxation as our war effort and national income expanded, having due regard to the needs of war, the necessity of preserving incentive, and the need for allowing individual savings to be made. In the course of the war, the government was seldom criticized for not pressing forward rapidly enough on this policy.
The income tax was increased by 20 per cent in 1939 and moved in three more swift steps to the full war level established in the budget of 1942. The increase to this level of income taxation with the provision for refundable taxes was made possible by the withdrawal of the provincial governments from the income tax fields under the agreements of 1941. In 1943, without increasing the general level of the personal income tax, the pay-as-you-earn system was adopted and collections put on a current basis. In the course of these changes, by advancing the dates of payment we were able to augment the revenue of the war years substantially. With the exception of the cancellation of the refundable feature of the personal income tax in 1944 and of minor amendments, the taxation of personal incomes remains at the level established in 1942.
The Budget-Mr. Ilsley
[Stage Direction]
The Excess Profits Tax Act, provisionally enacted in the fall of 1939, was given its present form in 1940, and in 1942 the rate on the "excess profits" was increased to 100 per cent of which 20 per cent is to be refunded.
Succession duties were first imposed in 1941 and have not been changed since except in minor degree.
In 1940 and 1941 new and increased commodity taxes were imposed for exchange reasons, to encourage transfer to war production and for revenue. Since 1942 the main increases in taxation have been in indirect taxes applying to commodities and services which were not necessaries of life and of which frequent purchase gave some evidence of ability to pay.
By about the middle of the war we had thus reached nearly the full war-time level of taxation. By previous Canadian standards, the level of taxes was enormously high. It was, however, by no means the highest tax level among comparable countries and, generally speaking, the taxation of the lower incomes was less severe than in other countries.
The result of the balance we endeavoured to keep between taxation and borrowing has been that up to March 31, 1945, after meeting all other expenditures, we covered about 45 per cent of our war expenditures out of current revenues.
The second principle enunciated in September 1939 was that, after an initial credit expansion, designed to facilitate a rapid increase in production, we should endeavour to limit our borrowings as closely as possible to the genuine savings of the country. In pursuit of this principle, our initial borrowing was from the chartered banks, followed by a war loan offered to the public but not distributed among individuals by the intensive effort which has characterized the victory loans. In May 1940, war savings certificates were instituted and the campaign to increase savings which is still being carried on was begun. With the first victory loan of May 1941, full emphasis was given to borrowing the savings of individuals, and the organization which later became the national war finance committee began the notable and patriotic work which they are still carrying on with such great initiative and thoroughness. In the first victory loan the number of individual cash subscriptions was 946,549. In the eighth victory loan of last May, the number of individual subscriptions was 3,178,275. I trust that in the ninth victory loan which is being offered to the public this month this great number will be maintained or exceeded. It is difficult

to estimate the importance for the future of the very large savings now held by individuals in this country. It is possible to make a rough estimate only of the savings held by Canadian individuals in certain liquid forms. Such an estimate, which cannot be too wide of the mark, indicates that as of May 31, 1945, in currency, bank deposits, refundable taxes and Dominion government securities, Canadian individuals held savings of more than nine and a half bilion dollars and that these savings had increased by more than six and a half billions since the end of 1938. The major item in these savings is dominion government securities estimated at five and a quarter billion dollars. These figures do not, of course, include all the savings of individuals but only savings held in the liquid forms specified. They do not include savings in the form of insurance, pensions, homes, or corporate securities.
The third principle which we set out at the beginning of the war was that in our borrowings we would endeavour to set the rates of interest as low as possible. We began our public borrowings in January 1940 with the issue of a 3i per cent bond having an average maturity of ten years. The long-term issue which is being offered in the ninth victory loan has a term of twenty years and ten months and carries a rate of 3 per cent. At the rates now obtaining, a ten-year bond such as was issued at 3| per cent in January 1940 could now be issued at 2-59 per cent. As of March 31, 1939, the average rate of interest paid on the funded debt was 3-52 per cent. On March 31, 1945, the average rate had fallen to 2-51 per cent.
The fourth principle laid down for wartime financial policy was part and parcel of the other principles. It was a definite rejection of the methods of inflationary finance. That principle has affected all our operations in the fields of taxation and borrowing but its pursuit has also led us to many major decisions in other fields. It emerged in its most comprehensive form in the historic decision of October 1941, to consolidate our wage controls, institute salary control and impose a comprehensive price ceiling as of that period. The progressive development of many additional controls over the supply and distribution of goods lent support to this structure.
These simple principles have led us a long way. They have permeated war-time financial and economic policies and have given them solidity and coherence. The carrying out of these policies throughout the fields of finance and economic stabilization has been recog-﻿OCTOBER 12, 1945
The Budget-Mr. Ilsley
nized, I think, as one of the most substantial of our war-time achievements and one most appreciated by the people of this country.
I have recalled briefly some of these points of war-time policy as foreshadowed in the first war-time budget because we now stand at the beginning of a new period and face new conditions and new problems. The policies which we have followed during the war have an important bearing on the choices which now confront us.

[Stage Direction]
It is only right that I should say something concerning the financial results of the fiscal year ending March 31, 1945, but I shall confine myself to a few brief statement since the present fiscal year is already half gone and the final figures for 1944-45 are given in some detail in the budget papers which I shall table before sitting down. Further, the full public accounts for the past fiscal year will, I hope, be presented to the house shortly.
In the year 1944-45, total revenues, including refundable taxes, amounted to somewhat more than S2,900 million, a slight decrease from the revenues of the previous year. Total tax revenues, including refundable taxes, were somewhat down from the previous year, at S2,374 million. This moderate reduction in tax revenues occurred mainly in the yields of the personal income tax and the corporation tax, and to a less extent the excess profits tax. Among commodity taxes, the revenues from spirits and malt, cigars, cigarettes and tobacco, and gasoline, all showed- substantial increases.
Ordinarj' expenditures for the year were S767 million compared with $630 million in the previous year. More than half of this increase was the result of increased public debt charges. The other major increase was in the expenditures of the Department of Veterans Affairs. War expenditures, including Mutual Aid, were $4,400 million, or slightly lower than in the previous year. The grand total expenditure was $5,246 million, about $75 million less than the previous year. Since total revenue, exclusive of refundable taxes, was $2,687 million, the over-all deficit for the year was $2,558 million, or approximately $1 million greater than in the previous year. This amount is the extent of the increase in the net debt during the year.
Other financial requirements for loans and advances and investments are set out in some detail in the budget papers which I shall table and I shall not attempt to review them here except to say that the amounts have turned
out to be smaller than I anticipated in the budget of last year. Total borrowings for the year, including refundable taxes, amounted to approximately $3,360 million. Of this, $219 million was obtained in refundable taxes and $2,948 million through the sale of victory bonds and war savings certificates. I should say here that, as explained in the budget papers, the amount set aside for refundable taxes is abnormally high. It has been found as returns are assessed that taxpayers have tended to credit too much of their payments to the corporation tax and too little to the excess profits tax or not to distinguish between them. It has become necessary therefore to increase the liability for refundable taxes. The remaining borrowings were obtained by an increase in treasury bills and deposit certificates outstanding, and in the floating debt. The total amount borrowed, $3,360 million, was used to meet maturities of $252 million, to increase holdings of cash by $152 million, and to finance the cash deficiency of $2,955 million arising from the budgetary deficit and the loans, advances and investments made during the year.
As at March 31, 1945, the total unmatured funded debt, including refundable taxes, amounted to $13,984 million. The net debt was $11,298 million, having increased during the year by the amount of the budgetary deficit. The funded debt carried annual interest charges of $351,590,000. The average rate of interest was 2-51 per cent as compared with 2-54 per cent as at March 31, 1944.
The most notable financial operations of the year were the successful conclusion of the two great victory loan campaigns. The achievements of the national war finance committee in the sixth and seventh victory loans in the fiscal year 1944-45 were exceeded only by their later success early in this fiscal year in carrying out the eighth victory loan.

[Stage Direction]
The financial proposals which I have to lay before the house are for the requirements of the current fiscal year 1945-46 but I realize that with six months of the fiscal year gone by and with hostilities ended I shall be expected to look further forward than the end of March next. The budget which I am presenting is a war budget in that, as I have already told the house, war and demobilization expenditures will continue for a short time at high levels even though hostilities have ended and though the demands of the armed services on men and materials have
The Budget-Mr. llsley
[Stage Direction]
fallen and are falling rapidly. The financial needs of war and demobilization are still very great in this as in every other country. On the other hand, this is also the first peacetime budget and its effects on employment and income must be accepted as of major importance.
The expenditure estimates for this fiscal year are known to the house. The main estimates covering non-war expenditures require $1,024 million. The war estimates stand at $3,365 million. The expected expenditures for war service gratuities and reestablishment credits as authorized by statute are $240 million. We expect that we shall need to ask about $30 million by way of supplementary estimates. Our total expenditures for the year are therefore estimated to be approximately $4,650 million.
On the revenue side it is estimated that under our present tax laws, revenues in 1945-46, not including the refundable portion of the taxes, will be $2,515 million, as compared with $2,687 million in the previous year. I shall place on Hansard a statement showing the details of this estimate in comparison with the revenues of 1944-45:
	1945-46	1944-45
	(millions)	(millions)
Customs duties	$ 120	$ 115Excise duties	175	152Sales tax (net)	225	210War exchange tax	75	98Other excise taxes	250	236Income taxes: Personal	725	768Corporate and excess profits tax 	710	742Interest and dividends.	29	28Succession duties	20	17Miscellaneous	8	8Total tax revenue	$2,337	$2,374Less refundable taxes	72	219Net tax revenue	$2,265	$2,155Non-tax revenue	150	145Total ordinary revenue	$2,415	$2,300Special receipts	100*	387Total revenue	$2,515	$2,687
# Arbitrary estimate.
It is indicated in the table that under the present tax laws we anticipate some declines in the sales tax and the war exchange tax, though the declines will be partly offset by the reduction of refunds on purchases for other governments. We anticipate some increase in revenues from excise duties and from excise taxes on tobacco. We likewise anticipate that there will be moderate increases in the revenues from excise taxes on retail purchases, gasoline, amusements and similar taxes. Personal income
tax would be expected to decline somewhat were it not for the channelling back through this tax of repayments of the portion of family allowances which duplicates the tax credits allowed to taxpayers in respect of dependent children. We look for some substantial decline in the combined revenue from the corporation income tax and excess profits tax.
On these estimates there will be a decline of about $150 million in our revenues this year, though this decline is to be attributed to the distribution of rebates and refunds as between this year and last year. Taking approximate figures, expenditures of $4,650 million and revenues of $2,500 million would result in a budgetary deficit for 1945-46 of $2,150 million, or approximately $350 million less than the deficit last year.
I have explained to the house on an earlier occasion that, as in other years, we will have substantial financial requirements outside the budget. It will be necessary in the reconstruction period to extend credits to allied countries for the financing of their needs and of our export trade. On a later occasion the house will be asked to approve a very large increase in the amount already provided under the Export Credits Insurance Act and to make such provision for other loans and investments as may be required. Though these amounts cannot be fully estimated at this time, it is anticipated that to provide such credits and to make loans to the foreign exchange control board may require in the neighbourhood of $800 million this year, bringing our total financial requirements for the year to about $5,400 million, an amount which is $300 million less than the total cash requirements of the past fiscal year. No provision has been included in these figures for subscriptions to the international monetary fund or the international bank for reconstruction and development, to which, if the house approves the legislation to be introduced, only token contributions would be made this year.
These are our requirements up to March 31, 1946 and, while they represent a reduction from the previous year and some shift from expenditures to loans, they are, as the house will see, at a very high level. These requirements in themselves do not suggest that the Minister of Finance is in a position to forgo any revenue which he might otherwise obtain.
In thinking over the financial problems of an initial peace-time budget, I had occasion to look back to the budgets of 1919 and 1920 following the first world war. I found that
[Stage Direction]
The Budget-Mr. Ilsley
in June, 1919, seven months after the end of hostilities, the then Minister of Finance estimated an increase in expenditures for 1919-20 and that in fact his estimate proved to be much too low. I found that the income tax, which was then admittedly at very low levels by present day standards, was increased in that budget by amounts ranging from about a third to 100 per cent of the existing rates and that the corporation tax was increased. In May, 1920, the personal income tax was again increased by adding 5 per cent to the rates in all brackets above $5,000 and an imposing array of luxury taxes was proposed, although some of them were later withdrawn. The business war profits tax was extended for another year, though its effect was alleviated somewhat by raising the exempted rate of earnings from 7 per cent to 10 per cent. The 71 per cent customs war duty was removed from all imports. In 1921 the business war profits tax was discontinued but the sales tax was instituted and there was some increase in excise duties.
I have not referred to these budgets of my predecessors to make any unfavourable comparison or to question the judgment which they applied to the circumstances of their time. It is, however, I think, important to realize that the rapid increase in taxation which we were able to accomplish during the war and to which the people of this country gave such loyal support has left us less restricted in our choices to-day than were the ninisters of finance at the end of the last war. I would further point out that, while they found as I have found that war expenditures do not drop as quickly as do war activities, nevertheless most of the increase in government expenditures following the first world war was the direct result of the wartime and post-war inflation which drove up prices and with them unavoidably government expenditures. No one is more impatient than the Minister of Finance at the slowness with which war expenditures decline. Nevertheless, they did in fact begin to decline this year as soon as hostilities ceased and our stabilization policy has so far saved us from facing that post-war increase in expendtiures which was so great and disruptive a fact in 1919 and 1920. It is essential that we maintain our stabilization policy until the danger lessens.

[Stage Direction]
The most obvious consideration in the mind of a Minister of Finance in framing budget proposals is the financial requirement of the future. I have already pointed out that our 47696-64
financial requirements for the present fiscal year will be at a high level, though reduced from the level of the previous fiscal year and very substantially reduced from those which we anticipated in the budget of 1944.
In speaking on the resolution introducing the war expenditures and demobilization bill, I intimated that our requirements over the twelve months from November 1, for which funds are being borrowed from the public in the ninth victory loan, would probably be in the neighbourhood of $4,000 million. This will be still a large requirement but it will represent an accelerating decline in government expenditures from the time of the cessation of hostilities in Europe. I have already explained to the house the chief factors which retard the more rapid decline of expenditures -the lag in payments for supplies and services delivered in the past, the length of time covered by the payment of pay and allowances, deferred pay, war service gratuities and reestablishment credits for members of the armed services being demobilized, and the necessity of financing relief through our contributions to UNRRA and of extending export credits to allied countries who must feed their populations, replenish their stocks and reconstruct their industries, if, as we anticipate, they are to be valued customers and trusted friends in the future.
Looking further into the future, there are too many uncertainties in the currents of world events which affect Canadian trade and industry for me to venture a definite estimate of our financial requirements for the whole of the fiscal year 1946-47. The lag in payments for war supplies will be overcome and the payments cease. As the peak of demobilization is passed, demobilization costs will decline rapidly. The industries of allied countries will be rehabilitated and they will find in their own exports increasing sources from which to finance their import trade. Some of the remaining need may be met by the international monetary fund and the international bank. If reconstruction proceeds steadily in the world outside, we can anticipate further substantial reductions in expenditure in 1946-47.
Faced with the present fact of a very large deficit in a fiscal year of which five months had passed before hostilities had ended, and with the prospect of declining expenditures, it may well seem prudent to maintain our revenues, reduce our borrowings and extinguish our deficit as rapidly as possible. Such a policy is not without its attractions to a Minister of Finance but there are other considerations which claim attention.
[Stage Direction]
The Budget-Mr. Ilsley
[Stage Direction]
The second consideration is economic. The government has adopted, as a major aim of government policy, the maintenance of a high and stable level of income and employment. Accordingly, it becomes a major consideration in budget policy. The present condition, as I see it, is that the outflow of war workers from war plants has been pretty well completed. The demobilization of the armed services is proceeding rapidly and will continue at a high level for some time. Civilian industry and employment are expanding rapidly. There are many projects in contemplation or under way for extended capacity and employment. Capital is plentiful. Consumers have unprecedented liquid savings, some substantial part of which they hope to spend as soon as their requirements can be met and met at reasonable cost. The urgent demand for housing needs no emphasis on my part. Deferred maintenance and other urgent and necessary works of railways, public utilities and governments are awaiting execution.
It is urgently necessary that the construction of houses proceed at the maximum possible rate. It is desirable that investment, which will lead to increased employment, should be made as quickly as supply conditions warrant. It is desirable that, as rapidly as finished goods can come on the market, consumers' needs should be met. It is not desirable that the government should through its expenditures compete with these demands for labour and materials, except for the most urgent needs.
During the war, there has been built up a system of taxation which is discouraging to investment, to enterprise and to consumer expenditures. In many of its aspects it was designed to be discouraging and restrictive to all activities not necessary to the prosecution of war. Some taxes were intended to restrict trade. Others have had the effect of increasing costs. I recognize that in the course of six years, war-time taxation has begun to blunt incentives and if continued indefinitely will paralyse the development of industry and trade.
This is a consideration of the greatest national importance. In such modifications as it is possible to make in taxation, it is imperative that we do what we can to reduce costs, restore incentives, encourage investment in the expansion of the employing-capacity of our industries whether in small or large enterprises and promote efficiency in production and export.
I probably do not need to elaborate on the third major consideration. We must maintain for some months yet the economic stabilization policy. It has been a sheet anchor during the war and is not to be cast off while there is still danger that what we have gained should be quickly lost. Recalling the course of events after the first world war, we must recognize the danger that the rush of consumers to buy, of traders to replenish their stocks and of producers to enlarge their capacity may easily result in an inflationary boom. In avoiding the rock on one side, we could be swallowed up in the whirlpool on the other. Our tax changes must be such as to contribute to employment and income, not merely to inflation and speculation.
There is another set of considerations of which there is not time to speak as fully as their importance warrants. Following the budget of 1941, the government entered into agreements with the provincial governments for the exclusive use of the corporation and personal income tax fields. By their terms, those agreements expire near the end of 1946. In August of this year the government laid before the representatives of the provincial governments comprehensive proposals for new agreements covering taxation and dominion-provincial relations generally. If they should be accepted, these proposals will, to an important degree, affect the continuing financial requirements of the government and the considerations under which it must frame its tax laws. If no agreement is reached, and the present agreements expire, the dominion is bound then to reduce the taxation of corporations by 10 per cent and to revise its personal income tax downward. In these circumstances, it would clearly not be prudent to take now hasty and irretrievable steps in the modification and reorganization of our tax structure.
It is in the light of these considerations that the proposals which I am about to make have been framed. We have fortunately reached the time when, despite our large requirements, we can contemplate some reduction in taxes. In doing so, we should bear in mind the paramount importance of assisting speedy reconversion, of restoring incentives, and of encouraging enlarged and efficient production and export on which our employment, income, and welfare depend. There are many and varied demands of the moment for tax reduction or elimination but it is necessary for all of us to think not of the moment but of the future, and of the interests of the nation as a whole.
[Stage Direction]
The Budget-Mr. Ilsley

[Stage Direction]
A war exchange tax of ten per cent on all imports from non-empire countries was imposed in 1940. I am proposing that this tax should now be discontinued.
There were sound reasons for imposing this tax but the reasons for removing it have now become compelling. Though the tax affects many consumer items, its major impact is on producers. We are in a period when production, both primary and secondary, is changing over from a war market to a non-war market both at home and abroad. Export markets will become increasingly competitive. Primary producers must to a considerable extent reequip themselves. Industry must be extensively modernized. An important part of the equipment and supplies for production will be imported and it would be shortsighted policy not to assist producers in reaching the lowest possible cost of expansion, modernization and operation. It is undesirable that this tax should be capitalized into the costs of the future.
The removal of the tax will have some immediate benefit for the consumer particularly in increasing the availability of supplies. Its ultimate benefit to the consumer will be very great. The removal will ease the problem of readjusting the somewhat higher prices of our neighbours to the price level which we have maintained in this country.
The imposition of this tax was fully justified by the circumstances of war and by the acute scarcity of United States dollars. It was recognized, however, that the tax was discriminatory and could not be justified under conditions of normal trade. I am glad that under present circumstances it is both desirable and possible to remove the tax and it will be discontinued as from midnight to-night.
It has been estimated that this tax would yield us in the present fiscal year $75 million. This sum, however, is subject to very substantial refunds on purchases for other governments, and it is swollen by the extensive purchase of war supplies in the United States. Though it is difficult to make an estimate, it seems probable that the loss of revenue will be about $60 million in a full year and not more than $30 million in the current fiscal year.

[Stage Direction]
I have been impressed also with the extent to which the sales tax is having a discouraging effect on the rapid and efficient modernization of our productive equipment. Whereas the war exchange tax affected imported equipment
only, the sales tax applies to imports and home production alike. It is highly important in this period when the transition is being made from war to civilian production and when extensive investments in plant, machinery, tools and dies are necessarily being made, and when primary producers are replacing and improving their equipment, that we should wherever possible remove taxes which result in higher costs. Particularly we should remove those taxes which, imposed far back in the production process, increase costs out of proportion to the contribution which they make to the revenue. It is especially important that if such reductions in taxation are to be made, they should be made now so that industries should not face the future with inflated costs of construction and equipment. It is of importance further that in the expansion of our peace-time exports and in the entry of the new industries into the export field this handicap to competition in world markets should be removed.
It is proposed to exempt from sales tax machinery and apparatus (not including office equipment or motor vehicles) which, in the opinion of the Minister of National Revenue, are to be used directly in the manufacture or production of goods. This exemption from sales tax will be effective as from midnight to-night.
The house will note that the sales tax is being removed from machinery and apparatus used in the manufacture or production of goods but not those used in distribution or in the rendering of services. The principle which we are endeavouring to follow is to remove the sales tax from the costs of those industries which bear sales tax on their products, including also those whose products have been deliberately exempted as in the case of food products. The sales tax will be imposed still on machinery and apparatus used in distribution and in service industries on which no sales tax is levied.
Nearly all the machinery used by primary producers is already specifically exempt from sales tax but the provision which is now being proposed will extend the exemption somewhat further.
It is estimated that in a full year this exemption from sales tax will result in a loss of revenue of about $30 million, of which about half will be suffered in the current fiscal year.
There are some amendments to the Special War Revenue Act which are of less importance and I shall do no more than mention them. It is proposed to simplify the present unsatis-
The Budget-Mr. llsley
[Stage Direction]
factory taxation on furs. At present there is a twenty-five per cent excise on furs, levied at the point of dressing and dyeing, and no sales tax on furs as such. The sales tax is, however, imposed on fur-trimmed garments. It is now proposed to reduce the excise tax to ten per cent and to subject all garments and articles of fur as well as fur-trimmed garments to the eight per cent sales tax. The main result of this change will be simplification and uniformity of tax treatment but there will also be some slight reduction in the tax on furs generally and a more substantial reduction in the tax on furs used in the trimming of cloth garments. The time of reclassifying manufacturers of fur garments as manufacturers for sales tax purposes will be announced by the Minister of National Revenue after a survey of the inventory position.
At the present time Canadian tourists returning from the United States are given an exemption on purchases up to $100 which they bring in with them. Under the present law the retail excise tax is levied on articles included in such purchases. The tax is difficult to collect and it is felt that its collection is an unnecessary reduction of the tourist privilege which has been reciprocally extended between ourselves and the United States. It is therefore proposed to exempt these purchases from the retail excise tax.
The considerations, which we have had in mind in framing the budget proposals, indicate that tax reductions should be concentrated on the most vital points and should not extend to the taxation of consumer commodities in general. There are other and more appropriate ways of stimulating consumer buying to the extent that it requires stimulation be5'ond its present high level. There will be later periods when reduction of taxes on the classes of consumer commodities subject to tax will be more necessary and will have a more beneficial effect than now.

[Stage Direction]
The Excess Profits Tax Act is a war measure which has commanded overwhelming support as an important and necessary instrument of war finance. Unmodified, it seriously weakens the stimulus toward the investment of capital and the efficient operation of enterprises. In this period of reconstruction it is becoming a barrier to expanding employment.
I have therefore three major modifications to propose. The first has to do with sole proprietorships and partnerships. The incomes of these firms are also subject to the personal income tax and the excess profits tax has perhaps been particularly severe on them, particularly on some smaller firms which have experienced no great increase in profits during the war. I am conscious of the fact that in the United States the excess profits tax has never been imposed on such firms. It is now proposed to remove from all sole proprietorships and partnerships the 15 per cent rate on total profits but to leave them for the time being subject to the excess rate. In the other proposals which I have to make there will also be additional relief to this class of firms.
The second proposal is concerned with small firms whether incorporated or not. It has been argued that such small firms have suffered more than most by reason of the fact that they could be reasonably expected to grow proportionately more than the larger firms. Many of these firms have only the minimum rate of standard profits of $5,000. Many have expanded during the war and it is represented that they can be a very great factor in providing employment in the postwar period. The position of such firms has been substantially relieved both in the United Kingdom and in the United States. It is accordingly proposed to increase the standard profits of all firms by half the difference between their present standard profits and $25,000. This will have the effect of raising the minimum standard profits from $5,000 to $15,000. Further, in the case of a firm whose present standard is $13,000, its new standard will be $19,000. Firms which have a standard profit of $25,000 or more will not be affected by this proposal.
Under this and previous recommendations, upwards of 12,000 businesses will be released entirely from excess profits and many others will experience some diminution of tax.
The government has reached the conclusion that in a period when we wish to encourage the fullest expansion of employment and income the 100 per cent rate under the Excess Profits Tax Act cannot reasonably be maintained. Now that we are moving from war to peace its undesirable effects become greater. The Excess Profits Tax Act has been in operation from the beginning of the war and the standard profits established on the basis of average profits before the war are becoming more and more out of date. There is widespread evidence that incentive is being stifled and that ordinary prudence in the making of business expenditures has been seriously weakened.
As an interim step towards the ultimate abolition of the excess profits tax, it is pro-
I.Mr. llsley.]

The Budget-Mr. Ilsley
posed (a) to abolish the twenty per cent refundable portion of the excess profits tax; and (b) to reduce the rate on excess profits to sixty per cent. The simple effect of the proposed legislation will be that all corporate profits will bear a rate of forty per cent, and corporate profits in excess of 116$ per cent of standard profits will bear an additional tax of twenty per cent. In the case of sole proprietorships and partnerships, the rate on profits in excess of approximately 117 per cent of standard will be sixty per cent. It is proposed that these changes in the Excess Profits Tax Act should be effective as from January 1, 1946.
It is estimated that as a result of these changes the government will lose its source of borrowing S72 million as the refundable portion of the excess profits tax; that the reduction of the excess rate to sixty per cent will result in a loss of revenue of 5572 million in a full year; that the raising of the standard profits for small firms and the exemption of unincorporated firms from the fifteen per cent rate will cost S22 million.
Confronted as we are by continuing war expenditures and with business profits still extremely buoyant as a result of high government spending and rising private expenditures, I have reached the conclusion that it is not in the interest of the country and of an orderly and rapid transition to a peace-time economy to remove the excess profits tax entirely at this time. In stating this conclusion, I do not in any way qualify the previous assurances that have been given that the excess profits tax will not be retained indefinitely.
Nor is it possible in my view at present to modify the 40 per cent rate on corporations. If the present tax agreements with the provinces lapse without being replaced by new agreements, the government is bound to reduce the corporation rate by ten per cent. If new agreements are reached the rate can be reduced promptly but to reduce the rate now by any substantial percentage and be bound to reduce it by ten per cent more at the end of 1946, would, in my view, establish too rigid a programme of tax reduction. There are, I have no doubt, substantial arguments for some reduction but the considerations stated have appeared to the government conclusive. I am bound to add further that only a very small proportion of the complaints received by the Department of Finance concerning business taxation have referred to the 40 per cent rate.
There are certain less important changes which it is proposed to make in the Excess Profits Tax Act. Now that the 100 per cent
rate is being reduced to 60 per cent, it is proposed to remove the limitation which has hitherto been imposed by administrative regulation on expenditures in advertising. Its removal will of course date as from January 1, 1946.
There has been a provision of some importance to the mining industry under which the profits of new base metal or strategic mineral mines have been exempted from excess profits tax for the first three years of their operation. This exemption is due to expire on December 31, 1945. It is proposed now to extend it and to include thereunder the profits from gold mines and from certain industrial-mineral mines.
It is proposed also to extend for another year the tax credits allowed to mining and oil companies for off-property expenditures on exploration and in the case of oil companies for expenditures on deep-test wells.
In respect of forest industries, it is proposed to allow by administrative regulation the amortization of any unamortized portion of capital expenditures where, as a result of fire, insects, disease, or storm, operations in a particular area are abandoned.
In the budget of last year provision was made to allow the writing back to the profits of a war year of one-half the maintenance and repair expenditure incurred in a designated post-war year. In view of the continuing shortage of certain materials and the large amount of construction work to be done, the period has not as yet been designated but continuing consideration will be given to the matter.

[Stage Direction]
I turn now to the personal income tax from which currently about one-third of our tax revenue is derived. I think there is no doubt that the personal income tax in the post-war period will continue to occupy a major place in our taxation structure. The extent and nature of the requirements of the government will necessitate dependence on the personal income tax as a major element in the1 taxation system. It should be, however, an income tax carefully revised to ensure its-efficiency and its suitability to the post-war-requirements.
As I have recalled to the house earlier, the present personal income tax was built up to its war-time level and system of collection at the source between 1939 and 1943. Many devices, including a somewhat elaborate system of refundable taxes, were adopted in order to make severe taxation tolerable in
The Budget-Mr. Ilsley
[Stage Direction]
the varying circumstances of different groups. As a general rule, very high taxation must be complicated unless parliament is willing to be ruthless in the face of the hardship of individual situations. I would go further and state that the longer very high taxation remains in force, the more complicated it will become through acceding to demands for special alleviation. In 1944, provision for the refundable portion of our personal income tax was rescinded though its calculation still enters into the calculation of the tax payable. This contributes what is now an unnecessary complication to the tax.
There are clear and obvious reasons for as early a reorganization and simplification of this tax as is practicable. These reasons have been very actively in mind. As I studied the matter, however, I became aware of other important considerations. A thorough and workmanlike overhaul of the whole personal income tax structure can be undertaken most effectively in the light of a realistic post-war level of taxation. In presenting the budget a few weeks after the cessation of hostilities, a budget for a fiscal year which is already half gone, the Minister of Finance cannot, with assurance, project his estimates so far ahead. The government has made certain financial and other proposals to the provinces. If they are accepted, the government will bring forward legislation for extended social security measures involving a contribution, which, whatever its form, will have an important bearing on the equitable distribution of income tax rates. If the proposals are rejected by the provinces and no general agreement is reached, the dominion is obligated to make some reduction in its tax rates and will have to consider what responsibilities it can assume, in those circumstances, in respect to any or all of the proposals.
Any reorganization of the personal income tax must be so carefully and thoroughly done that it will not have to be re-done in the early future. I have somewhat reluctantly reached the conclusion that, at this early date and in view of the contingencies involved in our discussions with the provinces, it is wise not to attempt to combine an immediate revision of the whole personal income tax structure with reduction of the tax.
My colleague, the Minister of National Eevenue, has found, however, that it is possible, even though the law is not simplified, to introduce administratively a great simplification for the taxpayer himself. When the returns for 1945 are due it will be found that a greatly simplified system of calculation has
been introduced. This is not a matter of legislation but more specific information can be given the house on a convenient occasion.
The considerations which are important in contemplating some reduction of the personal income tax are those which I emphasized earlier. It is not possible, at this early date and with high continuing commitments, for a responsible Minister of Finance to propose lavish reductions in any major tax. He has to reckon with a future in which our commitments vis-a-vis the provinces are unknown. He has to plan for reasonable contraction of the budgetary deficit. I am impressed, however, with the great and harmful effect which our present high personal income tax is having in discouraging work and initiative in all groups at a time when we need a rapid expansion of employment and a willing mobility of labour. I laid great stress on these harmful effects in 1944 when the refundable portion of the tax affecting mainly the lower-income groups was removed. Conversely, I am convinced that a reduction in the personal income tax can make a major contribution to the stimulation of initiative and employment.

[Stage Direction]
I think it wise therefore to recommend an interim measure of prompt and unquestionable relief. It is proposed that the tax levied shall be abated by 16 per cent dating from October 1, 1945. This abatement of 16 per cent will be applied to the current tax deductions at the source just as soon as the necessary change can be made. Since the change is applicable from October 1, the abatement on the whole tax liability for 1945 will amount to 4 per cent. For a full year, the abatement will be 16 per cent of the tax liability.
This is an interim measure to be applied immediately and to continue until it is possible to combine further abatement with a thorough overhaul of the whole rate structure of the personal income tax. I would hope that new arrangements with the provinces and further progress in the transition to peace-time conditions would have so clarified the outlook that it would be possible in the budget of 1946 to propose such a comprehensive revision.

[Stage Direction]
In addition to the major change which I have just explained, there are a number of further important amendments being proposed. On the coming in force of the Family Allowances Act it was necessary, to implement the provision of that act, that steps
[Stage Direction]
The Budget-Mr. Ilsley
should be taken under the Income War Tax Act to adjust the deduction from income tax on account of dependent children in order to avoid duplication where family allowances were being paid in respect of such children. A table was issued at that time showing the adjustment of tax deductions at the source in accordance with this principle. For the sake of simplicity, the table was in the form of a recapture of a stated percentage of the family allowance according to the taxable income of the taxpayer. Its effect, however, was to reduce or eliminate the tax credit allowed for children dependent on the taxpayer and on behalf of whom family allowances had been received during the year. For the sake of simplicity also, the adjustment was approximate, care being exercised that no one was penalized and that on the whole taxable persons in the lower income groups retained some net gain as the combined result of family allowances and tax credits under the Income Tax Act. In view of the proposed tax abatement, it is necessary to provide a new scale of adjustments for 1946.
In the budget of last year I announced that there were certain complicated tax problems which I felt required more concentrated attention and more public consideration than the Department of Finance was able to give to them, and that I should recommend the appointment of two special commissions to report on these problems. These commissions were appointed, have conducted extensive inquiries and both of them have now reported.

[Stage Direction]
The report of the commission on the taxation of annuities and family corporations under the chairmanship of Mr. Justice Ives presented its report last spring and the report has been printed and made public. I have no doubt that members of the house are familiar with its recommendations. The government is prepared to accept all the main recommendations of this commission and I am proposing that, in so far as legislation is required, the necessary amendments should be introduced. Without entering into the arguments by which the commission supported its recommendations, I will state very briefly what the government's proposals are. It is proposed that in respect of contractual annuities, the capital element in such annuities should not be taxed. It is recommended that annual or periodic payments under wills or trusts should be subject to income tax only to the extent that they are paid out of income. In respect of pensions, the resolutions will provide for the
taxation of all pensions except that, where an employee has not in the past been entitled to a deduction from taxable income in respect of his contributions, an appropriate portion of the pension shall be exempt from tax when received by him or by his dependents. Earnings in the hands of trustees of pension funds are to be made exempt from income tax. The commission recommended that the present limits placed on deductions from income in respect of employers' and employees' contributions to an approved pension fund or plan should be removed. It is fair enough to exempt reasonable contributions to moderate pensions from tax and to tax the pensions as paid. There may, I think, however, be some danger in giving unlimited freedom in respect of really large contributions to pensions which may represent a major form of investment. I have noted that one of the particular concerns of the commission was that present allowances were too low in view of the fact, which the commission reported, that under present low rates of interest it might require as high as a nine per cent contribution from the employer and an equal amount from the employee to provide a pension equal to half the employee's salary. So as not to grant an undue amount of freedom before bringing all pension funds under continuing supervision, I am recommending that the deduction to be allowed to an employee annually in respect of his current contributions to a pension fund or to an employer in respect of any employee should not exceed $900. Further, it is proposed to take steps to implement the recommendation of the commission that pension funds should be subject not only to the approval of the tax authorities but to continuing supervision.
The second main subject on which the Ives commission reported was concerned with the distribution of surpluses which had been accumulated by private closely-held companies from 1917 to 1939. The problem before the commission was to determine what, if any, abatement of income tax should be made on the distribution of such surpluses in the event of the death of a principal shareholder and for the payment of succession duties. In respect of private closely-held companies, the government proposes to implement the main recommendation of the commission on this point. It is proposed' that surplus accumulated from 1917 to 1939 by such companies should be free from tax in the hands of the shareholders if the company pays a tax thereon as provided in the schedule recommended by the commission and if the company elects before December 31, 1947, to pay such tax.
The Budget-Mr. Ilsley
[Stage Direction]
The commission made a further recommendation to the effect that on the reorganization, winding-up or discontinuance of business of any private company, the undistributed income deemed to be a payment of dividend under the present law should be reduced by an amount equal to twenty per cent of the income after tax earned in 1940 and subsequent years. This is a very drastic modification of existing practice and of the basic view of income established in our tax laws. This particular recommendation did not carry the unanimous judgment of the commissioners and it is the government's view that it ought not to be implemented immediately but should be subjected to further study.

[Stage Direction]
The second royal commission was directed to report on the taxation of cooperatives. Its report has been received only very recently and it is now being printed for tabling in the house and distribution. There has not as yet been time to give full study to the report but, if it is possible to do so, I shall introduce in the committee on ways and means further resolutions for sifch changes in taxation as seem desirable after consideration of the recommendations of this commission.
Several less important amendments which are being proposed in respect of personal income tax I shall mention only briefly. It is proposed to drop the requirement by which those disbursing dividends, registered interest and royalties are required to deduct at the source seven per cent on behalf of the taxpayer. This requirement is of little value in obtaining current payment of taxes which the taxpayer himself is required to pay in instalments. The requirement that the dis-bursera of these payments must report the amount of the payments to the inspector of income tax will of course be retained and it is this which is the important provision as far as ensuring the reporting of income is concerned. The elimination of the seven per cent deduction at the source will save a very considerable amount of clerical work and some confusion to small taxpayers.

[Stage Direction]
The house will recall that we have had in the income tax law for some time an allowance on account of unusual medical expenses which was introduced in order to provide some alleviation under circumstances which frequently gave rise to hardship. The alleviation is one, I believe, which has been much appreciated. It is proposed to enlarge the provision somewhat to allow in the event
fMr. Ilsley.]
of the death of the taxpayer the expenses paid by the estate of the deceased to qualify for the allowance and to allow the deduction from taxable income to be taken in the year prior to the death of the deceased.

[Stage Direction]
There has been a special exemption in the Income Tax Act for those members of the armed forces whose duties were performed afloat or in aircraft, and a similar exemption was allowed to civilians employed in flying by the Royal Air Force Transport Command. Now that active hostilities have ceased, the occasion fur the exemption has disappeared and the exemption is being withdrawn.

[Stage Direction]
Last spring in connection with plans which were being worked out for the repayment of Alberta bonds and in an attempt to forestall any speculative gain on the part of those who might trade in Alberta bonds, I undertook to recommend a special tax of 100 per cent on profits made through the purchase of such bonds. I shall therefore recommend the imposition of a 100 per cent tax on any profits made on Alberta bonds purchased between January 31, 1945, and August 7, 1945. By the latter date the full terms of the offer of the Alberta government had been made known and time had been given for full publicity.
I have received strong representations in favour of a change in the law which would allow the acceptance of the average income over a period of years as the taxable income of farmers and fishermen whose incomes are subject to great variability on account of weather as well as of markets. I have been impressed with the reasonableness of the requests, though hitherto the proposals made have involved collecting a tax from farmers and fishermen in bad years in which they might actually have had a loss. I am hopeful, however, that a solution can be found to the problem and I am prepared to give the most sympathetic consideration to the inclusion of a provision of this sort in a revised income tax law.
There have been a considerable number of inquiries as to when the refundable portion of the personal income tax is to be returned to the taxpayer. It is provided in the act that in the case of taxes paid on income for the 1942 taxation period, repayment shall be made not later than the end of the second fiscal period commencing after the cessation of hostilities. That means that refunds on 1942 taxes must be paid not later than March 31, 1948. Refundable taxes for 1943 must be re-

The Budget-Mr. Ilsley
paid not later than March 31, 1949, and those for the six months of 1944 not later than March 31, 1950. These are the latest dates at which the refunds can be made. It is open to the governor in council to make refunds at earlier dates but there is no provision for the return of these funds selectively to some individuals and not to others. The present time does not appear to the government to be a period in which such a general refunding of these sums is desirable owing to the strong inflationary pressures which still exist. Under changed conditions, the government would give consideration to the payment of these refunds without necessarily waiting till the dates specified.

[Stage Direction]
Thera are two simple amendments to the Succession Duty Act which I shall propose. In accordance with the recommendation of the Ives commission, it will be recommended that no succession duty shall be levied on the value of any pension receivable as taxable income with appropriate apportionment in the event of a pension being partly taxable and partly non-taxable. There has not hitherto been in our Succession Duty Act any provision for alleviation of succession duties in respect of so-called quick successions. Having examined the legislation in the United Kingdom and the United States on this matter, I am recommending provision for a percentage reduction in succession duties where the same property passes again as a result of a second death within a period of five years from the first death on which the property became subject to succession duties.
There is quite a number of amendments to the Customs Tariff Act but most of them are matters of redefinition and administrative convenience rather than of major importance. I shall defer my explanations of them until the resolutions are before the house.

[Stage Direction]
This completes the proposals which are being put forward in this budget. The expected effects on the revenue are summarized in a table which I shall place on Hansard:
Loss of Revenue Resulting from Budget Proposals
	(millions of	dollars) Current
	Full year	fiscal year
War exchange tax	6 b	30Sales tax	30	15Excess profits tax	95	10Personal income tax....	115	45* *	300	100Loss of refundable portion of excess profits	tax 	72	7
On a full year the loss of revenue from these interim tax reductions will amount to approximately $300 million. In the current fiscal year, the reduction in the excess profits tax which dates from January 1 next will have only nominal effect as even firms operating on a calendar year basis will not have remitted taxes on the new schedule before March 31. The loss of revenue from the personal income tax will be somewhat less than half of the annual loss since some payments on 1945 income are not due until April 30. The estimated loss of revenue in 1945-46 is therefore $100 million. This will reduce our estimated net tax revenues from $2,265 million to $2,165 million and increase the probable deficit from $2,150 million to $2,250 million.
In recommending these interim tax reductions, my major concern has not been the financial results of the current fiscal year. I have been concerned with making such reductions as would speed up the transition to peace-time conditions and contribute promptly to the expansion of enterprise and employment. I have been willing therefore to look beyond the end of this fiscal year and, despite uncertainty as to the tax fields which we can occupy exclusively in the future, recommend these immediate steps which will have the effect of maintaining the incomes from which all government revenues are derived.
In a period when the transition to peacetime employment is proceeding rapidly and government expenditures are being replaced by the expenditures of the public on investment and consumption, the right course seems to me to encourage that shift by tax reduction and endeavour in the months ahead to reduce our war expenditure as rapidly as possible.
There is another word to be said. By reducing taxes, we are leaving a somewhat larger deficit than otherwise to be covered by borrowing. As I have said before, our total requirements over the next twelve months are likely to be as much as $4,000 million. With these tax reductions, we cannot expect to cover more than about $2,000 million by revenues. A victory loan campaign is being launched this month to obtain from the public the funds necessary to finance most of the remainder. No other victory loan will be offered in the next twelve months. The public will be asked to subscribe their accumulated savings and to pledge their savings over the next twelve months in the purchase of bonds. I cannot emphasize too strongly the continuing need for savings. There will be over the
The Budget-Mr. llsley
[Stage Direction]
months ahead' some legitimate and increasing expenditure of war-time savings by individuals in acquiring houses and in making some of the purchases deferred for the war. As one who has had some responsibility for encouraging war-time savings, I am anxious that they should meet the real needs of the individual whether those be improved housing, better standards of living or better provision for old age. I do not want to see them dissipated as were savings after the first world war in unnecessary spending at inflated prices. There is still great national need for systematic saving and prudent spending. Hostilities have ended but men have still to be brought home and1 reintroduced to civil employment. Our world trade must be reestablished and our customers temporarily financed. The appeal of the government for this victory loan is still urgent and it is a national appeal.
I referred earlier in this speech to the road which we have travelled in financial and economic policy during the war. The recommendations of this Budget are that we now begin to direct our course toward the needs and requirements of a peaceful future. We are making good progress in the transition. There are difficulties and there will be setbacks, but they are proving less rather than more than we anticipated. If we move in good order and with the interest of the nation as a whole at heart, we can carry the achievements of the war into the achievements of peace in the months and years to come.
RESOLUTION S Income War Tax Act
Resolved that it is expedient to amend the Income War Tax Act, and to provide
1. That for 1945 and subsequent taxation years the capital element in contractual annuities be exempt from tax;
2. That for 1945 and subsequent taxation years annual or periodic payments received under the provisions of a will or trust be considered taxable income to the extent only that they are paid or deemed to be paid out of the income of the estate or trust;
3.	That the income of all approved superannuation or pension funds or plans in 1946 and subsequent taxation years be exempt from tax in the hands of the trustees;
4.	That all payments of superannuation or pension to former employees or their dependents in 1946 or subsequent taxation years be taxable income, provided that, where a former employee has not in the past been entitled to a deduction from income in respect of his contribution to an approved fund or plan, only a proportionate part shall be taxable;
5.	That the limitations on deductions for contributions in 1946 or subsequent taxation years by an employer or an employee to a
superannuation or pension fund or plan be increased to $906, and that the percentage limitation in respect of the employer's contribution be removed;
6.	That the exemptions and deductions for 1946 and subsequent taxation years in respect of a superannuation or pension fund or plan be conditional upon the continuing approval of the fund or plan by the Minister of National Revenue;
7.	That a payment on or after October 13, 1945, to an employee in respect of loss of office be deemed to be income of such employee over a period of five years;
8.	That, in lieu of the taxes otherwise payable by shareholders of a private closely-held company in respect of earned surplus accumulated by the company from the beginning of its 1917 fiscal period to the end of its 1939 fiscal period, the company be allowed to elect to pay a tax equal to the aggregate of the taxes calculated in respect of the allocable portion of each shareholder determined in accordance with the following table:
On the first $25,000, or any portion thereof, 15 per cent,
$3,750 on an allocable portion of $25,000 and 18 per cent on the amount by which the portion exceeds $25,000 and does not exceed $50,000,
$8,250 on an allocable portion of $50,000 and 21 per cent on the amount by which the portion exceeds $50,000 and does not exceed $100,000,
$18,750 on an allocable portion of $100,000 and 24 per cent on the amount by which the portion exceeds $100,000 and does not exceed $200,000,
$42,750 on an allocable portion of $200,000 and 27 per cent on the amount by which the portion exceeds $200,000 and does not exceed $300,000,
$69,750 on an allocable portion *f $300,000 and 30 per cent on the amount by which the portion exceeds $300,000 and does not exceed $400,000,
$99,750 on an allocable portion of $400,000 and 33 per cent on the amount by which the portion exceeds $400,000;
9.	That the provision contemplated by Resolution 8 be applicable only if the company elect on or before December 31, 1947, and that the tax be payable in four annual instalments, the first one being due on December 31, 1947, with interest at 4 per centum per annum on each instalment from December 31, 1946, until due and thereafter until paid at 7 per centum per annum;
10.	That for 1944 and subsequent taxation years the provision for deductions of unusual medical expenses be extended in the event of the death of the taxpayer either in the taxation year or subsequently to include expenses incurred and paid either by him or by his estate in a 12-month period commencing in the taxation year;
11.	That the requirement to deduct 7 per cent tax at source on payment of interest, dividends or royalties be discontinued after December 31, 1945;
12.	That for 1946 and subsequent taxation years the exemption of the service pay and allowances of members of the Canadian naval,
[Stage Direction]
The Budget-Resolutions
military and air forces while on active service in Canada or anywhere in the western hemisphere whose duties are of such a character as are required normally to be performed afloat or in aircraft be rescinded;
13.	That for 1946 and subsequent taxation years the exemption of one-third of the remuneration paid to the civilian officers or employees of the Royal Airforce Transport Command whose duties are of such a character as are required normally to be performed in aircraft be rescinded;
14.	That the exemption of limited dividend housing corporations be broadened to include institutional housing corporations and institutional holding companies as defined by The National Housing Act, 1944;
15.	That a special tax be imposed equal to 100 per cent of the profits made by persons who between January 31, 1945, and August 7, 1945, purchased bonds or debentures of or guaranteed by the province of Alberta which were outstanding on January 31, 1945, and were included in the debt reorganization proposal of the provincial government, dated July 16, 1945, such profits to be the difference between the purchase price and the selling price of the bonds or debentures, if sold by such purchasers, or the difference between the purchase price and the total value of rights accruing to the purchasers on implementation of the provincial government conversion plan, as the case may be;
16.	That the right of a corporation whose principal business is the production, refining, or marketing of petroleum or petroleum products to deduct 40 per centum of the exploration coste and drilling costs of oil wells which prove to be unproductive be extended to wells spudded in before the thirty-first day of December, 1946;
17.	That, the right of a corporation, association, syndicate or exploration partnership, formed for the purpose of exploring and drilling for oil, to deduct 26§ per centum of exploration and drilling expenses be extended to expenses incurred in 1946;
18.	That the right of a corporation, association, syndicate or exploration partnership, formed for the purpose of exploring and drilling for natural gas, to deduct 30 per centum of exploration and drilling expenses b« extended to expenses incurred in 1946;
19.	That a corporation whose chief business is that of mining or exploring for minerals be allowed to deduct 26§ per centum of prospecting, exploration and development expenses incurred in 1946 in searching for minerals;
20.	That the right of corporations, associations, syndicates or exploration partnerships whose principal business is production, refining or marketing of petroleum or exploration or drilling for petroleum to deduct 50 per centum of expenditures made directly or indirectly in connection with deep test oil wells which prove to be unproductive be extended to wells spudded in before the thirty-first day of December, 1946.
21 (a) That in respect of persons other than corporations the tax for 1945 be reduced by 4 per cent of the aggregate of the normal tax, the graduated tax and the investment surtax;
(b)	That in respect of persons other than corporations the tax for 1946 be reduced by 16 per cent of the aggregate of the normal tax, the graduated tax and the investment surtax;
22. To provide for an appropriate additional tax dependent on the income of the taxpayer in cases where family allowance payments are received in order to adjust the benefits in respect of dependent children.
Excess Profits Tax Act
Resolved that it is expedient to amend the Excess Profits Tax Act, 1940, and to provide
1.	That individuals and partnerships be exempt from the 15 per cent tax on total profits of 1946;
2.	That the tax on excess profits of individuals and partnerships in 1946 be reduced from 100 per cent of the excess profits to 60 per cent of that portion of the excess profits which are in excess of 117-647 per cent of the standard profits, and that the provision for refund of a portion of the tax be repealed;
3.	That for 1946 the following rates of tax apply to corporations;
(a)	22 per cent of the profits of corporations and joint stock companies before deduction therefrom of any tax paid thereon under the Income War Tax Act;
(b)	in. the case of corporations and joint stock companies which have filed consolidated returns, 20 per cent of the profits which are in excess of 117-241 per cent of the standard profits of such consolidated companies;
(c)	in the case of other corporations and joint stock companies 20 per cent of the profits which are in excess of 116-66 per cent of the standard profits;
and that the provision for refund of a portion of the tax be repealed;
4.	That on the profits of 1946 and subsequent years the minimum standard profits of taxpayers be increased from $5,000 to $15,000, and that where a taxpayer's standard profits are on January 1, 1946, in excess of $5,000 but less than $25,000 they be increased by one-half the difference between their present amount and $25,000;
5.	That the special rate of tax applicable to businesses commencing after June 24, 1944, not apply to cases where in the opinion of the Minister there has been no bona fide commencement of a new or substantially different business;
6.	That the exemption of the profits of corporations derived from the operation of any base metal or strategic mineral mines be extended to the profits of corporations derived from the operation of gold mines and industrial mineral mines, and that such exemption be extended to the profits of such mines which come into production after January 1, 1946.
Dominion Succession Duty Act
Resolved, that it is expedient to amend The Dominion Succession Duty Act, and to provide
1.	That no duty shall be leviable on the value of any pension or portion thereof which is receivable as taxable income within the meaning of The Income War Tax Act.
2.	Where the minister is satisfied that succession duty has become payable upon or with respect to the succession to any property and that subsequently within five years succession duty has again become payable upon or with
7'he Budget-Resolutions
[Stage Direction]
respect to the succession to the same property or any part thereof, on the death of the person to whom the property passed on the first death, the amount of succesison duty payable on the second death with respect to the succession to such property shall be reduced as follows:
(a)	where the second death occurs within one year of the first death, by fifty per centum;
(b)	where the second death occurs within two years of the first death, by forty per centum;
(c)	where the second death occurs within three years of the first death, by thirty per centum;
(d)	where the second death occurs within four years of the first death, by twenty per centum;
(e)	where the second death occurs within five years of the first death, by ten per centum.
Special War Revenue Act
Resolved that it is expedient to amend the Special War Revenue Act, and to provide
1.	That the consumption or sales tax shall not apply to machinery and apparatus and complete parts thereof which, in the opinion of the Minister of National Revenue, are to be used directly in the process of manufacture or production of goods; provided that this exemption shall not apply to office equipment* or motor vehicles;
2.	That the retail purchase tax shall not apply to goods valued at not more than $100 included in baggage accompanying residents returning
from abroad after an absence of not less than 48 hours such as is presently allowed in the case of other excise taxes;
3.	That the 10 per cent war exchange tax be rescinded;
4.	That the excise tax of 25 per centum imposed on fur and furs be reduced to 10 per centum, and that on a date to be determined by the Minister of National Revenue the existing exemption from sales tax of fur garment manufacturers as small manufacturers be withdrawn;
5.	That the net premium tax on insurance companies be reduced by a credit for premium tax paid in any other country;
6.	That enactments founded on these resolutions come into force on the thirteenth day of October, 1945.
The Customs Tariff
1.	Resolved, that Schedule A to the Customs Tariff be amended by striking thereout tariff items 72e, 186, 192b. 197d, 208, 216a, 219e, 272b, 326e, 386 (p), 398, 399, 438b, 438c, 438d, 438i, 445o, 445p, 446c, 454, 462a, 616(iii), 648a, 653, 669, 670, 700a, 703 and 756, 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:
[Mr. Ilsley.l
Tariff Item	-	British Preferential Tariff	Intermediate Tariff72e	Bent grass seed, not to include red-top grass seed....	15 p.c.	30 p.c.90e	Vegetables, frozen	10 p.c.	25 p.c.186	Paper calendered to between -006 and * 0085-inch	thickness adapted for the manufacture of shot shells, when impoited by manufacturers of shot shells for use exclusively in the manufacture of such articles in their own factories; and felt board sized and hydraulic pressed, and covered with paper or uncovered, adapted for the manufacture of gun wads	Free	Free197d	Tissue paper, not coated nor impregnated, when imported by manufacturers of stencils for duplicating machines for use exclusively in the manufacture of such stencils in their own factories	Free	10 p.c.208	Boracic acid and borax in packages of not less than twenty-five pounds weight; hydrofluosilicic acid: tannic acid; ammonia, sulphate of; cyanide of potassium; cyanide of sodium and cyanogen bromide; antimony salts, viz.: tartar emetic, chloride and lactate (antimonine); arsenous oxide; precipitate of copper (crude); verdigris or sub-acetate of copper, dry; sulphur and brimstone, crude or in roll or flour; argols; iodine, crude; bromine; sulphide of arsenic; carbon bisulphide, n.o.p	Free	Free219e	Chloropicrin, ethylene oxide, methyl bromide, methyl formate, cyanides, carbon bisulphide, acrylonitrile, or mixtures containing any of these, for use in combating destructive insects and pests	Free	Free272b	Paraffin wax, n.o.p	15 p.c.	22$ p.c.272c	Paraffin wax when imported for use exclusively in the manufacture of randies	10 p.c.	12J p.c.General Tariff	Present Rates	B. P. Tariff	Intermediate Tariff	General Tariff30 p.c.	15 p.c.	30 p.c.	30 p.c.30 p.c.	15 p.c.	32* p.c.	35 p.c.Free	Free	Free	Free15 p.c.	22* p.c.	25 p.c.25 p.c.	Free	10 p.c.	25 p.c.15 p.c.	22* p.c.	25 p.c.Free	Free	Free	FreeFree	Free	Free	FreeFree	20 p.c.	25 p.c.25 p.c.	15 p.c.	22* p.c.	25 p.c.25 p.c.	15 p.c.	22* p.c.	25 p.c.
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The Budget-Customs Tariff
Tariff Item	British Preferential Tariff	Intermediate Tariff	General Tariff	Present Rates	B. P. Tariff	Intermediate Tariff	General Tariff326e	Articles of glass, not plate or sheet, designed to be cut or mounted; articles of glassware, when imported by manufacturers of silverware to be used in receptacles made of or electro-plated with precious metals or to be equipped with tops made of or electro-plated with precious metals, in their own	Free	10 p.c.	22} p.c.	Free	10 p.c.	22\ p.c.10 p.c.	30 p.c.	32} p.c.326k	High thermal shock resisting glass bowls when imported by manufacturers of coffee makers for use exclusively in the manufacture of such articles in	Free	Free	25 p.c.	Free	25 p.o.	32} p.c.386	(p) Sheets or strip, of iron or steel, hot or cold rolled, with silicon content of 75 p.c. or more, when imported by manufacturers of electrical apparatus, for use in the manufacture of electrical	Free	12} p.c.	12} p.c.	Free	12} p.c.	\2\ p.c.7i p.c.	20 p.c.	20 p.c.398	Pipes and tubes, of steel, seamless, cold drawn, plain ends, valued at not less than five cents per pound,	n.o.p.:-	5 p.c.	5 p.c.	Free	5 p.c.	5 p.c.Free	20 p.c.	20 p.c.	Free	5 p.c.	5 p.c.398c	Welded stainless steel tubes, not more than 6 inches in diameter, when imported by manufacturers of condensers or evaporators for use exclusively in the manufacture of condensers or evaporators in their	Free	10 p.c.	30 p.c.	15 p.c.	27} p.c.	30 p.c.399	Pipes, tubes and flues, of wrought iron or steel, with plain, swelled or thickened ends, when imported for use exclusively in the manufacture or repiar of pressure parts of boilers, pulp mill digesters and vessels for the refining of oil, under regulations prescribed by the Minister:-	Free	Free	Free	Free	Free(ii) N.o.p	Free	20 p.c.	20 p.c.	Free	Free	Free
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The Budget-Customs Tariff
434c
Trucks of welded design with tubular frame, cast steel cross members, rubber mountings and rubber inserted wheels, of a class or kind not made in Canada, and body shells of welded sheet steel, for use in the construction of street railway cars, not to include electric motors or magnetic truck brakes; complete parts of the foregoing	
Free
10 p.c.
438b
Bearings, clutch release; bearings, graphite; bearings, steel or bronze backed, with non-ferrous metal lining; bushings, graphited or oil impregnated; ceramic insulator spark plug cores, not further manufactured than burned and glazed, printed or decorated or not, without fittings; commutator copper segments; commutator insulating and rings; tapered discs of hot rolled steel, with or without center hole, for disc wheels; distributor rotors and cam assemblies; door bumper shoes; electric wiring terminals, sockets, fittings and connectors and parts thereof, not to include battery terminals; gaskets of any material except cork or felt, composite or not; ignition contact points; keys for shafting; lenses of glass for head, tail, dome, signal and cowl or parking lamps, and for light reflectors; lock washers; piston ring castings in the rough, with or without gates and fins removed; rails of lock seam section, corners, locks and catches, unplated ventilators and parts thereof, the foregoing being of metal other than aluminum, for the manufacture of window sashes for bus bodies; steel bolts, capped with stainless steel; switches for lamps, heaters and defrosters and parts thereof; vacuum control assemblies; vulcanized fibre in sheets, rods, strips and tubing; all of the foregoing when of a class or kind not made in Canada and for use in the manufacture or the repair of the goods enumerated in tariff items 424 and 438a, or for use in the manufacture of parts therefor....
Free
Free
35 p.e.
30 p.o.
Free
30 p.c.
35 p.c.
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Free
Free
30 p.c.
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The Budget-Customs Tariff
Tariff Item	British Preferential Tariff	Intermediate Tariff	General Tariff	Present Rates	B.'P. Tariff	Intermediate Tariff	General Tariff438c	Ammeters; arm rests and wheel housing lining of indurated fibre, pressed to shape; axle housings, one piece welded, machined or not; carburetors and parts thereof; chassis frames and steel shapes for the manufacture thereof; cigar and cigarette lighters, whether in combination with a cigarette holder or not, including base, and parts thereof; control ventilator gear box; cylinder lock barrels, with or without sleeves and keys thereof; dash heat indicators and parts thereof; electric gear shift switches and parts thereof; engine speed governor units and parts thereof; front axle cross channel king pin support section assembly of steel, in the rough; fuel pumps, vacuum pumps and combinations thereof and parts therefor; gasoline gauges and parts thereof; hinges and parts thereof, finished or not, for bodies; horns and parts thereof; instrument bezel assemblies and parts thereof; instrument board lamps; locks, electric ignition, steering gear, transmission, or combinations cf such locks, and parts thereof; mouldings of metal, with nails set in position, lead filled or not; oil filters and parts thereof; oil gauges and parts thereof; pipe lines of tubing, rigid or flexible, covered or not, with or without fittings, and tubing therefor, for oil, fuel, air, or liquid for actuating hydraulic brakes; purifiers for air, and parts thereof; purifiers for oil or gasoline, parts thereof and brackets and fittings therefor; radiator, hood and other grills, assembled or not, but not polished nor plated, and not to include finish or decorative moulding; radiator ornaments, and hood lift lock ornaments, unplated, and parts thereof; radiator shutter assemblies, automatic; radiator water gauges; radiator shells and parts thereof, not plated nor metal finished in any degree; shackles, bearing spring, and parts thereof; speedometers and parts thereof; spring covers of metal and closing strips or shapes therefor; stampings, body, cowl, hood, fender and instrument board, of metal in the rough, trimmed or not, but not metal finished in any degree; starter switch assembly and parts thereof; steering wheels, rims and spiders therefor; sun visor blanks of gypsum weatherboard; thermos-	
The Budget-Customs Tariff
tats and parts thereof; throttle, spark and choke assemblies, including buttons therefor, and parts thereof; tire clamping rings of steel, plated or not; universal joint ball assemblies; voltage control regulators; wind-shield wipers and parts thereof; all of the foregoing when of a class or kind not made in Canada and for use in the manufacture or the repair of the goods enumerated in tariff items 424 and 438a or for use in the manufacture of parts therefor..
(1)	Provided, that if the above articles are imported. for use as original equipment by a manufacturer of automobiles, motor vehicles, electric trackless trolley buses or chassis enumerated in tariff items 438a and 424 whose total factory output during the year in which importation is sought does not exceed ten thousand complete automobiles, motor vehicles, electric trackless trolley buses or chassis, and provided that not less than forty per centum of the factory cost of production of such automobiles, motor vehicles, electric trackless trolley buses or chassis, not to include duties and taxes, is incurred in the British Empire, the rates of duty under this item shall be	
(2)	Provided, that if the above articles are imported for use as original equipment by a manufacturer of automobiles, motor vehicles, electric trackless trolley buses or chassis enumerated in tariff items 438a and 424 whose total factory output during the year in which importation is sought exceeds ten thousand automobiles, motor vehicles, electric trackless trolley buses or chassis, and provided that not less than sixty-five per centum of the factory cost of production of such automobiles, motor vehicles, electric trackless trolley buses or chassis, not to include duties and taxes, is incurred in the British Empire, the rates of duty under this item shall be	
(3)	Provided that the Governor in Council may make such regulations, if any, as are deemed necessary for carrying out the provisions of this item.
Free
Free
Free
438d
Front and rear axles; brakes; clutches; internal combustion engines; steering gears; magnetos; rims for pneumatic tires larger than thirty inches by five inches; transmission assemblies, hydraulic or fluid couplings and torque convertors; drive shafts; universal joints; steel road wheels; and parts of the foregoing, when of a class or kind not made in Canada, and imported by manufacturers of the goods enumerated in tariff items 424 and 438a for use only in the manufacture of motor trucks, motor buses and electric trackless trolley buses, or for the manufacture of chassis for the same	
Free
20 p.c.
Free
Free
17£ p.c.
30 p.o.	Free	20 p.c.	30 p.c.25 p.c.	Free	Free	25 p.c.25 p.c.	Free	Free	25 p.c.27$ p.c.	Free	17$ p.c.	27$ p.c.Free	25 p.c.	40 p.c.
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The Budget-Customs Tariff
British
Preferential
Tariff
Tariff
Item
(1)	Provided that if the above articles are imported for use as original equipment for motor trucks, motor buses and electric trackless trolley buses, or for chassis for the same, by a manufacturer of the goods enumerated in tariff items 424 and 438a, and provided also that during the year during which importation is sought, not less than forty per centum of the factory cost of production of such motor vehicles and chassis therefor, not to include duties and taxes, is incurred in the British Empire, the rates of duty under this item shall be	
(2)	Provided that the Governor in Council may make such regulations, if any, as are deemed necessary for carrying out the provisions of this item.
Free
438i
Body bottom cross members and steel shapes for the manufacture thereof; bumpers, front and rear, and parts thereof, including spring steel bumper plates; casket tables or platforms for hearses; destination and route sign assemblies, illuminated or not, and parts thereof; direction signals, illuminated or not; door and step mechanism, hand, vacuum or air operated, and parts thereof; door locks and catches and parts thereof; electric switches, buzzers, bells, push buttons, fuse assemblies and parts thereof; forward drive control conversion assemblies and parts thereof; lamps of all kinds, illuminating and indicating, including sockets, flanges, terminals, glassware, lenses and gaskets therefor, assembled or not, but not to include lamp bulbs; metal stampings, oiled and primed or not, and assemblies thereof; rubber fenders; seat operating mechanisms; ventilators, including motor drivenf an type, and grills, and parts thereof; window operating mechanisms; all of the foregoing when imported to be used only in the manufacture of motor truck bodies, motor bus bodies, electric trackless trolley bus bodies, motor ambulances and hearses	:	
Free
445o
Acid-free capacitor tissue and paper, plain and gummed; metal cans, extruded, plated or unplated; automatic record changers; parts for pickups; bias cells and holders; frames, yokes, brackets, poleo
oo
Intermediate
Tariff
General
Tariff
71 p.c.
27* p.c.
Present Rates
Free
B. P. Tariff
Intermediate
Tariff
General
Tariff
7* p.c
27* p.c.
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Free
20 p.c.
Free
Various
Free
Various
20 p.c. Various
The Budget-Customs Tariff
pieces, gasKets ana neid covers, separate or assembled for use in speakers with mounting diameter not exceeding 6§ inches; cones, spiders, spider suspensions, voice coils and voice coil dust covers, separate or assembled; magnetic structures and parts thereof for permanent magnet speakers; glass dial crystals and scales and metal dials or scales made by the silkscreen process; metal cabinet escutcheons without crystals, plain or finished; high frequency circuit switches and essential components thereof; high frequency iron cores with or without inserts moulded therein and metal powders for use in the manufacture thereof; motors and gears for automatic tuning; radio frequency ceramics; raw low loss mica; sheets and punchings of low loss mica; tube shields and parts thereof; vibrators; vulcanized fibre in sheets, rods, strips or tubing; high frequency coil forms and tubing having an outside diameter not exceeding one inch; for use in the manufacture or the repair of the goods enumerated in tariff items 445d, 597a, and other apparatus using radio tubes, or for use in the manufacture of parts therefor	
Free
445p
Ceramic parts; copper alloys for welding; getter and getter assemblies; glass parts; glass bulbs glass tubing, glass cane; mica parts; mica assemblies; wire of molybdenum and molybdenum alloy; nickel and nickel alloy tubing, wire, ribbon, screen and strip, coated or not, carbonized or not; tungsten and tungsten alloy and zinc wire; wire and strip of silver copper, chrome copper, chrome iron or plated iron; molybdenum strip; tantalum wire and strip; copper tubing, rod and strip; iron strip; leads, spuds and welds; hooks and supports; top cap assemblies; graphite anodes; heaters and filaments; metal parts, coated or not, carbonized or not; all the foregoing when imported by manufacturers of radio tubes and parts therefor, for use exclusively in the manufacture of such articles, in their own factories	
Free
Free
Free
446c
Golf shafts of seamless steel, coated or not.
Free
446h Welding rods or welding wires of all kinds, whether or
not flux-coated	
454 Frames not more than sixteen inches in width, clasps and fasteners (not to include slide or hookless fasteners), when imported by manufacturers of purses, chatelaine bags or reticules for use exclusively in the manufacture of purses, chatelaine bags or reticules, in their own factories, under regulations prescribed by the Minister; parts of the foregoing..
Free
Free
15 p.c. 15 p.c.
12J p.c.
30 p.c.
30 p.c. 35 p.c.
35 p.c. 20 p.c.
Free 10 p.c.
Free
Free 17} p.c.
Various
Free 27} p.c.
Free
25 p.c. 33} p.c.
Various
30 p.c. 35 p.c.
30 p.c.
35 p.c. 45 p.c.
Various
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Free
20 p.c.
12} p.c.	20 p.c.
30 p.c.	35 p.c.
The Budget-Customs Tariff
Tariff Item	-	British Preferential Tariff	Intermediate Tariff462a	Photographic cameras and equipment, and complete parts of the foregoing, for use by professional photographers and commercial photo-finishers in their own business, as follows:- Cameras for professional purposes, for making negatives 4| inches by 6J inches and larger, and the following accessories for use with such cameras: lenses, shutters, exposure meters, range finders, film and plate holders, lens hoods, lens boards, ground glass carriages, reducing backs, reversible adapter backs, lantern slide attachments, film sheaths, combination paper and plate holders, kits, carrying cases, camera stands, camera tripods, camera tripod tops, vignetters, diffusion disks, diffusion disk holders, colour filters, colour filter holders, polarizing screens, polarizing screen holders and backgrounds. Printers, enlargers, heaters, dryers, mounting presses, print washers, automatic film processors, printing frames and tanks for developing, fixing and washing	Free	Free616	(iii) Latex, being crude rubber in liquid form, not compounded beyond the addition of preservatives	Free	Free648a	Diamonds, rough or unset, and not advanced in condition or value from their natural state by cleaving, splitting, cutting, or other process, whether in their natural form or broken	Free	Free648b	Diamonds, n.o.p., advanced in condition or value from the natural state by cleaving, splitting, cutting or other process	Free	10 p.c.653	Brushes of all kinds, n.o.p	15 p.c.	30 p.c.669	Emery, corundum, garnet, and artificial abrasives, n.o.p., ground or unground	Free	Free670	Paper, cloth, and combinations of paper and cloth, coated with natural or artificial abrasives or with a combination of natural and artificial abrasives, and manufactures of all the foregoing; grinding	
General
Tariff
Free
Free
Free
10 p.c. 40 p.c.
Free
Present Rates
B. P. Tariff
Intermediate
Tariff
General
Tariff
Free 7* p.c.
Free 25 p.c.
Free 30 p.c.
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Free
Free
Free
Free
Free
Free
Free 15 p.c.
Free 30 p.c.
Free 40 p.c.
Free
Free
Free
The Budget-Customs Tariff
wheels, stones or blocks, manufactured by the bonding together of either natural or artificial abrasives; manufactures of emery, corundum, garnet, or artificial abrasives, n.o.p	 10 p.c.
(a)	Travellers' baggage, under regulations prescribed by the Minister	 Free
(b)	Goods valued at not more than one hundred dollars included in the baggage accompanying residents of Canada returning from abroad after an absence from Canada of not less than forty-eight hours and acquired by them for personal or household use or as souvenirs or gifts, but not bought on commission or as an accommodation for other persons or for sale, under regulations prescribed by the Minister	
Free
Provided that a resident of Canada shall not be entitled to the exemption herein granted within a period of four months from the date of the last exemption allowed, nor shall the exemption be allowed on alcoholic beverages in excess of one quart, or on tobacco in excess of fifty cigars, two hundred cigarettes and two pounds of manufactured tobacco.
Provided further that goods entitled to entry under this Item shall be exempt from all imposts, notwithstanding the provisions of this Act, The Customs Tariff Amendment Act, 1939 or any other Act.
Paperboard or fibreboard, single ply, not coated or impregnated, in rolls containing not less than five hundred square feet, when imported by manufacturers of impregnated socklining base, innersoling, welting, or similar materials, for use only in the manufacture of such materials in their own factories.
Free
20 p.c. Free
Free
10 p.c.
30 p.c.	10 p.c	25 p.c.
	12| p.c.	22J p.c.
Free	Free	FreeFree	Free	Free25 p.c.	15 p.c.	25 p.c.
30 p.e. 25 p.c.
Free
Free
35 p.c.
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The Budget-Customs Tariff
The Budget-Appendix
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2.	Resolved, that any enactment founded upon the foregoing resolutions to amend the Customs Tarilf or Schedules thereto shall be deemed to have come into force on the thirteenth day of October, one thousand nine hundred and forty-five, 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.

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A.	Review of Government Accounts, 1944-1945.
B.	Tables on Economic Conditions, 1944-1945.

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Comparative Summary of Revenues and Expenditures
1.	The figures that appear in this white paper are final, not estimated as in previous
years. The following tables show, by main categories and in detail, revenues, expenditures and the increase in net debt for the fiscal year 1944-45, together with comparable figures for the four preceding fiscal years.

The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (Thousands oi Dollars)
Tax Revenue-
Direct Taxes-
Direct Taxes on Incomes- Individual Income Tax, including
National Defence Tax	
Tax on Interest and Dividends__
Taxes on Rents and Royalties...
Corporation Income Tax	
Excess Profits Tax	
Total Direct Taxes on Incomes. Succession Duties	
Total Direct Taxes.
Indirect Taxes-
Customs Import Duties.
Excise Duties-
Spirits, malt, etc	
Cigars, cigarettes and tobacco.
Licences	
Less Refunds	
Total Excise Duties.
and
Excise Taxes-
Taxes on Commodities-
Sales Tax	
War Exchange Tax	
Automobiles, rubber tires
tubes	
Beverages	
Candy and chewing gum	
Cigars, cigarettes and tobacco...
Cigarette papers and tubes	
Electric and gas appliances....
Furs	
Gasoline	
Matches and lighters	
Phonographs, radios and tubes... Special excise on importations....
Sugar	
Toilet preparations and soaps....
Trunks, bags, luggage, etc....
Wines	
Sundry	
Taxes on Amusements and Services-
Amusements	
Tax on pari-mutuel bets	
Transportation and communication Stamps, including payment of taxes on jewellery, chinaware, cabaret
attendance, etc	
Licences, interest and miscellaneous Less refunds	
Total Excise Taxes.
Other Taxes-
Chartered bank note circulation
Insurance Companies	
Miscellaneous	
Total Indirect Taxes	
Total Revenue from Taxes	
103,535
12,282
131,566
23,995
272,138
272,138
130,757
34,140 55,417 45 -994
88,608
184,536
61,932
11,206
3,356
1,886
2,173
1,289
1,008
11,894
1,542
682
1,848
4,574
-4,835
284,167
972
506,038
778,176
296,139 26,643 1,626 185,836 135,168
645,412
6,957
534,138 26,711 1,370 347,970 454,581
652,369
142,392
46,776
65,050
-1,775
110,091
246,553
100,874
16,742
6,247
3,948
8,470
24,752
2,766
2,361
22,009
3,539
1,445
7,710
1,082
8,131
4,893
-10,370
453,425
1,148
708,544
1,360,913
1,364,770
13,273
1,378,043
118,963
65,594
76,372
-3,283
138,721
250,478
94,553
3,062
14,119
8,185
26,295
5,056
5,306
3,170
24,898
2,855
1,191
14,950
4,542
2,187
2,007
1,938
10,778
1,287
16,083
12,586
-17,549
488,712
10,893
758,677
2,136,720
813,435
25,671
1,272
311,379
468,718
1,620,475
15,020
1,635,495
167,882
65,922
79,906
-3,741
142,124
339,256
118,913
6,000
19,059
12,602
54,688
6,159
3,302
4,199
24,930
2,874
508
13,048
5,327
4,170
1,710
2,579
12,019
1,683
22,379
16,734
-34,342
638,619
6,481
956,316
2,591,811
767,755
27,053
1,546
276,404
465,805
1,538,563
17,251
1,555,814
115,091
72,133 83,142 37
-3,390
151,922
404,109 98,164
6,480
19,442
12,874
62,306
6,658
4,057
5,217
29,671
3,117
1,112
11,744
6,347
4,134
1,772
2,977
12,284
1,904
24,205
18,296
-194,719
543,065
7,182
818,312
2,374,126
The Budget-Appendix
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STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(Thousands of Dollars)
-	1940-41	1941-42	1942-43	1943-44	1944-45Non-Tax Revenue-	$ 40,383 17,902 6,266 6,107 10,921	S 45,994 25,826 4,767 11,855 14,469	$ 48,869 41,242 5,883 395 19,690	$ 61,071 48,281 8,732 2,154 13,045	S 66,056 60,749 4,586
Premium, discount and exchange						
					14,080
					
	81,579	102,911	116,079	133,283	145,471
					
	859,755	1,463,824	2,252,799	2,725,094	2,519,597
Special Receipts and Credits- Consolidated Deficit Account- Refunds of previous years' Special					
	78 1,542 1,410	102 16,384 459	239 18,651 275 6,660	221 98,918 216 2,971	53 360,061 177 589 2,625 22,400
Special Receipts-War Appropriation					
					
Canadian Wheat Board-					
Surpluses in certain special accounts Canadian National Railways- Net credit due to increase in Canadian National Railways Securities					
	1,6951	1,576'	31,560'	37,838' 53,448 26	
Previous years' war expenditure on investment in Crown plants trans-					
	4		1		
Total Consolidated Deficit					
	4,729	18,521	57,386	193,638	385,905
Capital and Non-active Accounts- Capital Accounts- Refunds of previous years'					
	20	38 984 33	102	93	728
Net insurance proceeds on the					
Non-active Accounts- National Harbours Board, reduc-			15		19
Canadian Government Merchant Marine Ltd.-balance in con-	1				
Canadian National (West Indies) Steamships, Limited, reduction				164 1,000 29	549
Canadian Pacific Railway- repayment of loan made under Unemployment Relief Act, 1932 Write-downs to Consolidated Deficit Account-					
	46	58	42		36
Total Capital and Non-active					
	67	1,113	159	1,286	1,332
Total Special Receipts and Credits..					
4,796	19,634	57,545	194,924	387,237864,551	1,483,458	2,310,344 70,000	2,920,018 155,000	2,906,834 219,500Less estimated amount of Income and Excess Profits Taxes refund-	
864,551	1,483,458	2,240,344	2,765,018	2,687,334
(') Revised to be comparable to the presentation used in Public Accounts of 1943-44, by netting the adjustments affecting the Canadian National Railways Securities Trust Stock.

The Budget-Appendix

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(Thousands of Dollars)
-	1940-41	1941-42	1942-43	1943-44	1944-45t	$	S	$	$Ordinary Expenditure	Agriculture	8,593	8,430	8,492	8,841	9,424Auditor General's Office	453	457	441	348	361Civil Service Commission	397	399	427	456	461External Affairs, including office of Prime	Minister	1,013	1,052	1,156	1,596	1,974Finance-	Interest on Public Debt	139,179	155,018	188,556	242,681	318,995Cost of Loan Flotations and Annual	Amortization of Bond Discounts and	Commissions	6,304	16,350	13,838	19,285	20,679Subsidies to Provinces	13,769	14,409	14,490	14,449	14,4455,475	Wartime Prices and Trade Board-	Dominion Fuel Board Administra-	tion, coal subsidies and subventions	(i) 4,880	(*) -	(>) -	(*) -Miscellaneous Grants and Contribu-	tions	530	531	526	528	531Civil Pensions and Superannuation....	508	445	398	356	325Government contribution to Superan-	nuation Fund	2,316	2,347	2,341	2,299	2,341Old Age Pensions, including pensions to	blind persons	29,912	29,612	29,976	30,377	32,187Premium, Discount and Exchange.. . .	-	-	-	-	16,348Compensation to Provinces under	Dominion-Provincial T axation Agree-	ments-	Income and Corporation Taxes	-	21,120	85,942	83,678	82,977Gasoline Tax	-	-	8,273	11,757	10,357Administrative and Sundry Expendi-	ture	3,500	3,807	4,181	4,472	4,724Fisheries	1,618	1,679	1,699	1,696	2,159Governor General and Lieutenant Gov-	ernors	213	226	225	222	223Insurance	176	181	182	183	185Justice	2,711	2,657	2,667	2,673	2,696Penitentiaries	2,717	2,786	2,772	2,799	2,936Labour	826	762	698	1,147	1,419Technical Education	18	41	19	23	25Unemployment Insurance Act, 1940-	Administration	69	2,344	4,657	5,171	5,115Government contribution	-	7,287	11,487	12,344	12,746Government Annuities-	Payments to maintain reserve	Ill	617	498	32	257Legislation-	House of Commons	2,468	1,408	1,827	1,915	1,612Library of Parliament	70	72	76	77	72Senate	868	424	555	562	485General	58	47	61	86	95Chief Electoral Officer, including elec-	tions	2,469	282	1,447	88	179Mines and Resources-	Administration	179	178	160	167	161Immigration	1,273	1,289	1,268	1,262	1,311Indian Affairs	5,183	5,000	4,978	5,177	6,164Lands, Parks and Forests	1,937	1,959	1,753	1,586	1,832Surveys and Engineering	1,114	1,128	1,129	1,272	1,610Mines and Geological Survey	1,173	1,156	1,140	1,125	1,217Movement of Coal and Subsidies under	Domestic Fuel Act	4,408	(*) -	(*) -	(>) -	C) -Munitions and Supply	9	12	12	14	19Dominion Fuel Board Administration	Coal subsidies and subventions	-	-	4,965	2,165	2,737National Defence-	Administration	30	43	44	36	40Sundry Services	168	223	371	32	29National Health and Welfare	1,111	1,246	1,244	1,617	1,725National Revenue (including Income	Tax)	12,229	13,428	15,190	17,721	20,114National War Services	''	682	428	547	838
1026
The Budget-Appendix
[Stage Direction]
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
' (Thousands of Dollars)
-	1940-41	1941-42	1942-43	1943-44	1944-45$	$	*	$	$Ordinary Expenditure-Con. Post Office	38,700	41,502	44,742	48,485	54,629Privy Council	54	54	62	80	81Public Archives	126	123	123	124	124Public Printing and Stationery	283	195	245	235	232Public Works	11,507	11,937	12,014	12,281	13,169Reconstruction including National Research Council	969Royal Canadian Mounted Police	5,554	5,985	6,242	6,678	7,183Secretary of State	772	823	820	831	864Trade and Commerce	4,315	(<) 6,200	4,566	4,196	3,497Canada Grain Act	1,908	1,909	1,918	2,089	2,333Mail Subsidies and Steamship Subventions 	942	616	616	800	869Transport- Administration	334	388	375	397	402Air Service	3,478	3,386	3,334	3,593	3,939Marine Service	3,795	4,010	4,257	4,504	4,897Canadian Travel Bureau	470	(5)	(s) -	(*) -	(') -Railways and Canals	3,527	3,694	3,340	4,090	4,260Maritime Freight Rates Act	3,951	3,935	4,894	5,058	4,733Railway Grade Crossing Fund	120	25	12	17	34Veterans Affairs- Departmental Administration	133	182	162	176	195Pensions (War 1914-18 and military)...	41,515	40,569	39,684	38,998	39,372War Service Gratuities and credits....	-	-	-	-	20,228Treatment and after-care of returned soldiers and allowances to dependents	13,402	12,667	12,689	14,050	19,845Soldier Settlement and Veterans Land Act	582	. 564	567	837	1,391Total ordinary expenditure	390,629	444,778	561,251	630,381	767,376Capital Expenditure Railways	7	4	38	692	630Public Works	3,351	3,426	3,238	1,930	2,534Total Capital Expenditure..	3,358	3,430	3,276	2,622	3,164War Expenditure National Defence-Army- Army Services	380.345	502,773	1,021,944	1,312,348	1,243,732Internment Operations	805	1,370	1,556	1,100	1,580Inspection Board of the U.K. and Canada	4,876	10,946	10,522	8,362Sundry	2,085	2,150	3,344	4,835	8,080383,235	511,169	1,037,790	1,328,805	1,261,754National Defence-Naval Services	88,16S	129,388	210,182	369,556	417,099National Defence-Air Services- Overseas War Establishment	5,362	13,333	23,666	383,888	759,070Home War Establishment	49,415	109,820	226,550	312,761	227,942Air Training	121,502	247,383	366,897	233,893	272,342Sundry	-	113	122	124	103176,279	370,649	617,235	930,666	1,259,457Munitions and Supply- Administration	2,068	4,930	9,457	9,957	8,841Expansion of Industry	77.8S6	247,761	469,675	672,804	205,039Acquisition of U. K. Assets	-	-	200,000	[DOT]5,000	1,96479,954	252,691	679,132	687,761	216,844
(') For previous years included in Departments of Trade and Commerce and Mines and Resources (*) For current year see Department of Munitions and Supply.
(') For relative years see Departments of Finance and Munitions and Supply.
(*) Includes an amount of $2,615,000 for Census of population of Canada.
(*) Included in Department of National War Services.
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The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
-	1940-41	1941-42	1942-43	1943-44	1944-45War Expenditure-Continued Agriculture- Disposal of agricultural products rend-	$	S	*	$	icred surplus by the War	
Subsidy to increase export bacon price to secure adequate supplies for the	4,350	2,260	2,901	1,876	1,194U.K	
Payments on cheese exports to the	-	2,281	-	-U.K	
Freight assistance on western feed	-	1,784	-	-	grains	
Payment to increase the income ol farmers in the spring wheat area of	3,972	10,318	17,754	15,943Western Canada.	
Fertilizer subventions and freight	-	16,299	2.67S	19	2allowance	
Subsidy on western wheat used ex-	-	-	1,036	903	350clusively as feed for live-stock	- 	-	836	4,500	7,471Subsidy on milk and milk products. .. Premium on hog carcasses suitable for	-	-	-	29,505	42,330export to Great Britain	
To provide for reserve stocks of feed	' 	-	-	3,855	14,091grains	-	-	-	1,292	715Sundry	140	791	2,211	4,589	5,958Finance-	4,480	87,387	19,980	64,893	88,064Comptroller of the Treasury	
Payment of premiums on the purchase of Dominion of Canada Registered	1,602	3,866	6,493	8,404	9,216Stock	
Wartime Prices and Trade Board-	-	8,100	126	13	14Administration	
Subsidies due to application of Order	([DOT]) -	1,437	9,278	13,705	12,720placing a ceiling over all prices. ... Canadian Wheat Board- Accountable advances for payment of drawback claims to millers and other manufacturers of wheat prod-	3,242	67,715	81,519	107,338ucts	-	-	0 -	20,500	19,700Deficits	-	-	13,058House Conversion Program	-	-	-	841	4,053Old Age Pensions, increased benefits..	-	-	-	3,062	8,788Sundry	90	80	1,051	417	1,632Labour-	1,698	16,725	84,663	188,461	176,619Industrial training	1,400	4,569	4,360	3,478	1,617Training aircraft mechanics	249	1,489	2,019	1,378	333National Selective Service	
Removal of enemy aliens from pro-	-	-	4,737	9,346	11,098tected areas	-	-	4,328	2,545	2,137Sundry	248	496	1,383	2,891	4,479Mines and Resources- Prince Rupert-Terrace-Cedarvale	1,897	6,554	16,887	19,638	19,664Highway	-	10	2,965	5,750	2,499Employment of Japanese	-	71	1,686	894	511Sundry	292	678	1,626	2,761	2,804National War Services-	892	759	6,277	9,405	6,814War Charities	-	1,175	6,499	10,910	15,933National Film Board	-	10	122	1,220	1,341Censorship	-	22	(*) 1,070	(!) 1,727	(*) 1,856Sundry.	2,370	2,011	954	1,330	6,852S,S70	3,218	8,645	16,187	85,988
(*) Included under Department of Labour.
(') See Department of Trade and Commerce.
(*) Including the censorship of telegrams, cables, etc., which was included under National Defence- Army, in previous years.
47696-65J
The Budget-Appendix
[Stage Direction]
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
- [DOT]	1940-41	1941-42	1942-43	1943-44	1944-45%	$	$	%	SWar Expenditure-Concluded Pensions and National Health- Treatment-Defence Forces	2,144	2,096	4,175	6,456	Pensions-Defence Forces	189	886	2,760	5,637	-Air Raid Precautions	140	619	5,027	1,724	-Sundry	897	1,412	2,358	4,135	-3,370	6,619	14,920	17,952	-Veterans Affairs- Treatment-Defence Forces	11,449Pensions-Defence Forces	-	-	-	-	11,939Additions, alterations and improvements to departmental hospitals, including land purchases	5,738Sundry	-	-	-	-	3,633National Health and Welfare	(') -	([DOT]) -	(') , -	(') -	32,759 1,340Public Works	4,917	4,497	6,880	6,467	6,500Royal Canadian Mounted Police	2,985	3,001	9,870	4,267	3,709Reconstruction-National Research Council	419	1,125	2,091	2,640	2,932Trade and Commerce- Gift of wheat to Greece	3,835	8,798	' 6,749Canadian Wheat Board- Accountable advances for payment of drawback claims to millers and other manufacturers of wheat products 	3,000	(.0) -	(.0) _Sundry	21	80	529	745	67021	80	7,964	9,543	7.419Transport	1,464	6,228	5,762	9,941	16,077Acquisition of Airfields and Works from United States Government....	__	66,600	18,661Wartime Information Board	-	-	1,474	759	1,700Can. Mutual Aid Board-Military Relief	-	-	-	-	50,199Other Departments	1,097	1,610	1,757	2,479	3,617752,045	1,339,674	2,724,249	3,674,420	3,615,100The War Appropriation (U.K. Financing) Act, 1942	1,000,000	' 	The War Appropriation (United Nations Mutual Aid) Acts	-	-	-	912,603	803,346Total War Expenditure	752,045	1,339,674	3,724,249	4,587,023	4,418,446Special Expenditure Unemployment Relief	27,647	8,500	5,013	, 3,751	3,869Western Drought Area Relief- Prairie Farm Assistance Act, 1939- Administration	346	423	157	217	188Advances to Prairie Farm Emergency Fund	4,376	11,848	249	2,578	1,295Wheat acreage reduction plan-	980	1,342	848	261Payments of awards to farmers	
Provision for reserve to meet deficits resulting from the operations of the Canadian Wheat Board not previously provided for	10,500	29,654 12,571	24,527	30,102	1,707 186Total special expenditure-	42,869	63,976	31,288	37,496	7,506(9)	Included in Pensions and National Health.(10)	See Department of Finance.
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The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Concluded
(Thousands of Dollars)
-	1940-41	1941-42	1942-43	1943-44	1944-45$	$	$	$	$Government Owned Enterprises Losses charged to Consolidated Deficit Account- Canadian National Railways System, ex-eastern lines	14,451	Eastern lines	2,514	-	-	-	-Prince Edward Island Car Ferry and Terminals	461	424	591	698	773National Harbours Board	40	33	-	30	59Total charged to consolidated deficit account	17,466	457	591	728	832Loans and advances non-active- National Harbours Board	716	758	657	579	526Total non-active advances	716	75S	657	579	526Total government-owned enterprises	18,182	1,215	1,248	1,307	1,358Other Charges Write-down of assets chargeable to Consolidated Deficit Account- Reduction of soldier and general land settlement loans	1,011	271	51	553	325Yearly established losses in seed grain and relief accounts-Department of Mines and Resources	46	58	42	29	36Cancellation of Canadian Farm Loan Board- Capital Stock	12	10	7	5	1To provide a reserve for possible losses on ultimate -realization of Active Assets	25,000	25,000	25,000	25,000	25,000Fulfilment of guarantees- Saskatchewan Seed Grain Loans, 1937	7,136	Canadian National Railways Securities Trust Stock- Net changes in Dominion's equity in Canadian National Railways	1,695	1,576	31,560	37,838	22,400Total other charges	34,900	26,915	56,660	63,425	47,762Grand total expenditures	1,241,983	1,879,988	4,377,972	5,322,254	5,245,612
The Budget-Appendix.
[Stage Direction]
SUMMARY OF REVENUES AND EXPENDITURES (Thousands of Dollars)
-	1940-41	1941-42	1942-43	1943-44	1944-45$	$	S	S	%Ordinary revenues	859,755	1,463,824	2,182,799	2,570,094	2,300,09720	1,022	102	93	728Special receipts and other credits	4,776	18,612	57.443	194,831	386,509Total revenues	864,551	1,483,458	2,240,344	2,765,018	2.687,334Ordinary expenditures	390,629	444.778	561,251	630.381	707,376Capital expenditures	3,358	3,430	3,276	2,622	3,104War expenditures	752,045	1,339,674	3,724,249	4,587,023	4,418,446Special expenditures	42,869	63,976	31,288	37,496	7,506Government Owned Enterprises	18,1.82	1,215	1,248	1,307	1,358Other charges	34,900	26,915	56,660	63,425	47,762Total expenditures	1,241,983	1,879,988	4,377,972	5,322,254	5,245,612Total deficit or increase of direct net debt	377,432	396,530	2,137,623	2,557,236	2,558,278

[Stage Direction]
2.	Dominion government revenues for the fiscal year ended March 31. 1945, totalled $2,-
687.334.000,	a decline of $77,6S4,Q00, or 2-8 per cent, from the previous year, which had been the highest in the dominion's history. The above figure represents the net revenue after deducting reserves established for the refundable portions of the personal income and excess profits taxes, and refunds and drawbacks against customs duties and excise and other taxes. The decline in total revenue was largely due to the fact that the amounts debited on these accounts wrere substantially higher than in the previous year. Details relating to these debits are given in later paragraphs. A table on page 16 also gives a detailed comparison of the actual revenue figures for the year with the forecast made in the budget speech of June 26, 1944.
3.	A feature again prominent in the tax revenue of the year was the large proportion derived from direct taxation of income. This form of taxation is generally recognized as being most equitable. Under the individual income tax it is possible to impose taxation measured approximately by the individual ability to pay, while direct levies on corporations under the corporation and excess profits taxes assure that abnormal and unreasonable profits are not made from war production. The proportion of tax revenue derived from direct taxes in 1944-45 was 62-0 per cent compared with 32-6 per cent in 1938-39, the last pre-war year.
[Mr. Ilsley.J
4.	An amount of $219,500,000 representing taxes estimated to be refundable under t)he provisions of the Income War Tax Act and the Excess Profits Tax Act has been deducted from the overall total revenue to present a net figure for the year. This amount does not relate solely to taxes collected in the year 1944-45 but includes some additional provision for previous .years which are detailed more fully under the sections relating to income and excess profits taxes below. Taken together with the amounts previously set aside on this account the latest provision brings the net accumulated liability to the end of 1944-45 to a total of $444,271,000 of taxes refundable in the nost-war period. Of this amount. $259,771,000 is in respect of individual income tax and $184,499,000 is in respect of the excess profits tax.

[Stage Direction]
5.	Net revenue from customs duties for the fiscal year 1944-45 amounted to $115,091,000, compared with net revenue of $167,882,000 in the preceding year.
6.	The explanation of this sharp decline in net revenue lies partly in a small reduction in gross customs receipts, but was due primarily to a marked increase in the amount of refunds and drawbacks debited from this source during the year. As explained in the Public Accounts for 1943-44, the taxation of war supplies and munitions produced on behalf of our allies underwent a development during the war which had a marked effect on government revenues. Prior to April 1, 1943, importations

The Budget-Appendix
into Canada or purchases in Canada by or on behalf of allied governments were granted exemption from customs duty and also from sales tax and any other excise 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 proportion of munitions and other war supplies procured in Canada for the use of other governments, and during the fiscal year 1943-44 only those supplies which were purchased in Canada for cash by allied governments were exigible for tax exemption, which exemption was granted in the form of a rebate, subsequent to the time of purchase, of the amount of duties and taxes included in the purchase price. In the fiscal year 1944-45 this policy was extended to provide for the refunding of duties and taxes on goods delivered under mutual add as well as those paid for by cash in Canada.
7.	The effect of this change was to bring within the scope of taxation in the first instance a substantial volume of war supplies excluded prior to April 1, 1943, which was the principal factor in accounting for the rise in gross receipts from customs duties and certain other taxes in the fiscal year 1943-44. At the same time it was known at the end of the fiscal year 1943-44 that a substantial but indeterminate amount of this increased revenue would be subject to rebate, and it was indicated in the public accounts for that year that there were arrears of refunds to allied governments then outstanding which had not at that time been determined. With the extension of the scope of the refunding procedure to include deliveries under mutual aid during the fiscal year 1944-45 it was also evident that the volume of such rebates would be increased over that of the previous fiscal year.
8.	In the course of the fiscal year 1944-45 progress was made in determining and refunding the amount of duties and taxes not only in respect of 1943-44 but also in respect of 1944-45. so that by the time the books for the latter year were closed substantially all rebates on goods delivered to the end of that year had been made. In the results, however, not only the rebates of the year 1944-45 were debited against the revenue of that year but also the arrears of rebates from the previous year, which reduced customs and excise revenues to a much greater extent than if there had been no carry-over of arrears from the previous year and correspondingly left revenue for the previous year higher than if it had been possible to determine and refund the proper amount of taxes allocable
to that year. The overall effect on customs refunds and drawbacks was that the total, including refunds on other accounts, increased from
820,010,000	in the fiscal year 1943-44 to $58,-
638,000	in the fiscal year 1944-45. It was this marked increase in refunds, attributable to the causes set forth above, which explains the decline in net customs revenue.
9.	Excise duties are levied exclusively on alcoholic beverages and tobacco products. Revenue in the fiscal year 1944-45 amounted to $151,922,000, some $9,798,000 higher than the previous year, of which increase alcoholic beverages contributed $6,211,000 and tobacco products $3,237,000. The increase in the former classification was attributable largely to higher revenues from beer, while cigarettes accounted for the largest part of the latter increase. The extent of the smokers' contribution to the federal treasury is indicated by the overall revenue from tobacco products which, including the additional taxes imposed under the Special War Revenue Act on tobacco, cigars, cigarettes and cigarette papers and tubes amounted in the fiscal year 1944-45 to $152,-
106,000,	or a sum in excess of one-third of the total tax revenue of the government in the last pre-war year, 1938-39.
10.	Under "excise taxes" are included the wide variety of commodity taxes levied under the Special War Revenue Act, of which the sales tax and the war exchange tax are the largest revenue sources. Gross revenue from excise taxes in the fiscal year 1944-45 amounted to $737,784,000, some $64,823,000 higher than the previous year, but total refunds of $194,-
719,000,	compared with $34,342,000 in the previous year, reduced net revenue in 1944-45 to $543,065,000, some $95,554,000 ower than 1943-44. The increase in refunds on excise taxes, mostly in respect of the sales tax, was attributable to the same circumstances as were outlined in the section dealing with customs revenue.
11.	The two major revenue sources, sales tax and war exchange tax, showed respectively an increase in gross revenue of $64,853,000, and a decrease of $20,749,000. The increase in sales tax revenue is to be attributed mostly to the higher level of munitions production, while the decrease in war exchange tax revenue arose from the exemption of certain imports, including raw cotton and cotton yams, agricultural implements and several other classes, from application of the tax. All other excise taxes yielded $235,511,000, exceeding the revenue of the previous year by $20,718,000. The
The Budget-Appendix
[Stage Direction]
significant increases occurred under the following headings (the amount shown is the increase in 1944-45 over 1943-44).
1. Cigars, cigarettes and tobacco..$ 7,618,000
2.	Gasoline	
4,741,6003.	Transportation and communications	
1,825,0004.	Stamps, etc., including paymentof taxes on jewellery, chinaware cabaret attendance, etc	
1,561,0005.	Toilet preparations and soaps.. 1,022,0006.	Furs	
1,020,0007.	Electric and gas appliances	754,0008.	Phonographs, radios and tubes..	621,00012.	Certain other revenues, on the other hand, suffered some reduction due largely to rationing of domestic consumption. The most important of these was sugar revenue, which declined from $13,049,000 to $11,744,000.13.	The personal income tax, again the largest single source of revenue, yielded a total of $767,755,000, compared with collections of $813,435,000 in the previous year. The decline was due to the fact that collection of the refundable tax ceased after July 1, 1944, thus reducing receipts for the last nine months of the fiscal year.14.	In 1944-45 a deduction was made of an amount of $95,000,000 in respect of the refundable portion of the tax which brought net revenue down to $672,755,000. This was lower than the net revenue of $698,435,000 in the previous year, a reduction which was largely attributable to the fact that the amount of $95,000,000 deducted for refundable taxes in 1944-45 related only to the extent of $70,000,000 to tax revenues of that year, the balance of $25,000,000 representing an increase in the reserves previously set aside against the two earlier years in which this requirement was in effect. The estimated total accumulated liability in respect of refundable taxes paid on personal incomes for the three taxation years, 1942, 1943 and 1944, has now been provisionally established at $260,000,000. Of this total amount $60,000,000 relates to 1942, $130,000,000 to 1943, and $70,000,000 to 1944. The reserves now provisionally established for 1942 and 1943 represent increases of $5,000,000 and $20,000,000 respectively over the amounts established previously for those years, the total increase of $25,000,000 being included in the figure of $95,000,000 deducted from revenue of 1944-45 fiscal year.15.	Corporation income tax and excess profits tax, both of which are levied on business incomes, may appropriately be discussed together. Revenue from the corporation income tax amounted to $276,404,000, as compared with $311,379,000 in 1943-44, while revenue from the excess profits tax, before deducting
[Mr. Ilsley.3
the estimated refundable portion, was $465,-
805,000,	only slightly less than the figure of $468,718,000 for 1943-44.
16.	It will be noted that from the excess profits tax revenue for 1944-45 there has been deducted an amount of $124,500,000 in respect of the refundable portion of the tax, as compared with a deduction of S40,000,000 in 194344. The magnitude of the figure for 1944-45 deserves some comment. It represents a substantial revision in the amounts previously set aside in earlier years and also the establishment of a liability against 1944-45 at a much higher level than was previously anticipated. The explanation of this upward adjustment lies in the fact that the early estimates of the refundable portion of excess profits tax were based on the level of revenue from that tax as indicated by annual receipts under that [DOT]heading. It has become apparent, however, as an increasing volume of corporation returns for the war years are assessed, that the distribution of tax liability between the corporation income tax and the excess profits tax is weighted more heavily towards the latter ' tax than the flow of revenue had indicated. This disparity is probably in large part explained by the fact that in making their monthly instalment ,pay-ments many taxpayers, although paying a correct amount in total, distinguished inaccurately or do not distinguish at all between the corporation income tax and the excess profits tax portions of their payment. It will only be possible to make an exact allocation of revenue between the two sources as assessment of corporation returns progresses and the correct total distribution of tax liability is determined.
17.	This reallocation of revenue will be effected through transfers from one source to the other as returns are assessed, and probably will not be completed for some time. It was felt appropriate, however, to anticipate in so far as possible the final effect of this redistribution in establishing the reserves for the refundable portion of the tax. On the basis of sudh final figures as are now available it has been estimated that the reserve for refundable portion of excess profits tax revenues collected in 1942-43 and 1943-44 should be increased from the amount of $60,000,000 then provided to an amount of $119,500,000, an increase of $59,500,000, and that the reserve in respect of 1944-45 should be established at $65,000,000, subject to further change as final and accurate figures become available. With these additions the accumulated liability to March 31, 1945, amounted for all years to $184,500,000.
18.	Revenue under the heading of dividends, interest, etc., is derived from special taxes

The Budget-Appendix
[DOT]imposed on certain income under Section 9b of the Income War Tax Act. In 1944-45 this revenue amounted to $27,053,000, increased by some $1,382,000, and was derived for the most part from the 15 per cent tax levied on interest and dividends paid to non-residents.
19.	The dominion government has levied succession duties only since 1941, and revenue from this source is showing a gradual increase from year to year. In 1944-45 it amounted to $17,251,000 as compared with $15,020,000 in 1943-44 and $13,273,000 in 1942-43.
20.	Small amounts of tax revenue are derived from the tax on the note circulation of the chartered banks, which decreases from year to year with the decline in circulation of such notes as provided by statute; from taxes on the net premium income of insurance companies; 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 194445 to $8,234,000.
21.	Non-tax revenues for 1944-45 amounted to $145,471,000, an increase of $12,188,000 over 1943-44. Receipts from the post office total $66,056,000, an increase of approximately, $4,-
985,000.	The receipts from the post office exceeded the cost of operations by about $11,-
427,000	without taking into account any credit for service 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. Return on investments realized $60,749,000, an increase over the previous year of about $12,468,000. The larger items making up this total are: interest on advances to Canadian National Railways, $18,282,000; Bank of Canada profits, $18,079,000; interest on loans to Foreign Exchange Control Board, $5,951,000; interest on bonds held in securities investment account, $5,545,000; interest on loans to National Harbours Board, $4,000,000; interest on loans to provinces, $2,927,000; interest on loans to Canadian Farm Loan Board, $911,000; Soldier Land Settlement loans, $797,000, and interest on advances to 'Canadian National Railways for purchase of railway equipment, $1,792,000.

[Stage Direction]
22.	The total amount for the fiscal year 194445 under this heading is $387,237,000, compared with $194,924,000 for the previous year: Refunds of previous years' war expenditures totalled $298,626,000, of which the department of Munitions and Supply accounted for $220,831,000; the Department of National Defence, Army services, $52,210,000; Navy services,
$2,867,000 and Air services, $20,981,000. The
three principal items under the Department of Munitions and Supply were, net production refunds representing mainly return of working capital advances from prefinanced plants, $206,146.000; refunds from contracts in connection with cost audits, voluntary refunds, negotiation of contracts, etc., $9,121,000, and miscellaneous refunds from sundry companies, $4,618,-
000.	Included in the amount of $20,981,000 under Air services, are amounts totalling $7,-
985,000	received from the governments of the United States, the United Kingdom and other government departments for materials and equipment supplied, and an amount of $3,097,000 received from the government of New Zealand representing certain liabilities due under the terms of the agreements governing its participation in the British Commonwealth Air Training Plan, No. 1. The remainder constitutes chiefly refunds on contracts after cost audits and proceeds from the sale of materials and supplies.
23.	The amount classified as miscellaneous war revenue is $45,884,000, of which $31,445,000 represents net revenue derived from the operation of government-owned companies and crown plants-sundry companies. Some of [DOT]the other items making up this total are net revenue from the sale of gasoline ration books, $1,581,000; rental of buildings and equipment and return on plant investment and working capital loans from sundry companies, $1,678,000; sundry permits and sales, Department of National Defence, Army services, $2,583,000; Navy services, $590,000; Air services, including equipment and supplies furnished other government departments, $3,461,000, and Department of Transport, made up mainly of the balance of the operating surplus as at March 31, 1945, of the Dominion Lighthouse depot at Prescott, Ontario, $2,231,000.
24.	Other large items recorded under the heading of special receipts and credits are, sale of surplus war assets, $8,408,000; asset values of properties disposed of under lease purchase option agreements previously Charged to war appropriation, $7,143,000, and $22,400,000, representing the net result of the changes in the dominion's equity in the Canadian National Railways for the calendar year 1944, due to surplus earnings of the Canadian National Railways of $23,027,000 less loss on capital abandonments of $627,000. This last item of $22,400,000 increased the book valuation of the, Canadian National Railways' securities trust capital stock and accordingly is offset by a contra amount appearing on the expenditure side under the heading "Other Charges."
[Stage Direction]
The Budget-Appendix
[Stage Direction]
25.	The table which follows gives a summary of the forecast made at the time of the last budget of the probable receipts from the various sources of revenue during the fiscal year 1944-45, and a comparison of these forecasts with receipts for the fiscal year. The increase in total receipts over the amount forecast in terms of percentage, excluding estimated refundable portion of income and excess profits taxes is 3-3 per cent.

[Stage Direction]
Source of Revenue	Budget Forecast of Revenue	Actual Revenue	Increase (+) or decrease (-) in revenue as compared with budget forecastTax Revenues Customs Duties	(th 160,000 150,000	ousands of doll 115,091 151,922	ars) - 44,909 + 1,922Excise Duties	Excise Taxes: Sales Tax (net)	290.000 120.000 225,000	209,391 98,164 235,511	-	80,609 -	21,836 + 10,511War Exchange Tax	Other Excise Taxes	Total Excise Taxes	635,000	543,066	- 91,934Income Taxes: Tax on personal incomes	760.000 300.000 425.000 27,000	767,755 276,404 465,805 28,598	+ 7,755 - 23,596 + 40,805 4- 1,598Corporate Income Tax	Excess Profits Tax	Interest and Dividends	Total Income Taxes	1,512,000	1,538,562	+ 26,562Succession Duties	17,000 8,000	17,251 8,235	+ 251 + 235Miscellaneous Taxes	Total Tax Revenues	2,482,900 145,000	2,374,127 145,471	- 107,873 + 471Non Tax Revenues	Total	2,627,000 75,000	2,519,598 387,237	- 107,402 + 312,237Special Receipts and Credits	Total Revenue	2,702,000 100,000	2,906,835 219,500	+ 204,835 - 119,500Less Refundable Taxes	Net Total Revenue	2,602,000	2,687,335	+ 85,335

[Stage Direction]
26.	Expenditures are dealt with under the usual classifications, viz. (1) Ordinary expenditures; (2) Capital expenditures; (3) War expenditures; (4) Special expenditures; (5) Government owned enterprises; (6) Other charges. All disbursements under these categories, with the exception of active loans and investments charged to the War Appropriation Acts, are included' as expenditures in arriving at the over-all deficit or increase in net debt.
ordinary expenditures
27.	Ordinary expenditures totalled $767,376,000 in the fiscal year ended March 31, 1945, compared with $630,381,000 in the previous year or an increase of $136,995,000. 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, war service gratuities and re-
[Stage Direction]
The Budget-Appendix
establishment credits total $642,100,000 or 83-7 per cent of total ordinary expenditure.
28.	Details of some of the larger increases in ordinary expenditure over the previous fiscal year are as follows:
Increased interest and public debt
charges	$77,707,000
Increase in Post Office expenditure.. 6,144,000 Increase in old age pensions and pensions to blind persons	 1,810,000
Increase in administrative cost of Department of National Revenue,
including income tax	 2,393,000
Increase in premium, discount and
exchange expenditure	 16,348,000
Increase in cost of treatment and after care of returned soldiers and
allowances to dependents	 5,795,000
War service gratuities and credits
(new item)	 20,228,000
29.	Smaller increases, as well as decreases
effected during the year are revealed in the five-year table. It should be noted, however, that many increases in expenditure which are classified as ordinary expenditures are in fact made necessary by or arising out of the war.

[Stage Direction]
30.	Capital expenditures totalled $3,164,000 in the fiscal year ended March 31, 1945, compared with $2,622,000 in the previous fiscal year. The main items classified as capital are the expenditures arising out of the dredging of the St. Lawrence ship channel, improvements in connection with civil airways and airports and the construction costs of the new Prince Edward Island car ferry.

[Stage Direction]
31.	Under the authority of the War Appropriation Act and the War Appropriation (United Nations Mutual Aid) Acts, $4,453,-
685,000	was disbursed. Of this amount $35,-
239,000	was for loans, advances and investments treated as active assets, and the remainder $4,418,446,000 was classed as war expenditures. The following table gives the same classification for the last six fiscal years:
Fiscal Year	Charged to Active Assets	War Expenditures	Total1939-40 	$ 9,092,742 26,379,066 42,816,676 65,231,622 91,906,305 35,238,956	$ 118,291,022 752,045,326 1,339,674,152 3,724,248,890 4,587,023,094 4,418,446,315	$ 127,383,764 778,424,392 1,382,490,828 3,789,480,512 4,678,929.399 4,453,685,2711940-41 	1941-42 	1942-43 	1943-44 	.*	1944-45 	
270,665,367	14,939,728,799	15,210,394,166
32.	The following'table gives a summary of the disbursements from the War Appropriation Acts divided between the amounts classified as expenditure and- those classified as active assets.

[Stage Direction]
Department of National Defence -Army service	 $1,261,755,000
Department of National Defence -Navy service	 417,099,000
Department of National Defence -Air service	 1,259,456,000
Department of Munitions and
Supply	 215,844,000
Miscellaneous Departments-
Agriculture	 88,054,000
Auditor General's office	 269,000
Canadian Mutual Aid Board ..	50,199,000
Civil Service Commission ....	527,000
External Affairs including
Prime Minister's office	 316,000
Finance	 176,519,000
Fisheries	 407,000
Justice	 45,000
Labour	 19,664,000
Legislation	 96,000
Mines and Resources	 5,814,000
47696-66i
National Harbours Board_________	356,000
National Health and Welfare..	'	1,340,000
National War Services	 25,982,000
Post Office	 1,300,000
Privy Council	 1,758,000
Public Works	 6,500,000
Reconstruction	 2,932,000
Royal Canadian Mounted
Police	 3,709,000
Secretary of State	 244.000
Trade and Commerce	 7,419.000
Transport	 34,738,000
Veterans Affairs	 32,759,000
[Stage Direction]
The War Appropriation (United
Nations Mutual Aid) Acts.... 803,346,000
Total war expenditure.... $4,418,447,000 ACTIVE ASSETS
Purchase of railway equipment:
1942	orders	
7,733,0001943	orders	
13,031,000
Commodity Prices Stabilization
Corporation, Limited	 12.658,000
Wartime Food Corporation,
Limited	 4,000
Construction of dock and rail facilities for Steep Rock Iron Mines, Limited	 1,755,000
The Budget-Appendix
[Stage Direction]
Loan to village of Dawson Creek for construction of a sewage disposal system	 58,000
Total active loans, advances and investments from the War Appropriation, 1944-45.	35,239,000
Total disbursements from the
War Appropriation, 1944-45. $4,453,686,000
33.	The table in the .preceding section does not include recoverable outlays made under the provisions of section 3 of the War Appropriation Act .which are also classed as active assets rather than expenditure. Under this section, the government of Canada may act as the agent of an allied government for any purpose which will aid directly or indirectly in the prosecution of the war and any obligations or costs incurred temporarily or assumed may be paid out of unappropriated moneys in the consolidated revenue fund. Furthermore, any expenditure required to be madie by the government under any contract for war supplies entered into for the purpose of enabling any company wholly owned by 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.
34.	The principal items of war expenditure for the fiscal year ended March 31, 1945, and
the four preceding fiscal years are detailed on pages 1027 and 1028. An explanation of a few of the more significant changes is appropriate. The first is the large increase in the expenditure for overseas war establishment, from $383,888,000 to $759,070,000, which was due to
(1)	the establishment of additional squadrons,
(2)	provisional payment of $100,000,000 to the government of the United Kingdom on reserve stores and pipe line supplies and (3) an advance payment of $134,000 to the government of the United Kingdom for advance training of air crew personnel.
35.	A new item of war expenditure that deserves explanation is the expenditure of $50,199,000 by the Canadian Mutual Aid Board for military relief. This amount was provided to cover expenditures made during the fiscal year in connection with Canada's share of the cost of relief supplies furnished by the allied military forces in Europe to civilian populations during the period of military responsibility.
36.	The large decrease under the Department of Munitions and Supply for the expansion of -war industry from $677,804,000 to $205,038,000 was due to the curtailment of capital expenditure and recovery of prior years' working capital part of which, was used for financing operations dhring the current year.
WAR EXPENDITURES BY DEPARTMENTS AND SERVICES-FISCAL YEAR 1944-45 Agriculture-
Agricultural Supplies Board'
[Stage Direction]
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

...
Seed administrator	
Meat Board	
Dairy Products Board	
Special Products Board	
Agricultural Food Board....
Special farm income payments
Auditor Genera]-
Auditing and checking war appropriation accounts	$	269,000
Canadian Mutual Aid Board-
Military relief	 50,199,(MX)
Civil Service Commission-
Supply of personnel for war services	$	515,000
Payment of minimum rate railway fare re
stenographers and typists	 12,000
[Stage Direction]
 527,000
28,000
286,000
1,195,000
24,185,000'
23,000
589.000
148.000
[Stage Direction]
^$ 26,454,000
	 14,247,000
	 24,000
	 1,922,000
	 45,405,000
	 2,000
88,054,000
[Stage Direction]
The Budget-Appendix
External Affairs-
Departmental Administration and Passport Offices.	147,000
Representatives abroad	[DOT]	[DOT] [DOT] * [DOT]	82,000
Legation building and residence, Chunking, China.	3,000
Sundries	 84,000
Finance-
Payment of premium on purchase of Dominion of Canada
registered stock	$
Comptroller of Treasury's Office	
Wartime Prices and Trade Board-
Administration	-	$	12,720,000
Canadian Wool Board Ltd	 341,000
Commodity Prices Stabilization Corporation-
Administration and Subsidies	 107,338,000
Payments to millers and manufacturers of wheat products.... Advances to the Canadian Wheat Board to cover deficits in
Board operations	
Old Age Pensions including pensions to blind persons	
Payment to the Unemployment Insurance Fund in settlement
of contributions due the Fund	
Dominion-Provincial Conference	
Conversion of large dwellings into multiple housing units...
Administration of Employees Instalment Purchase Plan,
Victory Loans	
Royal Commission on Cooperatives	
Royal Commission on Annuities and Family Corporations	
Sundries	
14,000
9,215,000
120,399,000
19.700.000
13.057.000 8,788,000
940.000
79.000 4,053,000
184.000
42.000
23.000
25.000
Fisheries-
Subsidies for the construction of packer-seiner vessels	
Subsidies for the construction of dragger vessels	
Construction, etc., of experimental long line vessel	
Purchase of fish for Greek Government	
Expenses re supply of frozen fish for British Ministry of Food..
Bonus to crews of fisheries vessels in war zones	
Salt Fish Regulations-Administration	
Sundries	
116,000
33.000
36.000 172,000
12.000
17.000
18.000 3.000
Justice-
Defence of Canada regulations	$	6.000
War Measures Act	 4,000
Penitentiaries Branch-
Purchase of materials re manufactures for war departments. 35,000
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 Labour Relations Board-
Administration	
Western War Labour Board'-
Administration	
Wartime Bureau of technical personnel	
Personnel management training	
National Selective Service-
Labour Supply Administration	$
Mobilization Division	
Manpower statistics units	
Expenses of work done by Unemployment
Insurance Commission	
National Registr at ion- '
Administration	
676,090
3.019.000
190.000
6.878.000
335.000
Coordination of shiploading and unloading operations at Halifax
Stabilization of longshore labour, Halifax	
Universities-Accelerating courses and loans to students	
1,617,000
333,000
35,000
602,000
432.000
89.000
19.000
162.000 5,000
11,098,000
134.000
670.000 74,000
316,000
176,519,000
407,000
45,000
|
[Stage Direction]
The Budget-Appendix
Labour-Con.
General labour transference in war industries and agriculture.. 491,000
Harvest assistance to provinces	  482,000
British Columbia Security Commission	 2,137,000
Organization and operation of day nurseries, etc	 151,000
Army Labour Account-Revolving Fund	 385,000
Compulsory transfer of ex-coal mine workers back to coal
industry	 70,000
Transportation expenses of members of the armed forces for
harvest leave	     227,000
Assistance to provinces in transporting labourers to farms...	334,000
Industrial Production Cooperation Board-
Administration	 72,000
Sundries	 45,000
Legislation-
Accountable advance to Empire Parliamentary Association....$	2,400
Indemnity and Transportation Expenses-
Members of the House of Commons and Senate	 93,600
Mines and Resources-
Mines and Geology-
Development of tar sands	$	806.000
Oil explorations	 112,500
Strategic minerals-exploration and	development	work		8,000
Vertical air surveys	 51,000
New Metallurgical Laboratory	 25,000
Explosives Division*-Administration of regulations re
explosives	 31,000
Assistance to provinces re transportation facilities to
wartime mining projects	 12,000
Metallic Minerals Division-Services to	war	departments...	277,000
Sundries	 6,500
$	1,389,000
Lands, Parks and Forests-[DOT] .	.
National Parks Bureau-Alternative service work camps... 168,000 Dominion Forest Service-
Alternative service work camps	 107,000
Alternative service work eamps,	B.C	
9.000Internment and prisoner of war	operations	
29.000Forest Products Laboratories	
53,000
Bureau of Northwest Territories and Yukon Affair®-
Expense of liaison officers Alcan and Canol projects...	5,000
Sundries	 2,000
$	373,000
Surveys and Engineering-
Engineering and Construction Service-
Prince Rupert-Cedarvale Highway	2,500.000
Employment of persons of the Japanese race and
Japanese nationals	     511,000
Post-war Construction-Planning	  104,000
Geodetic Service-
Post-war Construction-Planning	 101,000
. Legal Surveys and Map Service-
Post-war Planning	 4,000
Hydrographic Service-
Post-war Planning	 14.000
Dominion Water and Power Bureau-
Tidal power investigations		25,000
Sundries	 66,000
[Stage Direction]
$	3,325,000
Immigration-
Canadian interests abroad	    493,000
Grants to National Advisory Committee for
children from overseas	 55,000
Repatriation of wives and dependents of the
Canadian forces overseas	 133,000
Sundries	 46.000
[Stage Direction]
	727,000
19.664,000
96,000
[Mr. Ilsley.l
5,814,000

The Budget-Appendix
Munitions and Supply-
Administration	$	8,842,000
Expansion of war industry	 205,038,000
Acquisition of United Kingdom interest in war plants	 1,964,000
National Defence-Army Services-
Departmental Administration	$	1,550,000
Dependents' Allowance Board	 686,000
Dependents' Supplementary Grants Fund	 4,041,000
Army	 1,243,733.000
Internment Operations	 1,580,000
Inspection Board-United Kingdom and Canada	 8,362,000
Imperial War Graves Commission	 30,000
Chemical Warfare Experimental Station	 1,773,000
National Defence-Naval Services-*
Navy	$ 416,639,000
Royal Canadian Sea Cadets	<	 460,000
National Defence-Air Services
[Stage Direction]
Home War Establishment	$ 227,941,000
Overseas Establishment	 759,070,000
Departmental Administration	 103,000
British Commonwealth Air Training	Plan	 272,342,000
National Harbours Board-
Halifax-Operation of Fire Boat Rouille	$	64,000
Installation of additional car dumpers at grain elevator ....	10,000
Special fire protection	 103,000
Reconstruction of transit shed 21	 175,000
Saint John-Acquisition, etc., of heavy lift crane equipment...	4,000
National Health and Weifare-
Inspection of industrial plants	$	23.000
Laboratory of hygiene	   22,000
Public health engineering	 27,000
Foods and drugs	 10,000
Quarantine service	 62,000
Processing of blood for dried serum	 632,000
Maintenance of non-resident seamen	 33,000
Addition-John street Laboratories, Ottawa	 7,000
Grant to Canadian Nurses Association	 250,000
Chlorination of Water Systems-
Pacific Coast	 189,000
Dawson Creek, B.C., Water Supply	 25.000
Treatment Canadian fishermen and seamen	 11,000
Hire of Boat-Halifax Harbour	 18,000
Maintenance of Health Unit, Prince Rupert, B.C	 4.000
Contribution toward Health Services, Halifax	 6.000
Prince Rupert, B.C.-Purchase and installation of water pump..	2.000
Ottawa Laboratory of Hygiene-
Construction	„	 14.000
Sundries	 5.000
National War Services-
Departmental administration	$	74,000
War Charities-General	  89.000
War Charities-Auxiliary services	 15,933.000
Salvage Division	 180,000
Women's voluntary services	 19.000
Canadian firefighters for United Kingdom	 761,000
Canadian Prisoners of War Next-of-Kin Division	 15.000
Committee in cooperation in Canadian citizenship	 14,000
Censorship Division	 1,856.000
Government Office Economies Control	 9,000
Canadian Broadcasting Corporation Short Wave Station-Construction and maintenance	 691,000
Red Cross food parcels	 5,000,000
National Film Board-
Special War Library	$	36,000
Purchase of Supplies-Revolving Fund	 96,000
Wartime Information	Film Programme	
1,087,000Stills production and	distribution	
115,000Sundry	
7,000
1,341,000
215,844,000
1,261,755,000
417,099,000
1,259,456,000
356,000
1.340,000
25,982,000
The Budget-Appendix
[Stage Direction]
Post Office-
Canadian Postal Corps	$	588,000
Mail service for troops overseas	 212,000
Purchase of tobacco labels for service purchases	 500,000
[Stage Direction]
 1,300,000
Privy Council-
Statutory Orders and Regulations Division	$	29,000
Wartime Information Board -	 1,700,000
Expenses of Special Commission for defence projects in the
Northwest	 16,000
Su"drieS	1,758,000
Public Works-
Chief Architect's Branch-
Armoury Accommodation for Canadian Officers'
Training Corps Units	5
Repairs, alterations, operation and maintenance
of buildings	
Rental of premises occupied for war purposes.
Furniture, etc., for war employees	
Ottawa-
Temporary Building No. 8 (Carling ave.). Hostels for junior employees in the public service-construction and furnishings. Army Base Post Office-
Extension	
Temporary Annex to Records Building... Payment of claim re construction of
Temporary Building No. 1	
Edmonton-
Expropriation of Oliver property	
Building for Weights and Measures Office. Halifax-*
Extension to Old Salt Fish Building....
Norman Wells, N.W.T.-
Office and living accommodation for government departments	
Quebec-
Conversion of Drill Hall to provide office
accommodation	
Sundries	
Chief Engineer's Branch-
Saint John Harbour (Courtenay Bay), N.B.
[Stage Direction]
Dredging	I
North Sydney, N.S.-Reconstruction of wharf
and terminal facilities	
Post-war Construction Programme-
Preparation of plans	
Waterways, Alta.-
Improvements	
Dredging	
Sundry	
Telegraph Branch-
To provide for a 24-hour telegraph service on
the Pacific Coast	!
Telephone service and unforeseen	
Contingencies	
50.000
2.363.000
1.846.000
672.000
307.000
1,000
20.000
13.000
14.000
27.000
6,000
18.000
8,000
9.000
3.000
215.000
328.000
142.000
8,000
38,000
1,000
82,000
308,000
5,357,000
727,000
390,000
26,000
Reconstruction-
National Research Council- Special war activities...
6.500.000
2.932.000
Royal Canadian Mounted Police
[Stage Direction]
Increased activities of the Force due to the war. .-	$	3,578,000
Securities control	 131,000
[Stage Direction]
 3,709,000
Secretary of State-
Expenses in connection with the Quebec Conference	$	225,000
Sundries	 19,000
tttr. Ilsley.)
244,000

The Budget-Appendix
Trade and Commerce-*
Canadian Shipping Board	$	70,000Export Permits Board	;	
154,000Shipping Priorities Branch...,	
48,000Revolving Chartering Fund	
5,000Gift of wheat to Greece	
6,749,000Steamship Stabilization Fund	
331,000Canadian Export Board	
40,000Government Trade Commissioner's Office-Washington	
7,000Investigation of pre-fabricated houses	
15,000
Transport-
Departmental administration	$	33,000
Transport Controller's Office	 323,000
Director of Merchant Seamen, including administration, manning
pools, nautical schools and welfare facilities	 1,593,000
Air	Service-Special radio interception and
monitoring services, etc.-
Radio service	$	2,172,000
Meteorological service	 1,590,000
Municipal terminal airports	 690,000
Moncton-Newfoundland airline	 173,000
Montreal (Dorval) Airport-additional facilities..	930,000
Civil Aviation

Extra airport control	 404,000
Canadian Government Transatlantic Air Service..	302,000
Acquisition of airfields and works from United
States Government	 18,601,000
Northwest Staging Route-Construction	 5,206,000
Goose Bay Airport-additional facilities	 67,000
Transportation facilities at Malton and Dorval for
employees	 29,000
Improvements to Tor Bay-St. John's, Newfoundland	 65,000
Meteorological requirements at the Mackenzie River
Route	;	 16,000
Engineering representatives at Canol Project and
maintenance of landing strips	 313,000
Sundries	 13,000
[Stage Direction]
	30,757,000
Marine Service
[Stage Direction]
Aids to navigation, including lightships	$	58,000
Marine Service Steamers	 190,000
Reconditioning Chesterfield	 '	75,000
Nautical Services	 51,000
Degaussing equipment for Canadian vessels____	269,000
Compensation to crews of Canadian vessels for
personal effects	 12,000
Purchase, etc., of machinery and equipment for
l'Eeole des Arts et Metiers de Rimouski		20,000
Marine Service Steamers-
' Repairs to N. R. McLean	 59,000
Reconditioning C.G.S. Lady Grey	 271,000
General war risk bonus	 103,000
Dominion Lighthouse Depot, Munitions, Prescott..	523,000
[Stage Direction]
 1,631,000
Railway Service-
Additional labour and terminal facilities at
Halifax	$	29,000
Acquiring properties in Canada for United
States Government	 20,000
Accommodation for freight handlers at Saint
John. N.B	 12,000
Contribution re freight rates on ore from Steep
Rock Iron Mines	 12,000
Overhaul, etc., C.N. (W.I.) S.S. Connector...	200,000
Government Employees Compensation Act		68,000
[Stage Direction]
	401,000
Veterans Affairs-
Treatment-
Defence Forces	$ 11,449,000
Royal Canadian Mounted Police	 95,000
Pensions-Defence Forces	 11,939,000
Air Raid Precautions	   484.000
Investigations-Dependents' Allowance Board	 62,000
Committee on demobilization	 3,000
7,419,000
34,738,000
The Budget-Appendix
[Stage Direction]
Veteran's Affairs-Con.
Rehabilitation benefits	 2,468,000
Detention Allowances-Canadian Seamen	 143,000
Reserve Stores-Revolving Account	 50,000
Hospital Unit adjacent to Ottawa Civic Hospital	,..	13,000
Acquisition of Land-Westminster Hospital, London, Ontario..	14.000
Additions, Alterations and Improvements to Departmental Hospitals-
St. Anne de Bellevue, Que.-St. Anne's
Hospital	$	936,000
Montreal, Que.-Currie Memorial Hospital____	29,000
Charlottetown, P.E.I., Provincial Sanatorium.	75,000
Halifax. N.S., Camp Hill Hospital	 62,000
Gloucester Township, Ont.-Health and Occupational Centre	 365,000
Peterborough, Ont.-Hostel	 57,000
Kingston, Ont.-Women's Hostel	 52,000
Toronto, Ont.-Christie Street Hospital and
Memorial Hospital	 1,505,000
London, Ont.-Westminster Hospital	 328,000
Winnipeg, Man.-Deer Lodge Hospital	 467,000
Regina Saslt.-General Hospital	 196.000
Calgary. Alta.-Col. Belcher Hospital		89,000
Edmonton, Alta.-University Hospital	 483,000
Vancouver, B.C., Shaughnessy Hospital		267,000
Saint John, N.B.-Lancaster Hospital	 82,000
[Stage Direction]
	^ 0 93 QQ9
Land Purchases for Hospitals-
Victoria-Land for 200-bed Hospital	$	12,000
Montreal, Que.-Currie Memorial Hospital...	113.000
Halifax, N.S., purchase of J. C. Tory Property.	33,000
Saint John, N.B.-Health and Occupational
Centre	 35.000
Ottawa, Ont.-purchase of Land from Beechwood Cemetery	  45,000
Gloucester Township, Ont.-	-
Purchase of Smythe Estate	 18,000
Purchase of James Dempsey Property....	9,000
Toronto, Ont.-
Purchase of Nathanson Property7 Health
and Occupational Centre	 45,000
Acquisition of Flanagan Property	 275,000
Winnipeg. Man.-purchase of Children's Home to provide accommodation for veterans
care eases	 148.000
Calgary-J. Leslie Bell property	  12,000
.	

 745 000
Soldier Settlement-purchase of right-of-way, etc., re Canada
Alaska Highw ay	 26,000
Advertising and radio publicity re measures for rehabilitation
of members of the armed forces	 204 000
Sundries	*	71,000
Total Direct War Expenditures, 1944-45 under War Appropriation Act..$
32,759,000
3,615,101,000
37.	Under the War Appropriation (United Nations Mutual Aid) Acts, $803,346,000 was expended in the fiscal year ended March 31, 1945. The following table gives the distribution by countries and the type of aid provided.
Distribution of Mutual Aid by Countriks
United Kingdom	$ 598,751.973
Union of Soviet Socialist Republics 87,436,954
Australia	   47,672,519
China	 14,676,879
France	 17,551,779
New Zealand	 7,796,734
India	;...	14,431,201
British West Indies	  3,881,858
United Nations Relief and Rehabilitation Administration		11,092,754
[Stage Direction]
Distribution of Mutual Aid by Type of Aid
Munitions and Military Supplies, including ships-
Aircraft and parts... .$117,850,961 Automotive equipment and mechanical
transport	 131,677,341
Tanks and other fighting equipment		38,261,251
Chemicals and explosives	 12,542,417
Guns and small arms. 34,560,677 Shells and ammunition 103,683,947 Merchant vessels-
Construction		43,074,718
Repairs and servicing	:	 5,065,077
Naval vessels and
equipment	 17,947,438
IMr. Ilsley.]

The Budget-Appendix
Munitions and Military Supplies-Con. Clothes, clothing and
fabrics	
Radio, electrical and telephone equipment Lumber and heavy
materials	
Machine tools and heavy equipment...
Small tools, stores and
miscellaneous	
Aluminium	
Other base metals....
Locomotives and railway rolling stock..
Freight	
Cancellation charges..
Foodstuffs and Farm Products-	
Bacon	$	49.760.350
Canned pork		1.354.835
Offals 		361.102
Casings		429,232
Beef 		6,725,137
Other meats		85,695
Lard 		2.653,310
Cheese 		4.214,736
Milk 		95,000
Eggs		8,235,653
Dehydrated vegetables	2,749,010
Fresh apples		59,945
Dried apple rings... .	581.298
Dried beans and	
canned corn		205.400
Garden seeds		20,306
Forage crop seeds....	284,400
Seed potatoes			325,621
Canned salmon		193.837
Canned herring		1.653.213
Frozen fish		1,329,446
Other fish products.. .	2,192,281
Wheat 		47,554.590
Flour 	[DOT]	37,968,191
Linseed oil		1,271,731
Rolled oats		923,231
Oatmeal		300,165
171,632,655
6,975.606
30,827,481
5,938,376
10,281,443
2.963,184
9.316,915
11,844,951
5.466.328
16,154.930
3,156
General Supplies-
Asbestos	$	954.480
Paper 		71.499
Farm machinery		2,337,967
Boots, clothing and fabrics		529,265
Fertilizers and chemicals 		494,666
Soap			572,202
Miscellaneous 			459,384
Air Training Services under B.C.A.T.P	
United Nations Relief and Rehabilitation Administration-Contribution to Central Committee	
5,419,463
14,159,836
7,664,500

[Stage Direction]
38.	Special expenditures for the fiscal year ended March 31, 1945, totalled 87,506,000 compared with 837,496,000 in the previous fiscal year. This decrease is occasioned mainly by the decrease in the payments of awards to farmers under the Wheat Acreage Reduction Plan.

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39.	The classification of expenditures entitled Government Owned Enterprises comprises the losses of and non-Active Advances to Government Owned Enterprises which had been established before the war and are operated as separate corporations. As the Canadian National Railways has shown substantial annual surpluses since 1940, expenditure under this heading since the fiscal year 1940-41 has been of minor importance, the total for 1944-45 being $1,358,000.
Canadian National Railways
40.	The operating revenues of the Canadian National Railways for the calendar year 1944 totalled $441,148,000, the highest in the Company's history.
41.	Operating expenses of the railway amounted to $362,547,000, an increase of
838,072,000	over the previous year. This increase was occasioned by the higher wage rates prevailing in 1944, higher prices for materials and additional maintenance expenditures.
42.	The net operating revenue of the railway was $78,600,000 and after deducting $10,876,000 for taxes, equipment and joint facility rents, there remained a net railway operating income of $67,725,000. Other income, less deductions, amounted to $3,372,000, and accordingly the net income available for payment of interest was $71,097,000. After payment of interest charges of $28,136,000 on debt held by the public and interest charges of $19,934,000 due to the government in respect of temporary loans for capital and refunding purposes, there was a net cash surplus of $23,027,000. This cash surplus was paid to the government in redemption of loans and advances.
[Stage Direction]
Administration		 53,051
[Stage Direction]
43.	The operating deficit of the Prince Edward Island Car Ferry and Terminals during 1944 was $773,000 compared with $698,000 in the previous year.
The Budget-Appendix
[Stage Direction]
Canadian National Steamships
44.	The Canadian National (West Indies) Steamships, Limited, in the calendar year 1944 produced an operating profit of $1,974,000. After payment of $521,700 in bond interest and exchange and $181,000 in current interest due to the government, there was available $1,271,000 which was paid to the government in reduction of interest arrears and capital advances.
National Harbours Board
45.	The operating income of the National Harbours Board for the calendar year 1944, after payment of interest to the public but before depreciation, reserve for replacements and interest on Government advances totalled $5,580,515 compared with $4,596,917 in 1943. Interest paid to the government in the fiscal year amounted to $4,000,000.
46.	Financial assistance provided by the government to the National Harbours Board and charged to expenditure under the category of Government Owned Enterprises totalled $584,674, divided as follows: $59,000 for the operating deficit of Churchill Harbour: $275,000 for non-active advances to meet the deficit of the Jacques Cartier Bridge at Montreal: $47,500 for the retirement of maturing debentures of the Saint John Harbour Commission and $28,000 for capital expenditures, Saint John Harbour; $16,500 for capital expenditures, Halifax Harbour and $158,400 for the retirement of maturing debentures of the Three Rivers Harbour Commission. Details of expenditures charged to the War Appropriation are given under "War Expenditures".
47.	The elevators at Port Colborne and Prescott operated at a profit during the year and $291,000 was paid to the government.

[Stage Direction]
48.	The total of Other Charges, the final category of expenditures was $47,762,000.
49.	The largest item in this category is the amount of $25,000,000, which has been added to the reserve to meet possible losses on the ultimate realization of active assets. This is the same amount as has been provided in the four previous fiscal years and the total reserve therefore now amounts to $125,000,000. The annual write-off from active assets of Soldier
and General Land Settlement Loans amounted to $325,000 and the concellation of Canadian Farm Loan Board Capital Stock amounted to $1,000. The provision of the reserve and the two write-offs resulted in a proportionate increase in the dominion's net debt.
50.	There was written-off from non-active assets an amount of $36,000 representing the yearly established losses on Seed Grain and Relief account administered by the Department of Mines and Resources. As this account, is classified as a non-active asset and therefore included in the net debt of Canada it is offset by a similar amount on the Revenue side under "Other Receipts and Credits".
51.	The remaining items in Other Charges totalling $22,400,000, 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 increased during the year by $23,027,000, due to the surplus earnings of the System for 1944, less $627,000 due to capital abandonment during the year. The Canadian National Railways Securities Trust Stock is carried in the dominion's books as a non-active asset, and thus the net debt of Canada is not affected by these transactions.

[Stage Direction]
52.	The grand total of expenditure for the fiscal year 1944-45 under the various categories enumerated, namely Ordinary Expenditures, Capital Expenditures, War Expenditures, Special Expenditures, Losses of and non-active advances to government-owned enterprises, and Other Charges, was $5,245,612,000.
53.	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 $219,500,000 of income and excess profits taxes estimated as refundable after the war, are shown as per centages 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]
The Budget-Appendix
54.	It should be noted that many expenditures attributable to the war are not charged to the War Appropriation. The interest on the increased public debt and practically all the expenses of war-expanded departments like the Post Office and National Revenue-are charged to Ordinary Expenditures. Accordingly, the so-called non-war expenditures have increased greatly during the war despite the fact that the controllable portion has only increased from $112,200,000 in 1938-39 to $119,800,000 in 1944-45. The following table gives an analysis of non-war expenditure for the fiscal year 1944-45 and the five previous fiscal years:
ANALYSIS OF NON-WAR EXPENDITURE (*)
(Millions of Dollars)
	Fiscal Years Ended March 31:					
1940	1941	1942	1943	1944	1945'1.	Grand Total Expenditure	
2.	Less War Expenditure (2)	
3.	Total Non-War Expenditure 0)	
Deduct Uncontrollable Items: (3) 4.	Unemployment Insurance (4)	
5.	Public Debt Charges	
6.	Pensions, Superannuation, etc	
7.	National Revenue Department	
8.	Post Office Department	
9.	Subsidies, and Payments to Prov- inces under Taxation Agreements. 10.	National Defence Department	
11.	War Service Gratuities and Re-estab-	680-8 118-3	1,249-6 752-0	1,885-1 1,339-7	4,387-1 3,724-2	5,322-3 4,587-0	5,245-6 4,418-4562-5	497-6	545-4	662-9	735-2	827-2134-6 75-7 12-1 36-7 19-2 13-2	0-1 145-7 74-9 12-2 38-7 19-2 0-2	9-6 171-6 73-7 13-4 41-5 35-5 0-3	16-1 202-5 73-2 15-2 44-7 108-7 0-4	17-5 262-1 72-9 17-7 48-5 109-9 0-1	17-9 339-8 75-2 20-1 54-6 107-8 0-1 20-2 16-3 7-513. Special Expenditure	89-1 40-1 23-3	42-9 17-0 5-5 29-9	64-0	31-3	37-5	15.	Adjustment of C.N.R. Securities Trust Stock for Net Income Surpluses and Capital Gains	
16.	Write-down of Assets	
17.	Total to be Deducted (4 to 16)	
18.	All Other Non-War Expenditure, (5) (3 minus 17)	4-1 27-9	36-1 29-7	37-8 25-6	22-4 25-4444-0	386-3	441-6	558-1	629-6	707-4118-5	111-3	% 103-8	104-8	105-6	119-8
(') All expenditure not charged to war appropriations.
(*) Expenditure charged to war appropriations.
(s) 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 and farm assistance purposes); and certain bookkeeping adjustments.
(*) The Government's contribution and the cost of administration.
(s) 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

[Stage Direction]
55.	As total revenues for the fiscal year ended March 31, 1945, were $2,687,334,000 and expenditures aggregated $5,245,612,000, the over-all deficit or increase in net-debt for the year was $2,558,278,000.

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56.	In addition to the expenditures aleady detailed, the government makes disbursements for the acquisition of investments which are treated as "active" 1 and are deducted from total gross liabilities in arriving at the figure
The Budget-Appendix

[Stage Direction]
Amount in	Percentage	Percentage-	thousands	of Total	to Totalof dollars	Revenue	Expenditure$	%	%Ordinary Revenue-	Customs Import Duties	115,091	4-28	2-19Excise Duties	151,922	5-65	2-90Excise Taxes-sales tax and other excise taxes	444,901	16-56	8-48War Exchange Tax	98,164	3-65	1-87Income tax on persons, corporations, etc. (net)	977,758	36-39	18-64Excess Profits Tax (net)	341,305	12-70	6-51Succession Duties	17,251	0-64	0-33Other Tax Revenues	8,234	0-31	0-16Total Revenue from Taxes	2,154,626	80-18	41-08Non-tax Revenue	145,471	5-41	2-77Total Ordinary Revenue	2,300,097	85-59	43-85Special Receipts and Credits	387,237	14-41	7-38Grand Total Revenue	2,687,334	100-00	51-23Amount in	Percentage	Percentage-	thousands	of Total	to Totalof dollars	Expenditure	Revenue$	%	%Ordinary Expenditure-	Interest on Public Debt	318,995	6-08	11-87Other Public Debt Charges	20,851	0-40	0-78Subsidies and payments to provinces under taxation agreements	107,779	2-06	4-01Old Age Pensions and pensions for blind persons.-.	32,187	0-61	1-20Unemployment Insurance Act, administration and Govern-	ment's contribution	17,861	0-34	0-66Agriculture	9,424	0-18	0-35Mines and Resources	12,296	0-23	0-46National Revenue	20,114	0-38	0-75Post Office	54,629	1-04	2-03Public Works	13,169	0-25	0-49Transport	18,265	0-35	0-68Veterans Affairs	81,031	1-55	3-01All other	60,775	1-16	2-26Total Ordinary Expenditure	767,376	14-63	28-55Capital Expenditure	3,164	0-06	0-12War Expenditure-	National Defence-Army	1,261,755	24-05	46-95Navy	417,099	7-95	15-52Air	1,259,456	24-01	46-87Munitions and Supply	215,844	4-12	8-03Other Departments	460,946	8-79	17-15War Appropriation (United Nations Mutual Aid) Acts	803,346	15-31	29-89Total War Expenditure	4,418,446	84-23	164-41Special Expenditure	7,506	0-14	0-28Government Owned Enterprises	1,358	0-03	0-05Other Charges	47,762	0-91	1-78Grand Total Expenditure	5,245,612	100-00	195-19
[Mr. Ilsley.l

The Budget-Appendix
of net debt. The net increase in loans, advances and investments for 1944-45 was
S457.458.000	compared with §635.341,000 in 1943-44. Details of these increases together with those for the four previous fiscal years will be found in the table on page 39.
Railway and Steamship Companies-
57.	The net increase in this category in the
fiscal year ended March 31,	1945, was
$83,608,000, and relates entirely to transactions with the Canadian National Railways.
58.	In the fiscal year the government made net payments to the Canadian National Railways in the amount of $83,607,995, classified as follows:
Advances-
Under Canadian National Railways Refunding Act, 1938-for retirement of maturing issues	$ 35,000,000
Under Canadian National Railways Refunding Act. 1944-for retirement of maturing issues	 56,684,000
Under Canadian National Railways Financing and Guarantee Act,
1940-Purchase of Grand Trunk Railway Company of Canada 4%
Perpetual Consolidated Deben-	.
ture Stock	 425,434
Under Canadian National Railways Financing and Guarantee Acts,
1941 and 1942-Purchase of securities from Canadian holders	58,199
Under the War Appropriation (United Kingdom Financing)
Act, 1942

Purchase of securities from government of the United Kingdom	 1,019.149
Total advances by way of loan. .$ 93,186,782
Equipment purchased by government and'leased to Railway under Hire-Purchase Agreements:
1943	Agreement	$ 6.058,4981944	Agreement	
14.705.925
Total Equipment Purchased.... $ 20,764,423
Total Loans and Equipment Purchased	$113,951,205
Repayments-
Application of 1944 Net Income Surplus to advances under Refunding Act, 1938	$ 23,026,924
Surplus available from Depreciation Reserves and Debt Discount Amortization after providing for capital expenditures . during 1944-Applied to advances under the Refunding Act,
1938	 2,776,532
Financing and Guarantee Act,
1941-Purchase of securities. . .	86,312
[Stage Direction]
Repayments of Instalments under
Hire-Purchase Agreements:
1936 Agreement	$	517,1731940	Agreement	
991,9681941	Agreement	
1,382,6341943 Agreement	
1,561,667
Total Equipment Repayments.. $ 4.453,442
Total Repayments of Loans and Equipment Repayments'	$ 30,343,210
Net Total Payments' on account of Loans and for Equipment Purchased	$ 83,607,995
Foreign Exchange Control Board-
59.	During the fiscal year $265,000,000 was advanced to the Foreign Exchange Control Board to enable the Board to finance the purchase of gold and foreign exchange.
Sundry Government Agencies-
60.	The net change in the fiscal year in advances to the National Harbours Board was only $8,000. Advances of $19,000 were made for capital purposes at the port of Montreal, while a capital refund of $11,000 was received from Vancouver.
61.	The net increase in the fiscal year in advances for Soldier and General Land Settlement aggregated $3,948,000. This increase was occasioned by advances of $7,958,000 under the Veterans' Land Act, less net repayments by settlers and $325,000 written off and charged to Consolidated Deficit Account.
62.	Net advances to Sundry Crown Companies were reduced during the year by $17,374,000, due principally to the liquidation of inventories, repayment of working capital and transfer of surplus assets to War Assets Corporation. An advance of $500,000 was made to the Export Credits Insurance Corporation which commenced operations in the fiscal year.	[DOT]
63.	Net advances to Sundry Crown Plants- Privately Managed were reduced by $10,309,000 due principally to the return of working capital provided in prior years.
Provincial and Municipal Governments-
64.	Advances under this category increased in the fiscal year by $15,599,000 due to the government implementing its guarantee to the chartered banks under the Saskatchewan Seed Grain Loans Guarantee Act, 1938. The net advances for this purpose outstanding at the close of the fiscal year, less repayments recovered from amounts payable to the Province totalled $15,887,000. Small repayments on Relief Loans were received during the year from Alberta, British Columbia and Saskatche-
The Budget-Appendix
[Stage Direction]
wan. Repayments of $168,000 were received from municipalities on loans made under the authority of the Municipal Improvements Assistance Act, 1938.
United Kingdom and Other Governments-
65.	Net advances under this heading decreased by $38,272,000 during the year. Food advance accounts for the purchase of food by the United Kingdom increased by $10,613,000. The Canadian dollar obligation of the government of the United Kingdom under the authority of the War Appropriation (United Kingdom Financing) Act, 1942, was reduced by $55,098,000, leaving a balance outstanding of $602,510,000.
66.	Recoverable advances on account of air training increased during the year by $81,586,000, due to increased advances to the government of the United Kingdom.
67.	Advances to War Supplies Limited were completely liquidated by repayment totalling $71,158,000.
68.	The remaining items in this category covering many departments and governments decreased by $4,215,000 during the year.
Miscellaneous-
69.	In the period from April 1, 1944 to March 31, 1945, 1065 loans were approved under the National Housing Act, 1938, and 862 under the National Housing Act, 1944, in the amount of $3,772,740 and $3,575,785 respectively. During the year repayments of loans exceeded loan disbursements by $1,240,000, leaving the balance outstanding at March 31, 1945, at $14,721,232.
70.	Loans by the Department of Munitions and Supply to private companies under the authority of the War Appropriation Act increased by $7,975,000 in the fiscal year ended Mach 31,'1945.
Investments-	[DOT]
71.	The government's investment in the Canadian Farm Loan Board decreased during the year by $5,001,000, due to the purchase by the Board out of its surplus funds of $5,000,000 of its 3bonds due January 2, 1960. In addition $1,000 of the Board's capital stock was written off to Consolidated Deficit Account. At the end of the fiscal year the government's investment in the Canadian Farm Loan Board totalled $24,024,000.
72.	Miscellaneous investments increased during the year by S153,552,000. The main item in this category is the Securities Investment Account consisting chiefly of the cost of acquisition of dominion government direct and guaranteed securities including Victory Bonds held under instalment purchase plans for civil servants and members of the Armed Forces.
73.	The following table gives the details of the annual changes in loans, advances and investments in the fiscal year ended March 31. 1945, and the four previous fiscal years.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
1940-41 TO 1944-45	[DOT]
(In thousands of dollars)
-	Fiscal Years Ended March 31				
	1941	1942	1943	1944	1945
Loans and Advances-					
Railway and Steamship Companies					
1. Canadian National Railways.						113,747	251,240	142,539	Cr. 3,907	83,608
2. Canadian National Steamships - Canadian					
	800	Cr. 800			
	6,396	Cr. 2,085	Cr. 12,814		
					
4. Net Total, Railway and Steamship Companies.	120,943	248,355	129,725	Cr. 3,907	83,6085. Foreign Exchange Control Board	325,000	400,000	Gr.325,000	185,000	265,000Sundry Government Agencies	Cr. 364	Cr. 283	Cr. 503	7. National Harbours Board	Cr. 333	Cr. 980	Cr. 267	Cr. 127	88. Soldier Settlement of Canada	Cr. 2,150	Cr. 1,791	Cr. 1,692	Cr. 2,090	3,9489. Sundry Crown Companies (war activities)	9,866	15,397	45,140	63,317	Cr. 17,37410. Sundry Crown Plants, privately managed (war	57,007	Cr. 10,30911. Other	1	8	4	Cr. 11	3812. Net Total, Sundry Government Agencies	7,020	12,351	42,682	118,096	Cr. 23,68913. Provincial and Municipal Governments	1,656	Cr. 629	Cr. 899	Cr. 437	15,599United Kingdom and Other Governments	6,755	13,244	10.61315. United Kingdom, loan under The War Appro-	700,000	Cr. 42,392	Cr. 55,09816. United Kingdom, Australia, and New Zealand	-air training accounts. 	33,956	72,199	56,360	205,403	81,58617. Union of Soviet Socialist Republics, loan for the	917	9,083	18. War Supplies Ltd., for munitions to be sold to	83,042	Cr. 11,884	Cr. 71,15819. Sundry Governments, miscellaneous recover-	able accounts	6,444	7,405	661	15,766	Cr. 4,21520. Net Total, U.K. and other Governments	40,400	79,604	847,735	190,220	Cr. 38,272Miscellaneous	21. Dominion and National Housing Acts	3,805	2,644	239	Cr. 532	Cr. 1,24022. Sundry munitions contractors, etc. (Depart-	ment of Munitions and Supply)	25	9,260	3,640	Cr. 3,964	7,97523. Sundry loans and advances	Cr. 124	Cr. 651	Cr. 329	Cr. 61	Cr. 12624. Net Total, Miscellaneous	3,706	11,253	3,550	Cr. 4,557	6,66125. Net Total, All Loans and Advances	498,725	750,934	697,793	484,415	308,907Investments	26. Canadian Farm Loan Board	850	Cr. 985	Cr. 2,507	Cr. 5,005	Cr. 5,00127. Other investments	Cr. 38,524	6,530	Cr. 7,645	155,931	153,55228. Net total, Investments	Cr. 37,674	5,545	Cr. 10,152	150,926	148,55129. Net Total of changes in Loans and Advances	and Investments	461,051	756,479	687,641	635,341	457,458

[Stage Direction]
74. In the fiscal year ended March 31, 1945, the Dominion issued securities in the domestic market in an amount <5f $4,069,222,680. This amount includes the net increase of $20,000,000 in Treasury Bills and $210,000,000 in Deposit Certificates outstanding, but does not include the amount of the recurring issues of Treasury Bills and Deposit Certificates issued to refund similar securities maturing during the year. In -the fiscal year $1,241,580,589 of Dominion obligations matured or were called for redemption, leaving the sum of $2,827,642,091, less cost of flotations, available for direct and indirect war expenditures.
The following table gives the details of 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% School Lands Debentures held by the Prairie Provinces which were again renewed for one year):
Issue
Date
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
%
Treasury Bills (net increase)	
Sold to Bank of Canada
20,000,000
20,000,000
One Year Notes... Two Year Notes.. Six Months Notes. Six Months Notes. Six Months Notes.
April 15, 1944. April 15, 1944. Sept. 1, 1944.. Oct. 16, 1944.. March 1, 1945.
April 15, 1945. April 15, 1946. March 1, 1945. April 16, 1945. Sept. 1, 1945..
li
Sold to Chartered Banks
Deposit Certificates (net increase)..
Sold to General Public
Sixth Victory Loan	
Sixth Victory Loan	
Seventh Victory Loan	
Seventh Victory Loan	
War Savings Certificates and Stamps (net). Non-Interest Bearing Certificates (net)....
May 1, 1944. May 1, 1944. Nov. 1, 1944 Nov. 1, 1944
March 1, 1948. June 1, 1960... Nov. 1, 1948.. Feb. 1, 1962...
June 15, 1947.
[Stage Direction]
ii
3(')
100 00 99 85 100 00 100 00 100 00
100 00
99 59 99 37
99	61 99 39
100 00
100	00
100 1 45
0-75
0-75
1-86 3 05 1-85 305 0)3-00
250.000.	000
100.000.	000
104.000.	000
102.000.	000
154,000,000
250.000.	000
100.000.	000
104.000.	000
102.000.	000
154,000,000
710,000,000
710,000,000
210,000,000
210,000,000
239.713.000 1,165,300,350
344.267.0001 1,315,639,200/
28,801,982
2,207,677
147,544,000
239,713,000
1,165,300,350
1,512,362,200
28,801,982
2,207,677
3,095,929,209
147,544,000
2,948,385,209
Grand Total.
4,035,929,209
857,544,000
3,178,385,209
[Stage Direction]


o
(>) Yield to investor if held to maturity, seven and one-half years after issue date, amount issued includes interest accrued during the year on outttanding certificates.
The Budget-Appendix

The Budget-Appendix
75.	In the fiscal year 1944-45, the Sixth and Seventh Victory Loans were sold, both being larger than any previous Canadian loan sold for -cash. The Sixth Victory Loan was sold entirely for cash in the amount of $1,405,013,350, the number of subscriptions being 3,077,123. The Seventh Victory Loan was sold in the amount of $1,512,362,200 for cash and $147,544-
000 in conversion of bonds maturing or called for redemption on October 15, 1944. The number of cash subscriptions was 3,306,990 and the number of conversion subscriptions was 20,325.
76.	The following table sets out the bond redemptions in the fiscal year ended March 31, 1945:

[Stage Direction]
Maturity or Call Date	Interest Rate	Where Payable	AmountApril 15, 1944	% 1 u 2 4 H 41 31 li 2i 1 2 2i 3i 4 31	$ 250.000.	000 100.000.	000 90,625,000 33,293,471 150.000.	000 50.000.	000 138,322,000 200.000.	000 20.000.	000 104.000.	000 105.000.	000 68,945 134,077 90,481 46,615April 15, 1944	June 1, 1044	July 1, 1944	September 1, 1944	October 15, 1944	October 15, 1944 (') 	October 16, 1944	November 15, 1944	March 1, 1945	March 1, 1945	October 1, 1947 (')	May 1, 1955 (s)	September 1, 1958 (3)	July 1, 1963 (3)	Total	1,241,580,589 890,837,471Less amounts renewed or converted (4)	Provided from cash resources	350,743,118
0) Maturity date October 15, 1949, called for redemption on October 15, 1944.
(!) 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 1944-45 was cancelled.
(') 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 1944-45 were cancelled.
(«) Total from previous table $857,544,000 and School Lands Debenture Stock, viz. $33,293,471.
77.	The fortnightly issue of three months' Treasury Bills was continued during the year and the amount was increased by $20,000,000 to $380,000,000. The last issue in the fiscal year was sold at a discount of -365 per cent.
The average rate of interest on the dominion's direct funded debt (including Treasury Bills and Deposit Certificates) outstanding at March 31, 1945, was 2'51 per cent. This compares with 2-54 per cent on the debt outstanding at the close of the preceding year.
The Budget-Appendix

[Stage Direction]
78.	The following table shows the total cash deficiency of the Government for the fiscal year ended March 31, 1945, at $2,955,000,000. The comparable figure for the previous fiscal year was $3,065,600,000.
79.	The significant thing is that while the budgetary deficit for 1944-45 was $2,558,277,000, the cash deficiency (that is the excess of cash requirements over receipts other than borrowing) was $396,700,000 greater. It is the sum of $2,955,000,000 which had to be met by borrowing from the Canadian people.
REQUIREMENTS FOR AND SOURCES OF CASH, FISCAL YEAR 1944-45 (*)
(Millions of Dollars)
Requirements i-oit Cash
Non-War Requirements(2)-
Expenditure-
Interest on the public debt	$	319-0
Payments to provinces under the tax agreements	 93-3
Other Ordinary Expenditure (3)	 325-9
[Stage Direction]
$	738-2
Capital Expenditure	 3-2
Special Expenditure	   7-5
Government Owned Enterprises	 1-4
Total Non-War Cash Expenditure (*) _(**)-.. -	
Outlay that Increased Assets or Decreased Liabilities-
Active loans, advances, investments, etc.
[Stage Direction]
Bond Holding Account (including repatriated securities
and bonds held under instalment purchase plans)...	151-3
Canadian National Railways (s)	 71-0
Other (net)	 24-2
Sub-total	 246 [DOT] 5
Cost of loan flotations, portion to be amortized	 17-9
Reduction of New York indebtedness (6)	 0-9
Purchase price of increase in holdings of gold and U.S.
dollars (7)	 119-4
War Requirements (2)-
Expenditure-
Department of National Defence-
Army	$
Navy	
Air Force	
Department of Munitions and Supply	
Other Departments	
1,238-6
1,259-5
461-0
Total War Appropriation Act	S 3,561-0
The War Appropriation (United Nations Mutual Aid) Acts.	803-3
Outlay that Increased Assets or Decreased Liabilities-Active loans, advances, investments, etc.-
Department of National Defence recoverable advances.	80-4
Foreign Exchange Control Board	 265-0
Canadian National Railways (5)	 18-3
Other (net)	  -139-0
Sub-total	 224-7
Revaluation of war plants	 - 7-1
Reduction of London indebtedness	(6)	   0-3
Less purchase price of decrease in holdings of sterling balances	  -11-9
384-7 
[Stage Direction]

4,364-3
1,135-0
4,570-3
Total Requirements for Cash	 5,705-3

[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.
(2) War requirements means outlays under the war appropriation acts and i uch other accounts as obviously relate to the war; non-war means all other requirements.
(*) Excluding the amortization of bond discounts and commissions, $12-8 million.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(Millions of Dollars)
Revenue-
Sources or Cash
Ordinary Revenue-
Customs duties, excise duties, and excise taxes	$	810*1
Personal income tax	 767*8
Corporate income tax	 276*4
Excess profits tax	 465*8
Other tax revenue	 54*0
Total tax revenue	*	$	2,374*1
Post Office revenue	 66*1
Return on investments	 60*7
Other Ordinary Revenue (8)	 20*0
Gross Ordinary Revenue (8)	$	2,520*9
Leas estimated refundable portion of personal income tax and
excess profits tax	 -219*5
[Stage Direction]


Capital Refunds	
Special Receipts and Credits (9)	
2,301*4 0*7 356*4 
[Stage Direction]

2,658*5
Other Receipts-
Miscellaneous receipts and credits on war account	 32*2
Miscellaneous receipts and credits on non-war account	 59*5
[Stage Direction]
 91*7
Borrowing in Canada-
New Issues of Funded Debt-
Treasury Bills, net increase	$	20*0
Chartered banks, net	 112*0
General public (10)	 2,948*4
[Stage Direction]
 3,080*4
Less Maturities paid off in cash	 -252*4
Estimated refundable portion of personal income tax and excess profits tax..	219*3
Net increase in funded debt	 3,047*3
Net increase in floating debt	 59*5
Net increase in funded and floating debt	 3,106*8
Increase in Cash Balances held in domestic currency	 -151*8
Total of borrowing less increase in cash balances (equals "cash deficiency")...	2,955*0
Total sources of Cash
$	5,705*3
FOOTNOTES-Concluded
(4) Excluding the write-down of assets, $25*4 million, and adjustments of the valuation of C.N.R. Securities Trust Stock due to the net income surplus and capital gain, $22*4 million.
t p) For details see page 36. The advances treated as relating to the war are those for the repatriation of sterling securities, and the purchase of equipment leased to the railway under the terms of the 1940 and subsequent agreements.
(6)	Including both matured and unmatured funded debt, and the premium or discount on foreign funds.
(7)	Computed by adding the 10% exchange premium to the change during the year. The figures exclude changes in funds held for special purposes.
(8)	Adjusted by the addition of $1*3 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.
(®) Excluding the adjustment of the reserve against losses of the Canadian Wheat Board, and the entry recording the increase in value of the C.N.R. Securities Trust Stock.	.
(10) Includes the increase in value of War Savings Certificates during the year due to interest accruals, $5*8 million.

[Stage Direction]
80.	The gross unmatured funded debt (including Deposit Certificates, Treasury Bills and the estimated refundable portion of personal income tax and excess profits tax) of the Dominion outstanding at the close of the fiscal year 1944-45, was §13,983,764,000. Other liabilities consisting chiefly of Deposit and Trust Accounts, Insurance, Pension and Guaranty Accounts totalled $1,728,418,000 on the same date. The gross liabilities of the Dominion on March 31, 1945, were
$15,712,182,000. On the other side of the balance sheet there are active assets totalling $4,413,820,000, consisting of cash, loans and advances and investments, less a reserve of $125,000,000 for possible losses on their ultimate realization. If the amount of net active assets is deducted from the amount of gross liabilities, there results a figure of $11,298,362,000, representing the net debt of the Dominion as at March 31, 1945. The increase in the net debt in the year was $2,558,278,000, or the amount of the over-all deficit for the fiscal year 1944-45.
The Budget-Appendix
[Stage Direction]
81.	The following is a condensed balance sheet of the Dominion, together with details of non-active assets:

[Stage Direction]
(Thousands of Dollars)
Liabilities-
Floating Debt-
Matured Funded Debt Outstanding	
Stock and other obligations payable on demand
Interest due and outstanding	
Outstanding cheques and warrants	
Post Office Account	
Deposit and Trust Accounts-
Post Office Savings Bank Deposits.. Bank Circulation Redemption Fund
Indian Trust Funds	
Miscellaneous	
18,701
28,835
112,547
4,565
33.469
2,259
16.638
941,235
Insurance, Pension and Guaranty Accounts-
Government Annuities	 243.538
Insurance Fund-Civil Service	 18,020
Insurance Fund-Returned Soldiers	 22.762
Unemployment Insurance Fund (Cash portion only)	 6.103
Other Insurance Funds	 21.951
Civil Service Superannuation Account	 79,147
Civil Service Retirement Fund	 13,923
Other Pension Funds	 1,028
Deferred Credits	
Sundry Suspense Accounts	
Province Debt Accounts	
Reserve or Certain Contingent Liabilities
Funded Debt Unmatured-
Payable in Canada-
Bonds, Deposit Certificates and Treasury Bills	 13,194,427
Refundable Portion of Personal Income Tax and Excess Profits
Tax (estimated)	 444,271
Payable in London	 12,066
Payable in New York	 333,000
165,067
993,601
406,472 26,379 81,334 11,920 43,645
13,983,764
$	15,712,182
Assets-
Cash-	,
In Current Deposits	$	154,974
In Special Deposits	 2,793
[Stage Direction]
$	157,767
Departmental Working Capital Advances
Loans and Advances-
To Railway and Steamship Companies-
Canadian National Railways	$	655,915'
Canadian National (West Indies) Steamships Ltd...	450
[Stage Direction]
	656,365
To Foreign Exchange	Control Board	 850,000
To Sundry Government	Agencies-
Soldier Settlement of Canada	 34,055
National Harbours Board	 85,031
Crown Companies	 116,346
Crown Plants Privately Managed	 46,698
Other	 40
[Stage Direction]
	282,170
To Provincial and Municipal Governments-
Unemployment Relief Loans	 156,291
Province of Alberta-Subsidy overpayment	 350
Province of Saskatchewan-Seed Grain Loans
Guarantee 1938	 15,887
Municipal Improvements Assistance Act	 5,543
Other	 183
[Stage Direction]
 178,254
7,374
[Stage Direction]
The Budget-Appendix
BALANCE SHEET-MARCH 31, 1945-Concluded
Assets-Con.
Loans and Advances-Con.
To United Kingdom and Other Governments-
United Kingdom-War Appropriation (United Kingdom Financing) Act	 602,510
Government of Greece	 6,525
Government of Roumania	 24,329
Government of the Union of Soviet Socialist Republics	 10,000
Other	 508,488
Miscellaneous-
Dominion and National Housing Acts. Other	
Investments-
Bank of Canada-Capital stock.. Canadian Farm Loan Board- Advances and Capital Stock. Miscellaneous	
14,721
20,345
Province Debt Accounts	
Deferred Charges-Unamortized Discounts and Commissions on Loans. Sundry Suspense Accounts	
Less-Reserve for possible losses on ultimate realization of active assets.
1,151,852
35,066
5,920
24,024
343,963
3,153,707
373,907
2,296
86,739
757,030
4,538,820
125,000
4,413,820
Net Debt, March 31, 1945	$	11,298,362
NET DEBT-MARCH 31, 1945 (Thousands of Dollars)
Net Debt represented by-
(A) Expenditures for Capital Purposes and Non-Active Assets-
Public Works-
Canals	$
Railways	
Miscellaneous	
Military Property and Stores	
Territorial Accounts	
Canadian Pacific Railway (old)	
Canadian National Railways Securities Trust Stock	
Canadian National Railways Stock	
Loans Non-Active-
Canadian National Steamships	
National Harbours Board-
Chicoutimi	 $	3,838
Churchill	 10
Halifax	 12,502
Montreal (Jacques Cartier Bridge)	 5,840
Quebec	 27,766
Saint John	 17,056
Three Rivers	 3,980
Soldier and General Land Settlement	
Seed Grain and Relief Advances	
Saskatchewan Seed Grain Loans Guarantee Act, 1936
Seed Grain Loans Guarantee Act, 1937	
Miscellaneous Non-Active Accounts	
240,237
427,014
315,005
12,617
9,896
62,791
359,081
18,000
13,158
70,932
16,526
2,637
7,136
2,458
(B) Consolidated Deficit Account-
Balance, Consolidated Deficit Account brought forward from
March 31, 1944	 7,207,056
Excess of. expenditure over revenue, less amounts charged under A
above, fiscal year ended March 31, 1945	 2,533,519
[Stage Direction]
 9,740,375

[Stage Direction]
The Bridget-Appendix
[Stage Direction]
82 The following table gives the details of the various obligations included in the unmatured funded debt of the Dominion outstanding as at March 31, 1945, and the annual interest charges thereon:

[Stage Direction]
Date of Maturity	Rate Per Cent	Where Payable	Amount of Loan	Annual Interest Charges1945,	April 15	
April 16	
July 1	
July 2	
Sept. 1	
1946,	Feb. 1	
April 15	
May 1	1	Canada	$ c. 250,000,000 00	$ c. 2,500,000 00[DOT]75	Canada	102,000 000 00	765,000,004	Canada	33,293,470 85	1,331,738 83li	Canada	450,000,000 00	6,750,000 00[DOT]75	Canada	154,000,000 00	1,155,000 004§	Canada	45,000,000 00	2,025,000 00If	Canada	100,000,000 00	1,375,000 00li	Canada	144,253,000 00	2,524,427 50li	Canada	197,455,000 00	3,455,462 502	Canada	193,286,000 00	3,865,720 00li	Canada	373,259,000 00	6,532,032 50' Oct. 1	24	London	103,084 94	2,577 121948, Jan. 15	
Feb. 1	
Mar 1 	24	New York	30,000,000 00	750,000 0031	Canada	50,000,000 00	1,625,000 0021	Canada	269,879,000 00	6,072,277 50li	Canada	239,713,000 00	4,194,977 50li	Canada	344,267,000 00	6,024,672 501949, Feb. 1	31	Canada	50,000,000 00	1,625,000 0031	Canada	33,500,000 00	1,088,750 001950,	Feb. 1	
1951,	Feb. 1	31	Canada	50,000,000 00	1,625,000 0031	Canada	(i) 50,250,000 00	1,625,000 003	Canada	(2) 649,969,592 50	19,306,027 5031	Canada	60,000,000 00	1,950,000 001952, Feb. 1	
Oct 1 	31	Canada	(3) 50,500,000 00	1,625,000 003	Canada	324,945,700 00	9,748,371 00Oct 15	4	Canada %	56,191,000 00	2,247,640 001953 Jan. 15	3	New York	30,000,000 00	900,000 001054 Mar. 1	3	Canada	(*) 676,355,489 00	20,089,767 001955 May 1	31	London	4,958,401 84	161,148 063	Canada	40,000,000 00	1,200,000 003	Canada	55,000,000 00	1,650,000 001956, Nov. 1	44	Canada	43,125,700 00	1,940,656 503	Canada	(') 855,607,410 50	25,414,081 501Q57 Mav 1	3	Canada	1,111,261,650 00	33,337,849 50Nov 1 	44	Canada	37,523,200 00	' 1,688,544 001958, Jan. 15	'	3	New York	30,000,000'00	900,000 003	Canada	88,200,000 00	2,646,000 00Sept. 1	4	London	3,345,182 58	133,807 3044	Canada	276,687,600 00	12,450,942 001959, Jan. 1	3	Canada	1,197,324,750 00	35,919,742 5044	Canada	289,693,300 00	13,036,198 503	Canada	1,165,300,350 00	34,959,010 50' Oct 1 	4	New York	100,000,000 00	4,000,000 001961 Jan. 15 	31	New York	48,000,000 00	1,560,000 001962 Feb. 1	3	Canada	1,315,639,200 00	39,469,176 001963 July 1	31	London	3,658,863 50	118,913 0631	Canada	54,703,000 00	1,777,847 501967 Jan. 15 	3	New York	55,000,000 00	1,650,000 001968 Nov. 15	3	New York	40,000,000 00	1,200,000 003	Canada	55,000,000 00	1,650,000 001945, April 13 Treasury Bills	[DOT]371	Canada	65,000,000 00	241,150 00April 27 Treasury Bills	[DOT]371	Canada	65,000,000 00	241,150 00May 11 Treasury Bills	[DOT]371	Canada	55,000,000 00	204,050 00[DOT]368	Canada	65,000,000 00	239,200 00June 15 Treasury Bills	*365	Canada	65,000,000 00	237,250 00[DOT]365	Canada	65,000,000 00	237,250 00April 3 Deposit Certificates	[DOT]75	Canada	130,000,000 00	975,000 00April 10 Deposit Certificates	[DOT]75	Canada	50,000,000 00	615, UU0 00April 17 Deposit Certificates	[DOT]75	Canada	140,000,000 00	1,050,000 00April 24 Deposit Certificates	[DOT]75	Canada	145,000,000 00	1,087,500 00Aug. 28 Deposit Certificates	[DOT]75	Canada	57,100,000 00	428,250 00Sept. 4 Deposit Certificates	[DOT]75	Canada	88,920,000 00	. 666,900 00Sept. 11 Deposit Certificates	[DOT]75	Canada	128,980,000 00	967,350 00Sept. 18 Deposit Certificates	[DOT]75	Canada	110,000,000 00	825,000 00Sept. 25 Deposit Certificates	[DOT]75	Canada	150,000,000 00	1,125,000 00
The Budget-Appendix
UNMATURED FUNDED DEBT AND TREASURY BILLS AS AT MARCH 31, 1945, AND ANNUAL INTEREST THEREON-Concluded
Date of Maturity
Rate Per Cent
Where
Payable
Amount	Annual
of Loan	Interest Charges
[Stage Direction]

1945, June 15 Non-interest Bearing
Certificates	
1947, June 15 Non-interest Bearing
Certificates	
War Savings Certificates	 3
War Savings Stamps	
Canada
Canada
Canada
Canada
Refundable portion of personal income tax and excess profits tax (estimated)	 2
Payable in Canada... Payable in New York Payable in London... * (*)
6,443,644 39
201,696,507 09	7,850,895 21
7,294,936 75	
13,539,492,592 32	346,394,303 58
444,270,982 59	(6)5,195,447 69
13,983,763,574 91	351,589,751 27
$ 13,638,698,042 05	97-53%
333,000,000 00	2-38%
12,065,532 86	0-09%
13,983,763,574 91	100-00%
(1)	Redeemable at 109} per cent. Amount outstanding includes $ 250,000.00 redemption bonus.
(2)	Redeemable at	101	per cent.	Amount outstanding includes 86,435,342.50	redemption bonus.(3)	Redeemable at	101	per cent.	Amount outstanding includes 8 500,000.00	redemption bonus.(*)	Redeemable at	101	per cent.	Amount outstanding includes $6,696,589.00	redemption bonus,(i)	Redeemable at	101	percent.	Amount outstanding includes $8,471,360.50	redemption bonus.
(«) Interest on refundable portion of personal income tax only.

[Stage Direction]
83.	Bonds and debenture stocks bearing the guarantee of the Dominion and outstanding in the hands of the public totalled $606,665,000 at March 31, 1945 or a decrease of $92,778,000 from the amount outstanding at the close of the previous year. This decrease is occasioned mainly by the redemption of two Canadian National Railway Company bond issues on May 1, 1944 and July 1, 1944 (due July 1, 1969 but called for prior payment) outstanding in the amounts of S35.000.000 and
856,684,000	respectively. The funds required to meet these maturities were loaned to the Company by the Government.
84.	There were also outstanding at the close of the fiscal year other contingent liabilities authorized by various statutes.
85.	Guaranteed bank advances to the Canadian Wheat Board totalled $71,166,000 at March 31, 1945, and related to wheat in the amount of $65,564,000; to flax in the amount of $5,211,000 and to rapeseed and sunflow'er seed in the amount of $391,000.
86.	Pursuant to the terms of an Order in Council dated August 11, 1943, the Commodity Prices Stabilization Corporation, a Government-owned Corporation, guaranteed 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 March 31, 1945, was $27,400.
87.	Under the terms of an Order in Council dated April 6, 1944, the Commodity Prices Stabilization 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 1944. The liability of the Corporation is limited to ten 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, 1945, was $39,277.
88.	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
[Stage Direction]
The Budget-Appendix
[Stage Direction]
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 close of the fiscal year in connection with this guarantee. The maximum amount of guarantees authorized at March 31, 1945, was *110,581,000.
89.	Before operations under the Home Improvement Loans Guarantee Act were discontinued (October 30, 1940), 125,720 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 S49.959.055. 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, 1945 was $246,120, the contingent liability of the Government is limited to this amount. Up to March 31, 1945, 1,249 loss claims for an aggregate amount of $454,018 had been paid. In terms of total losses to total volume of loans, this loss ratio is only [DOT]909 of one per cent.
90.	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. 1945, 59 loans for a total amount of S109.238 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 $16,309. There have been no claims for loss made by the banks.
91.	Under the Dominion Housing Act, 1935, the National Housing Act, 1938, and the National Housing Act, 1944, the Dominion has accepted and is accepting certain obligations arising out. of its contracts with approved lending institutions which, while not expressed in the form of a guarantee, may nevertheless be regarded as contingent or indirect liabilities.
92.	The manner in which losses in respect of any loan are to be shared by the Dominion and the lending institution is fixed by the contract. The general principle under the

Dominion Housing Act and the National Housing Act, 1938, 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. Under the National Housing Act, 1938, 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. Under the National Housing Act, 1944, the Dominion bears the first one-quarter of the loss and agrees to pay losses sustained by any lending institution up to fifteen per cent of the total amount of loans made in any area by each such lending institution.
93.	An amount of $2,000,000 was appropriated for the fiscal year 1944-45 to provide for advances under the National Housing Act, 1938, not exceeding with the advance made jointly by the approved lending institution, $4,000 in respect of any one house, for the construction of houses where the Minister was satisfied that permanent houses could be constructed to relieve a serious housing shortage without threatening to create a post-war surplus. Loans to the number of 21,896 have been approved at March 31, 1945, under the Dominion Housing Act, 1935, and the National Housing Act, 1938, in the amount of $87,767,957. Under the National Housing Act, 1944, to the same date 862 loans in the amount of $3,575,785 have been approved. Losses recorded and paid to March 31, 1945, amounted to $2,644.78, covering the

The Budget-Appendix
Dominion's proportion of the loss on seven loans. This amount represents total losses to that date under both the Dominion Housing Act, 1935, and 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, 1945, is therefore only $2,147.04. There have been no losses under the National Housing Act, 1944.
94.	As announced in the Budget Speech of 1943 and provided in the Appropriation Act, the Minister of Finance entered into agreements with certain provinces guaranteeing the liquor revenues of the provinces on the basis of such revenues received during the twelve months ended June 30, 1942. No payments have been made to March 31, 1945, under these Agreements.
95.	Under the terms of Orders in Council passed under the Export Credits Insurance
Act, the Dominion Government guaranteed the payment to certain contractors for goods supplied and services rendered to the agent of a foreign country. The maximum amount authorized at March 31, 1945, under ths authority was $3,230,000.
96.	The guarantee of bank advances to municipalities in Saskatchewan under the authority of The Seed Grain Loans Guarantee Act, 1938, was required to be implemented during the fiscal year. On December 11, 1944, the Government paid $16,469,000 to the chartered banks, the amount so advanced was charged in the Dominion's books as a loan to the Province of Saskatchewan which in the first instance guaranteed the advances. At the close of the fiscal year the amount so advanced had been reduced to $15,887,000.
97.	The following is a statement of bonds and debenture stocks and other indebtedness guaranteed by the Dominion outstanding on March 31, 1945.

[Stage Direction]
Date of Maturity	Issue	Interest Rate	Amount Outstanding
		%	$
Jan. 15, 1946...	Canadian National	2f	15,000,000'July 1, 1946....	Canadian Northern	61	23,752,000April 1, 1948....	New Westminster Harbour Commissioners	4f	700'000Dec. 15, 1950...	Canadian National	3	50,500,000Sept. 1, 1951....	Canadian National	41	48,022,000Feb. 1, 1952....	Canadian National	3	20,000,000-Aug. 1, 1952....	Saint John Harbour Commissioners	5	667,953Feb. 15, 1953....	Canadian National	3	25,000,000July 10, 1953....	Canadian Northern	3	1,169,460-Feb. 1, 1954....	Canadian National	5	50'000^000Mar. 1, 1955....	Canadian National (West Indies) Steamships	Limited	5	9,400,000June 15, 1955...	Canadian National	4}	48,496,000Feb. 1, 1956....	Canadian National	41	67,368,000July 1, 1957....	Canadian National	41	64,136,000-July 20, 1958....	Canadian Northern	31	5^641] 326-Jan. 15, 1959...	Canadian National	3	35,000 000-May 4, 1960. ...	Canadian Northern Alberta	31	551,505May 19, 1961....	Canadian Northern Ontario	31	3,643,985Jan. 1, 1962....	Grand Trunk Pacific	3	26,465 j 130*Jan. 1, 1962....	Grand Trunk Pacific	4	7,999,074Oct. 1, 1969....	Canadian National	5	57,728,500Nov. 1, 1969....	Plarbour Commissioners of Montreal	5	19,000,000Feb. 1, 1970...	Canadian National	5	17,338,000Various dates	1946-54	City of Saint John Debentures assumed by Saint	John Harbour Commissioners	Various	590,2295	it	5	it	4	It	Northern Railway of Canada Debenture Stock..	4	27,458606,665,082
1060
The Budget^-Appendix

[Stage Direction]
Principal Amount Outstanding March 31,1945
Bank Advances, re Province of Manitoba Savings Office	$	5,299,078
Province of Manitoba Treasury Bill	 4,305,723
Province of British Columbia Treasury Bill	 626,534
Bank Advances, re Canadian Wheat Board:
Wheat	 65,563.970
Flax	 5,210.947
Rapeseed a.nd sunflower seed	 390,772
Loans made by approved lending institutions under Dominion and National
Housing	Acts	 Indeterminate
Loans made by approved lending institutions under The Home Improvement
Loans Guarantee	Act,	1935	 246,120
Loans made by approved lending institutions under the Home Extension Plan	16,309
Deposits maintained by the chartered banks in the Bank of Canada	 422,029,434
Bank Advances, re Government War Contracts-Department of Munitions and
Supply	 3,003,750
Bank Overdrafts-Government War Contracts-Department of Munitions and
Supply (closed out monthly)	
Bank Advances, re production of logs or lumber-Commodity Prices Stabilization Corporation		   27,400
Bank Advances, re coal, coke or briquette purchases

Commodity Prices
Stabilization Corporation	  39,277
Guarantee under Dominion-Provincial Taxation Agreements of Provincial receipts from gasoline taxes at amounts received in fiscal years
ending nearest December 31, 1940	 Indeterminate
Guarantee under Dominion-Provincial Agreements of Provincial liquor revenues
at amounts received during the twelve months ended June 30, 1942... Indeterminate Guarantees under Export Credits Insurance Act	 Indeterminate
IMr. Ilsley.]

The Budget-Appendix
(B.) CANADIAN ECONOMIC CONDITIONS

[Stage Direction]
Calendar Years				
	1926	1928	1932	1937	1939	1943	1944
Group I.-Comprehensive Indexes (1935-39 = 100)							
Physical volume of business	87	103	69	107	107	236	237Volume of manufacturing	89	100	66	109	105	294	292Mining	55	65	59	104	118	242	235Forestry	84	87	57	117	103	123	121Carloadings	131	148	88	106	102	139	146Electric power output	46	61	61	106	108	154	154Employment (a)	100	112	88	114	114	184	183National income	110	129	69	107	112	214	225Retail sales	(e)	(e)	92	105	105	161	173Group II.-Price Levels and Financial Factors (1926 = 100)	Wholesale prices	100	96	67	85	75	100	103Farm product prices	100	101	48	87	64	96	103Cost of living (b)	122	121	99	101	102	118	119Common stock prices (b)	92	147	51	117	92	84	84Bank deposits	100	115	100	120	132	199	234Active currency circulation	100	105	81	103	111	353	482Group III.-Gross Value of Production in Major Industries ($ millions)	Agriculture	1,148	1,265	496	800	900	1,524	(0)1,874556	586	267	494	466	809	(c) 936 (c) 13373	71	34	51	53	119	Mining (including Smelting)	281	316	238	663	663	974	Co) 893Construction	452	578	271	352	373	572	(c) 407Manufacturing	3,101	3,582	1,980	3,625	3,475	8,733	(c)8.713Group IV.-Foreign Trade and International Transactions ($ millions)	Exports (gold excluded)	1,277	1,364	498	1,012	936	3,001	3,440Net non-monetary gold exports (d)	30	40	70	145	184	142	110Total exports, including non-monetary gold	1,307	1,404	568	1,157	1,120	3,143	3,550Imports (gold excluded)	1,008	1,222	453	809	751	1,735	1,759Total trade	2,315	2,626	1,021	1,966	1,871	4,878	5,309Export balance	+299	+182	+115	+348	+369	+1,408	+1,791Net tourist receipts	53	79	65	79	68	52	(e)Net interest and dividends going abroad	201	221	262	226	249	202	(e)(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.
[Hr. Ilsley.]


[Stage Direction]
s
to
-	Jan.	Feb.	Mar.	April	May	June	July	Aug.	Sept.	Oct.	Nov.	Dec.
Group I.-Comprehensive Indexes (a)												
(1935-39 = 100)												
Physical volume of business	
1943	226	227	232	237	232	232	236	241	237	240	243	2491944	247	242	248	240	242	239	232	233	231	228	228	2331945	229	217	225	232	219	220	214	Volume of manufacturing	
1943	279	291	294	297	287	286	285	291	299	304	307	3081944	304	305	301	291	297	292	288	292	285	286	285	284>1945	274	270	271	271	256	253	249	Mining	1943	224	218	245	248	255	245	253	254	243	240	232	2451944	250	256	263	248	239	226	225	215	206	209	192	1891945	174	148	174	183	189	175	161	Forestry	1943	106	121	124	116	119	132	127	127	127	114	126	1321944	114	125	125	115	119	121	113	122	116	129	125	1261945	117	127	138	119	124	125	125	Carloadings	1943	131	140	144	144	143	147	148	139	123	122	139	1531944	155	158	157	145	157	153	147	143	126	125	141	1431945	152	148	149	149	154	156	151	Electric power output	1943	143	142	147	153	161	162	167	164	161	151	149	1541944	156	154	155	153	165	160	155	153	152	152	149	1451945	152	150	154	166	165	164	162	Employment (b)	1943	191	188	189	191	185	181	180	181	179	179	181	1861944	193	190	189	191	185	181	180	179	178	174	176	1811945	187	186	186	187	182	175	Retail sales (c)	1943	129	131	151	168	163	159	148	143	158	174	173	2211944	140	139	163	175	178	178	155	161	179	183	191	2371945	143	147	194	175	182	196	Group II.-Price Lerelu and Financial Factors-	(1926 = 100)	Wholesale prices	1943	97	98	99	99	99	100	100	100	101	102	102	1031944	103	103	103	103	103	103	103	102	102	102	102	1031945	103	103	103	103	103	103	104	product prices	1943	88	89	91	92	93	94	96	98	98	104	104	1051944	104	104	105	104	102	102	102	101	101	103	103	1031945	104	105	105	105	105	106	108	
o
o
2
o
Si
[Stage Direction]
The Budget-Appendix
Cost of living (d)	
Common stock prices (d)	
Bank deposits (e)	
Active currency circulation (e)	
Group III.-Other Significant Factors
Exports (f) ($ millions)	
Imports (f) ($ millions)	
Net non-monetary gold exports (g) ($ millions)...
Construction contracts awarded ($ millions)	
War contracts awarded (h) ($ millions)	
Canadian war expenditure ($ millions) (j)	
.1943	117	117	117	118	118	119	119	119	119	119	119	1191944	119	119	119	119	119	119	119	119	119	119	119	1191945	119	119	119	119	119	120	120	.1943	76	79	79	83	84	86	91	89	89	86	80	811944	82	82	82	79	80	84	88	87	85	86	86	871946	89	93	93	94	97	103	101	.1943	178	176	184	193	203	203	202	199	205	204	221	2181944	215	211	213	222	237	238	239	235	233	243	259	2601945	257	253	251	255	273	281	.1943	312	320	331	341	341	344	352	362	372	382	382	3941944	391	399	411	419	413	415	427	437	445	458	457	4671945	461	467	477	482	477	479	.1943	177	168	205	228	251	249	304	293	245	260	290	3031944	242	227	283	283	368	343	279	257	265	314	313	2671945	230	236	301	312	315	323	283	.1943	127	114	146	151	154	147	151	149	137	163	160	1351944	126	138	151	137	159	152	148	157	180	160	142	1271945	130	112	132	133	144	146	139	.1943	14	13	13	14	13	12	10	10	12	11	9	121944	9	8	13	9	9	17	7	10	9	8	10	61945	9	8	10	7	10	5	8	.1943	12	19	11	16	23	20	16	24	19	19	14	121944	9	16	31	28	32	37	32	24	25	26	19	131945	12	13	20	34	38	59	51	.1943	112	92	307	109	73	115	255	94	89	116	75	641944	97	51	128	44	100	62	54	44	50	47	28	451945	45	77	68	35	27	22	16	13	.1943	184	196	m	703	137	276	262	452	451	312	377	423	6411944	290	319	(it	647	199	90	302	422	439	348	385	88	6621945	242	239	(>)	797	129	400	327	298	304	(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 trad* returns.(h)	Contracts awarded by Department of Munitions and Supply on Canadian Account, including Capital Assistance; subject to revision.(i)	Includes year-end expenditure.(j)	Includes expenditure under United Nations Mutual Aid Acts of 1943 and 1944 from July, 1943; figures from September, 1944, subject to revision.
The Budget-Appendix
The Budget-Mr. Macdonnell
Mr. J. M. MACDONNELL (Muskoka-Ontario):: The Budget-Mr. Macdonnell

veterans, et cetera, will depend on our capacity to borrow, as well as on our capacity to raise taxes.
My next question is: Is there any indication that the government has taken into account the relative tax position of business in the United States and Canada after post-war tax adjustments? The relative position of business in the two countries will affect their respective capacities to compete in the foreign market.
Next: Is there any indication of the necessary drastic measures to reduce the controls still piled one on another so that we may get away from our present position, which may be described in an old rhyme:
For larger fleas have smaller fleas Upon their backs to bite 'em;
And these again have other fleas,
And so. ad infinitum.
My next question:	Has the government
shown any intention of adjusting taxes on mines and petroleum products, having regard to the great increase in production and employment which could be brought about thereby?
Next:	Has the government taken into
special account the tax position of farmers, particularly stock breeders?
My next question is this: Does the budget give any indication that the government is really grappling with the task of reducing expenditures? For example, has the government tackled the job of the reduction of army expenditures? Considering that V-E day came only five weeks after the beginning of the financial year, why are the army estimates only fourteen per cent down, as against twenty-eight per cent in the navy and fifty-two per cent in the air force?
In a word, has the government really developed a peace-time mentality on the question of public finance? Does it realize that if we do not get on top of expenditures, expenditures will get on top of us?
I have put these questions in the sincere hope that they may help people in reading the budget to take account of these considerations,-deep, grave considerations affecting our economic welfare, which are involved. If I am right in thinking that these questions have not been adequately dealt with, perhaps they can still be dealt with. Finally, I submit these considerations to the judgment of the house and, what is even more important, to the judgment of that great body, namely, public opinion, which can reach into this house and make its will felt when it wishes. Mr. Speaker, I now move the adjournment of the debate.
Motion agreed to and debate adjourned.
On motion of Mr. Mackenzie the house adjourned at 9.35 p.m.

Monday, October 15, 1945.