1956-03-20

PRIVATE BILLS


Mr. W. J. Henderson (Kingston) moved:: That the petitions for private bills of the Maritime Stock Breeders' Association, Trans-Prairie Pipelines of Canada, Ltd., Esther Pheobe Brunger Abels, Rosa-Anna Rose Crombie, Adam Forbes, Martha Hope MacDougall Fortier, Geraldine Isabella Johnson Mole, Hugh Oliver Semper and Phyllis Elizabeth Jardine Williams, together with the clerk of petitions' reports thereon of March 15 and 19, be referred to the standing committee on standing orders for such recommendations as may be deemed advisable.


[Stage Direction]
Motion agreed to.


Mr. P. T. Hellyer (Parliamentary Assistant to the Minister of National Defence):: In accordance with the practice of informing the house about current developments in continental air defence, I should like to make a statement on the manning and operation of the early warning lines in the Canada-United States air defence system.
In consultation with the United States government it has now been agreed that the distant early warning line should be manned and operated for the next three years by a civilian contractor, to be selected by the United States government. The Canadian government has reserved the right to undertake any part or all of the manning and operation of the Canadian section of this line after the expiration of the three-year period.
A United States-Canadian military group will be located at each main station in the D.E.W. line and will have control of the purely military functions of the line.
With reference to the mid-Canada line, investigations are now being made by the Canadian government to see whether it is practicable to have the technical maintenance and manning of this line also undertaken by a civilian contractor.


Mr. Howard C. Green (Vancouver-Quadra):: Will these contractors be Canadian contractors or United States contractors?


Paul Theodore Hellyer: I am not sure, but I presume it would possibly be a United States contractor. In any event, if the United States government have the selection of the contractor that would be something they would have to decide.


Howard Charles Green: Has the Canadian government no voice whatever in the selection of these contractors?


Paul Theodore Hellyer: In this particular case the statement covers the matter. The United States government has the responsibility for the selection of the contractor.
ILater:1
On the orders of the day:
Mr. M. J. Cold well (Rosetown-Biggar): Mr. Speaker, I wish to ask the Prime Minister a question which is supplementary to those asked by the hon. member for Vancouver-Quadra (Mr. Green). Are there any other agreements of the same nature as the one dealing with the distant early warning line, allowing United States contractors appointed by the United States government to take over? I should like to ask this question also. Are those contractors and their employees subject to Canadian statutes and laws or is there some agreement with regard to the legal standing of those people?


Right Hon. L. S. St. Laurent (Prime Minister):: The question of the hon. member is so all-embracing that in order to be perfectly sure of the accuracy of every part of the answer I might give, I prefer to take it as notice.


Mr. Coldwell:: All right.


Howard Charles Green: Would the Prime Minister consider tabling the agreement or agreements?


Louis Stephen St-Laurent: We will consider the hon. member's suggestion that the agreements be tabled. We shall have to consider it in the light of the security arrangements that exist between ourselves and the United States in connection with these early warning lines.
ILater:]
On the orders of the day:


Mr. T. S. Barnett (Comox-Alberni):: I should like to direct a question to the Prime Minister, supplementary to the question asked by

Inquiries of the Ministry the member for Rosetown-Biggar. When he gives his reply, will the Prime Minister indicate what arrangements in respect to unemployment insurance coverage will be in effect with respect to the employees to whom the hon. member for Rosetown-Biggar referred?


Louis Stephen St-Laurent: I will take note of the hon. gentleman's desire to have that information.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Secretary of State for External Affairs. Can the minister inform the house what stand Canada is taking on the Anglo-French disarmament proposal reported from London in today's press?


Hon. L. B. Pearson (Secretary of State for External Affairs):: Mr. Speaker, the hon. member was good enough to give me notice of this question. The discussions of the United Nations disarmament subcommittee, of which Canada is a member together with France, the United Kingdom, the United States and the Soviet union, were resumed yesterday in London. As the house knows, the subcommittee meets in private in accordance with the recommendation of the United Nations general assembly. In view of this, I do not feel that it would be appropriate for me to comment on these highly important and delicate negotiations at this very early stage in the negotiations.
I can say that western delegations have given earnest consideration to the various aspects of this problem during preliminary discussions which took place during last week, and that there seemed to be substantial agreement on the measures which should be taken as a first step in a disarmament program. I do not think it would be appropriate for me to add to this for the time being.
Together with the other western members, Canada will do its utmost to widen the area of agreement which may already exist between the east and the west on this vital issue in order to bring about some measure, at least, of effective disarmament which would contribute to diminishing international tension and by the same token facilitate the settlement of other outstanding issues. Having said that, Mr. Speaker, I think I should add that a disarmament scheme on paper which did not include effective methods of
control and supervision would not, I think, contribute to these desirable ends.
During the last twelve months a number of significant and constructive proposals have been made in this field, and the subcommittee will now be offered the challenging task of finding whether it will be possible to develop proposals which will be generally acceptable. The Canadian delegation at the London meeting will do its best as a member of the subcommittee to help bring about such agreement.


[Stage Direction]
On the orders of the day:
Howard Charles Green: I should like to direct a question to the Minister of Northern Affairs and National Resources. Vancouver papers reaching here over the week end report Premier Bennett as stating that the minister is to confer with him shortly about the development of the Columbia river. Is this so, and could the minister give the house a statement? Incidentally, it would be helpful if he could state whether the dominion is prepared to negotiate on the basis of a joint investment program.


Hon. Jean Lesage (Minister of Northern Affairs and National Resources):: Mr. Speaker, I wish to thank the hon. member for having given me notice of his question. When Premier Bennett was in Ottawa on Friday, March 9, I had a conversation with him. Among other things, water problems of common concern were mentioned. We agreed that it would be a goodi thing to sit down together and discuss such problems. Premier Bennett then invited me to visit him in Victoria. I told him it was possible that I would have to go to the Pacific coast later this spring and that I might visit him then with some of my advisers. I may add that the question of the joint development of hydro power on the Columbia river as such, which has been raised by the hon. member, was not mentioned.


Howard Charles Green: Is the government prepared to negotiate on the basis of a joint investment program?


Jean Lesage: Mr. Speaker, I have no comment to add at this time.



OLD AGE PENSIONS


[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough):: I should like to address a question to the Minister

of National Health and Welfare, and it is this. Does the federal government pay any portion of the new Ontario $20 old age supplemental allowance to those in need? If so, how much?


Hon. Paul Martin (Minister of National Health and Welfare):: Mr. Speaker, I am not sure that this is the kind of question that you think proper on the orders of the day.


Mr. Speaker:: The minister has the right to insist that this question be placed on the order paper. He does not have to look at me. All he has to do is say, "I wish this question to be placed on the order paper". That is all he needs to do.


Paul Joseph James Martin: Mr. Speaker, as my hon. friend knows the full details of the supplemental allowance to which he directs my attention have not been made public, but I understand it is restricted to a limited number of persons. The federal government pays all of the $40 a month to those 70 and over. I think my hon. friend is aware that we pay half of the old age assistance program to the province of Ontario as well as to all other provinces.


Mr. Lennard:: Up to $40 a month.


Paul Joseph James Martin: In other words, well over 90 per cent of the old age assistance and old age security in Canada is paid by the taxpayers through the federal government.


Gordon Knapman Fraser: Mr. Speaker, the minister went all around the mulberry bush, but he never answered my question.
ILater:!
On the orders of the day:


Gordon Knapman Fraser: May I ask the
Minister of National Health and Welfare if he could just say yes or no to the question I asked?


Paul Joseph James Martin: Would my hon. friend repeat his question?


Gordon Knapman Fraser: The question is, does the federal government pay any portion of the new Ontario old age supplementary allowance of $20 for those in need?


Paul Joseph James Martin: If my hon. friend is seeking to have me say something against a provincial government, he is mistaken. I believe the way to proceed in these matters is by co-operation with all provincial governments.


Mr. Fulton:: Yes or no?


Paul Joseph James Martin: The fact is that this particular supplementary is paid entirely by the province of Ontario, but it is much less than supplementary payments made by three other provinces.
Inquiries of the Ministry



REPORTED ADOPTION OF CANADIAN PLAN BY HOLLAND

[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the hon. Minister of National Health and Welfare? Has his attention been called to newspaper reports that Holland has copied Canada's universal old age pension plan, except that the pension is paid at age 65?


Paul Joseph James Martin: I thank the hon. member for this tribute to the ingenuity of the government of Canada.


Stanley Howard Knowles: Will the minister-


Some hon. Members:: Oh, oh.


Stanley Howard Knowles: Will the minister take note of the fact that under the plan referred to payments to everyone begin at age 65, and will Canada do the same?


Major James William Coldwell: Exercise your ingenuity
again.


Stanley Howard Knowles: Yes or no?



CITIZENSHIP AND IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. F. S. Zaplitny (Dauphin):: I should like to direct a question to the Minister of Citizenship and Immigration arising out of his announcement offering to pay to the children of immigrants up to 16 years of age the equivalent of $5 per month. My question is this. Does the minister regard that offer as a substitute for the regular payment of family allowances?


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration):: Mr. Speaker, the purpose of this allowance is to help immigrants get established in Canada. It is not regarded as a substitute for anything.



HIGHWAYS


[Stage Direction]
On the orders of the day:
Mr. Roland Michener (St. Paul's):: Mr. Speaker, I wish to direct to the Minister of Finance a question of which I have given him notice, unless it should be directed more properly to another department. Has the federal government been asked for financial assistance in building a traffic tunnel from

Canadian Farm Loan Act the city of Toronto to Toronto island? If so, has any decision been made, and what is the decision?


Mr. Maurice Bourget (Parliamentary Assistant to the Minister of Public Works):: This question was handed to me a few minutes ago by the Minister of Finance, and I have made inquiries in our department. I am told that no official representation has been made to the Department of Public Works.


Daniel Roland Michener: May I ask a supplementary question? Can the parliamentary assistant advise whether a similar request has been made of any department?


Louis Stephen St-Laurent: Is not that the type of question, Mr. Speaker, that should go on the order paper so that inquiries in all departments could be made for the purpose of giving an answer?


Daniel Roland Michener: Mr. Speaker, I would be glad to have it on the order paper. It is just a matter of getting information.



CANADIAN FARM LOAN ACT


[Stage Direction]
The house resumed, from Thursday, March 8, consideration of the motion of Mr. Harris for the second reading of Bill No. 84, to amend the Canadian Farm Loan Act.
Mr. L. E. Cardiff (Huron):: I intend to take just a very few minutes to speak on this bill. I think the farm loan board could more popularly be called dominion farm loans limited, because it is so difficult to get a loan on some of these farms. In my part of the country we have a lot of young farmers who would stay on the farm if they could get started, but they find it very difficult to get a loan, especially from the dominion government, to enable them to start.
I am going to have something to say about the percentage rate that is being charged but that is not the hold-up. It is the fact that these people just cannot get a loan because the restrictions are too great, and there is not enough flexibility on the part of those administering the loans. I do not know why this should be so. At 5 per cent the rate is too high. There is no reason why these loans should not be made by the dominion government just as cheaply as the junior farm loan board of Ontario makes them. That farm loan board is doing much more business in my part of the country than the dominion loan board.
A few years ago this board was practically dormant; it was not doing any business, and I do not know the reason for that. For several

years very little business was done. Apparently they were sitting back trying to make collections on the loans they had made years ago. Now we are in the position in some places where the average age of farmers is 60 and over. Why is that? It is simply because boys are not able to get loans to start farming. Unless you have in excess of at least $10,000 you can hardly get started on a farm.
Up to the present time, at any rate, the government has not suffered any losses on loans because the values of farm properties have been increasing every year for the last 15 years, so much so that they are double what they were 10 or 15 years ago. Therefore the government has not been losing any money on loans made on these farms.
The bill calls for a 65 per cent limit on the loan. It should be raised to 75 per cent. That would not be too high, because a farmer would not get any more than 50 per cent of it anyway. There is no reason why the amount should not be raised in some instances, at any rate. The requirement of gilt-edge security on every loan that is proposed or asked for is holding back the young farmers of this country. They are not able to get the money they want.
Why is the dominion government not able to lower the interest rate on these loans? Some will say it is owing to the fact that they are small loans and they cost too much to make. If the Ontario farm loan board can lend money at 4 per cent there is no reason why the dominion board could not lend it at the same interest rate. That rate is high enough when you consider the remuneration farmers get for their efforts. I would suggest that the interest rate be lowered to 4 per cent and that the percentage be raised to 75 per cent of the value. That would give many of these boys a chance to spread themselves and operate their farms more efficiently.
I do not intend to say very much more, but I hope some consideration will be given to some of the proposals I have made.


Mr. H. A. Hosking (Wellington South):: Mr. Speaker, I wish to speak for just a moment or two on this bill. I would like to commend the government for making larger amounts of money available to farmers, and at an interest rate which they will consider to be fair. Most of us know that in the last three years the farming industry in Canada has been the hardest hit of any of our industries. It is right and proper that we should do some things to help the farmers in the province of Ontario; therefore I commend the minister for presenting this bill.
But, specifically, I would like to make another point with regard to servicing the

farmers through the farm loan board. Located as it is in the centre of Toronto the office is in an extremely difficult place to find and like most places in Toronto it is practically inaccessible. I would say that is a kindly criticism of the city of Toronto, which has grown much too large to house a farm loan office. This office should be moved to a location where farmers could find it without the difficulties they experience in the city of Toronto.
Having passed that comment about the office, and having brought to the attention of the minister the fact that going to Toronto is an extremely difficult operation for a farmer, I would like to make a recommendation. Before doing so I might point out it is particularly difficult for the type of farmers who require loans to go to Toronto. They are not as familiar with the large cities as are some of the farmers who do not require loans. Looking for the office is a difficult and unpleasant task for them.
I should like to recommend that the city of Guelph is a more central location. It is the centre of gravity of the area requiring farm loans having as it does the agricultural background of a city which contains the largest agricultural college in the British Empire and the famous Ontario veterinary college. Guelph would be the proper place in which to locate an office to give service to those farmers who would benefit by these increases made by this new farm loan act which is before us.


Mr. Speaker:: May I suggest to the hon. member that if we are to have every hon. member in this house suggest that an office of the farm loan board should be established in his constituency, perhaps I myself might join in the concert and ask that there be one established in my own constituency. There is no limit to that. There is certainly nothing wrong with asking that an agency be placed in one's own constituency, but I do not think the proper time to do so is when we are discussing the second reading of this bill.


Henry Alfred Hosking: Thank you, Mr. Speaker. I shall now close my remarks by thanking the minister for making more money available in loans in view of the fact that the cost of buying farms has increased. I should like to express my appreciation for his having made this money available to the farmers.


Mr. E. G. McCullough (Moose Mountain):: Mr. Speaker, the bill before us is an act to amend the Canadian Farm Loan Act, and has to do with the extension of credit to agriculture. I might say that the whole problem of adequate credit to farming in Canada is extremely complex, and is one which I think deserves the attention of all hon. members 67509-1461
Canadian Farm Loan Act of this house. Agriculture is a basic industry in Canada and as such I think it demands the attention of all hon. members.
I believe the government has come to realize, in respect to the method of financing this type of credit, that the procedure has been very clumsy in the past. The amendments proposed will make some changes in that respect. However, I want to deal more particularly with the terms of the loans which are made to farmers.
I might say, Mr. Speaker, that in Saskatchewan this matter has been given a great deal of attention. I suggest that the commission which has been set up to investigate the picture of agriculture in Saskatchewan has done a remarkably good job in setting out the problems which face agriculture in respect to credit, and also the other problems related to the rural life of that province. I do feel that there may be differences of opinion, and the need of credit for agriculture in various provinces may differ. Essentially, however, the needs are the same.
Agriculture as a vocation is a very precarious one, where the producer not only has to face the vagaries of weather conditions but also has to face the fact that his return, in other words the market price for his commodity, varies considerably from time to time, I believe that is one reason why lending on farms in Saskatchewan through the banks came to a stop, because of the experiences of the banks and mortgage companies in the 1930's. But today I believe there is a great need for adequate lending facilities to the farmer.
I think it is essential that we understand exactly what we are trying to do when formulating policies of credit for agriculture. It is important to understand whether we want to advance the idea of corporate farms, or whether we believe that the family farm is the kind of institution we should have in Canada and relate our credit policies to the promotion of the best interests of the family farm. I was very interested in this matter, and I think the different methods we have of providing credit for agriculture in Canada are not satisfactory. First, they are varied in such a way that the farmer does not know exactly how to obtain that credit. In some cases the loans are overlapping, and we find a great deal of misunderstanding in respect to what a farmer may get in the way of credit.
The bill proposes to increase the percentage of the assessed value of land on which a farmer may get a loan from 60 to 65 per cent. I agree with the previous speaker that even though this is an advance over the previous figure, it still is not satisfactory, because the officials of the board in

Canadian Farm Loan Act assessing the farms are very conservative in their appraisals, and consequently 65 per cent does not represent an adequate assessment for the provision of loans. I suggest that we should perhaps change this to bring it more into line with what is being done in the United States.
I took the opportunity of inquiring about the methods adopted in the United States with respect to credit to agriculture. I find that in the United States they have a very great number of different methods of giving assistance to farmers by way of different types of loans and different types of credit. Whilst I do not entirely agree with everything they have done, I think they have a measure of credit to the farmer greatly in excess of what we have in Canada. In the first instance, under the farmers' home administration, the provision is for 90 per cent of the assessed value of the land. That is very important, because today it is recognized that agriculture is becoming more highly mechanized.
As I stated earlier, the royal commission studying agriculture in the province of Saskatchewan has indicated that there is a direct relationship between the capitalization of each farm and the net income. As an example, it is indicated that a farm in which there is a total investment of $17,000 realized twice the net income of one in which the total investment was $10,600. Then it goes on to say in the report:
. . . two-thirds of Saskatchewan's farms are undercapitalized and realize less than adequate average Income.
It is pointed out that when the point of capitalization is reached where the farm becomes efficient, then of course that increases the income to that farm unit. I might say, in respect to the amount of the loan on any one farm, it is being increased under the bill from $10,000 to $15,000. I think this is a move in the right direction, but I wish to point out that it has been found in investigations made by the royal commission in Saskatchewan that the average farm there requires something more than $17,000, and it is pointed out by authorities that the family farm, to be adequately capitalized and properly mechanized, would perhaps require closer to $25,000 or $30,000. I think this bill, making provision for a maximum loan of $15,000, is totally inadequate to meet farming conditions, particularly in my province of Saskatchewan, and I believe the same conditions would pertain in other parts of the dominion of Canada.
As I said at the beginning, it is very difficult to assess just what type of credit we need for agriculture. If it is to be successful in giving security to the family farm and making

sure that the family farm has an adequate income comparable with other vocations, it will be essential, first, that we have agricultural policies to guarantee the income of that farm. I am acquainted with the experiences of the farmers in Saskatchewan who have suffered tragedy because of the vagaries of the system by which the prices for what they produce go up and down. A farmer might have an economic unit that is mechanized, highly specialized and productive, but when prices go down of course that investment brings in a very small return to the farmer; he will find himself mortgaged and with a load of debt and interest that he cannot carry. So I think we have to take a second hard look at the methods of providing credit for agriculture.
I believe that the 5 per cent interest provided in this case is far too high. Instead, the government should set up some type of farm administration for the provision of credit to agriculture, and it should be set up on a revolving fund basis, with the lowest rate possible being charged to borrowers under the scheme. I believe such a plan should be carried out with an interest rate of 2 or 3 per cent, very little more than the government would need to pay in order to get the money from the Bank of Canada.
If this were done, and we had proper supervision of these loans to the farmers, in the same way as is done under the farmers' home administration act in the United States, so the farmer would get adequate technical advice in respect to the methods of farming, construction and planning of farm buildings and all the associated experience and technical advice that could be given to him through that type of administration, then we could build up in Canada what might be called a morale amongst our farmers and we would show a high regard for the moral obligations involved in providing such a type of credit to the farmers.
I have had some experience with credit unions, and I know that under their plans there is a moral obligation to those taking out loans. The loss on loans provided under the credit union plan is very small. I am quite sure if it were known in the community, that a farmer was getting a loan under the type of plan I am suggesting, namely a low interest rate loan which would be properly supervised through advice to that farmer, then I am sure there would be a moral obligation and there would be very little risk involved.
I believe such a plan would provide a healthy atmosphere for agriculture. The farmer today is facing tremendous difficulties so far as the prices he receives for his commodities are concerned. As everyone knows,

the farmer from coast to coast is caught in a price squeeze. The situation may vary from province to province; nevertheless it is probably similar in every province. The fruit grower, the vegetable grower, the market gardiner, almost every producer today is working in a very competitive field, not competitive as between different producers but competitive in the respect that the farmer must minimize his costs in order to stay in business.
I do not think there is another vocational group in Canada who display the co-operative spirit that prevails in agriculture. I know that on occasion almost every farmer of my acquaintance lends expensive machinery to his neighbours. This takes place on almost every farm in the province of Saskatchewan, and I presume the situation is similar in every other province. Therefore while there is not competition between farmer and farmer, there is the competitive aspect to which I have referred, as a result of which the farmer must be highly specialized and competitive from the point of view of trying to keep down his costs.
Here we have a proposal to make it possible for the farmer to borrow money from the Canadian farm loan board at 5 per cent interest, and if there is any default the farmer then has to pay 5| per cent interest. I think Canada is far behind other countries which have undertaken to try to adequately finance farmers in need of specialized credit. While the loans under this legislation are intended to provide long-term credit, I do not think they meet the situation adequately. A maximum period of 25 years is provided, but under the home administration act of the United States loans are made for 40 years and, as I said before, the initial interest rate is 3J per cent.
In addition, there are other types of loans available in the United States by which the living standards of rural people are raised. I should like to mention the administration of the rural electrification branch of the United States department of agriculture. This is a most amazing type of credit that is provided to farmers in the United States. The scheme has been in operation since 1935, and I think we in Canada should have taken an earlier look at exactly what they are doing in that great country to the south of us. I am sure the people of the United States would be the first to recognize that they have not found all the answers, and that even yet they have not all the credit facilities necessary for a healthy agriculture. Yet they have gone much further than we have.
I have here a statement on the rural electrification administration in the United States,
Canadian Farm Loan Act in which it is pointed out that since 1935 loans have amounted to $3,106,085,511 and borrowers have used the loan fund to extend electric service to nearly 4,200,000 rural consumers and have built 1,350,000 miles of line.
Here is a program which provides credit to people living in the rural parts of the United States, and of course it raises the standard of living of those people. I do not think any comparable type of credit is given to agriculture in Canada. I know that under provincial legislation in the province of Saskatchewan a large grid system is being built throughout the province, and the electrification of farm homes is being accelerated. We have there a subsidization program to the farmers which provides around 50 per cent of the cost of installation, but the farmer still has to dig up $400 or $500 in order to complete installation on his farm.
I believe the federal government has been remiss in not accepting its responsibility, taking a look at the picture and providing credit for some of the needs of our rural people. When the bill goes to the standing committee on agriculture and colonization I hope a study will be made of ways and means of providing more adequate credit for agriculture. One important phase of such a credit proposal has to do with the young people who really do not have the credit standing to be able to obtain a loan. They are the people who are hardest hit under the suggested program of the Canadian farm loan board. It is not so bad for an established farmer, who perhaps can get credit either through his bank or by making application for a loan under this legislation, but I am more particularly interested in the young farmer who is trying to set up his farm and needs credit in order to make it highly efficient.
We find that land values are high, and that a capital outlay of $15,000 or $20,000 is required. Such an amount of money is not available to the average young person. Therefore I suggest that the government should give consideration to making it possible for young people to get larger loans. I also suggest that loans should be available under this legislation to the small farmer whose operation is perhaps uneconomic because of the size of his farm, and who wants to get a loan to buy additional land. As the legislation now stands, I believe there is a requirement that there must be buildings on the land before a loan can be given. I think there should be some easing of the qualifications required of a borrower in order that he may get a loan from the Canadian farm loan board.
This legislation has been in operation for some 20 years or more, and when one realizes

Canadian Farm Loan Act that something less than $100 million has been borrowed one can readily see that the legislation has not played its full part in providing the type of credit needed for agriculture. I realize that the bill is going to the standing committee, and I am sure the members of the committee will try to do the necessary research. Perhaps they will call certain people to find out what has been done in the United States and what is being done in Australia, where I understand a large revolving fund has been set up from which money is lent at 2 per cent interest in order to provide the necessary credit for rural people so they can improve their living standards and become highly efficient.
I am suggesting that certain changes are needed in our legislation. The present high cost of production and the general inflationary condition across the country warrant some changes in it, and I hope that when the bill comes back to the house the committee will have seen fit to amend it along the lines I have suggested.


Mr. J. M. Forgie (Renfrew North):: Mr. Speaker, I do not presume to speak for the rest of Canada but I can speak about the county of Renfrew, which lies along the right bank of the Ottawa river about 100 miles from here. I have discussed the question of the farm loan board with many of the farmers there, and they are well pleased with the amendments that have been brought forward at this time.
As far as farming is concerned, the main industries are dairy farming and stock raising. Together with lumbering they are outstanding industries in my section of the country.
As far as my farmers are concerned, the amount of the loan is eminently satisfactory. I have been associated with this Canadian Farm Loan Act since 1929. I left my position only when I was honoured by being elected to this House of Commons in 1953. I can say without fear of contradiction that never in my experience has a loan of $15,000 been asked for in Renfrew county. The average loan amongst my farmers has run between $3,000 and $4,500. Hence when this amount is raised to $15,000, the appraisal is raised to 65 per cent, and the chattel mortgage and the second mortgage are removed from the provisions of this act, I think I can confidently say that this act, in the opinion of my farmers, is satisfactory.
The removal of the second mortgage and the chattel mortgage provides a cushion between the first mortgage of the Canadian farm loan board and some calamity that may happen to a farmer after he has taken out

the first mortgage. It frees his cattle, all his stock and all his equipment, so that if he arrives in a position where he needs further loans, he has ample security with which to obtain them. I therefore do not agree with my friend the hon. member for Moose Mountain when he says that the conditions that prevail in western Canada prevail throughout Canada as a whole. I prefer to speak about sections of the country that I know something about rather than to deal in generalities.
As far as western Canada is concerned with respect to these loans, I have a little bit of experience in that connection, because I happen to have been a land owner for some considerable time in Saskatchewan. As I look at the annual report of the Canadian farm loan board I find that in Saskatchewan the outstanding loans amount to approximately $10,247,917.17. That is not very much money on the security of the farms of Saskatchewan. A more interesting document is the one that I received on February 7, 1956, from the Monetary Times, to which I wrote asking if they could give me the situation in the western provinces in connection with mortgage loans on farm lands in those three provinces from 1937 up to the present time. Mr. Speaker, if I may I should like to incorporate this letter in Hansard, because I think it reveals some significant figures and indicates possibly that sometimes a little bit of politics creeps into some of the remarks that are made in this chamber.


Mr. Speaker:: A letter cannot be placed on the record unless it is read. Does the hon. gentleman intend to read it?


James Moffat Forgie: I should like to have the opportunity of reading it and placing it on the record.


Mr. Speaker:: The hon. member is quite sure that whatever is contained in that letter is quite relevant to the principle of this bill?


James Moffat Forgie: Very definitely. I want to establish the fact that loans in Saskatchewan or in those western provinces are not as urgently sought as has been indicated by many hon. members who have already spoken. I should like to say that the total loans in the three provinces made by the Canadian insurance companies operating in Canada, the United States insurance companies operating in Canada, the British insurance companies operating in Canada, the trust companies and the mortgage loan companies in 1937 amounted to $182,286,000, of which $107 million was loaned in the province of Saskatchewan. In 1954 that $182 million of loans had been reduced to $20,240,000 and the

loans in the province of Saskatchewan had been reduced from $107 million to $6,500,000.
Mr. Speaker, I think it would be a wonderful investment to own the equity security of a corporation that could reduce its senior indebtedness from $182 million to $20 million in that space of time. I should just like to mention this in passing-


Mr. Speaker:: May I suggest to the hon. member that in my humble view this moment is not the time to examine the position in the various provinces as to the amount of loans that have been requested or obtained by them in the past. We are dealing with a bill to amend the Canadian Farm Loan Act. It has to do with further credit being granted under the act. As long as we remain within that environment, we are all right. But if we go outside of it, we are contravening the rules.


James Moffat Forgie: My object in bringing this material forward was to prove that there is not the demand for loans that is suggested, and that the farmers in those provinces apparently are in a strong enough financial position that they do not require loans. That is one reason.


An hon. Member:: Let the farmers speak for themselves.


Mr. Speaker:: Notwithstanding the worthy objective of the hon. gentleman, I do not think he should be allowed to make that point on this measure.


James Moffat Forgie: Mr. Speaker, I do not claim that the provisions of this act, including the amendments, have reached a stage of perfection. I think that the inspection department of the Canadian farm loan board could be stepped up. It takes too long to inspect a property. Certainly speaking for my section of the country, I can say that it takes too long to obtain a report as to the security offered by the farmer. I would therefore suggest that the inspection squad be increased or that possibly the field men under the Veterans' Land Act might lend some assistance. The field men who are operating under the Veterans' Land Act are extremely efficient.
I also think the form of application should be simplified. I believe the application form is too cumbersome. I would therefore suggest that attention and study be given to that matter with a view to seeing if the application form could not be simplified. In my experience the farmers find it most difficult to make that form out. I think the terms of payment are satisfactory. If the farmer wishes to pay his loan within 24 months from the time he has taken it out, he must of course
Canadian Farm Loan Act pay a bonus as well as the principal and interest up to date. But if after the expiration of the two years he desires to pay off his loan, he can then do so without notice and without any bonus.
I think the advertising under this Canadian Farm Loan Act is being done in the proper place, namely through the farm journals. I cannot see any advantage in spending a great deal of money on having advertisements placed in the local papers throughout the country.
Since I understand this bill is going before the standing committee on agriculture and colonization in the very near future, I shall defer any further remarks I desire to make on this matter.


Mr. G. W. Montgomery (Victoria-Carleton):: I shall only take a few minutes, Mr. Speaker. I have been interested in the remarks made on this bill by various hon. members. I understand it will be referred to the banking and commerce committee, but I believe we should make any suggestions we have at this time so they may be considered by that committee.
First I should like to say that I believe these amendments are improvements in the act, so far as they go. However, I feel that, speaking for my own sectiori of the province and as a result of my own experience, the increase in lending value from 60 to 65 per cent is hardly enough. I think that farmer's land is usually valued quite low. I know the manager of the board in my own province and I think he is very conservative, though he tries to be as generous as the regulations will permit. On the other hand, like a banker he is going to take no chances of showing any losses to his head office. On several occasions the local valuator or assessing officer, whichever you wish to call him, has been inclined to follow municipal assessments. In my particular area the assessments run very close to 50 or 60 per cent of the valuation.
Recent reports show that there is not too much advantage taken of this act. The reason is that farmers find the value placed on their farms does not bear any relation to the selling value. I feel that the manager of the board in my province is doing the right thing under the provisions of the act, but I do feel you should give him more latitude. I feel that an increase of 5 per cent, from 60 to 65 per cent, in the lending value is not enough.
I agree with the hon. member who suggested it should be raised to 75 per cent. I do not think you will find, under management such as we have had in my province, that you will have any losses if you permit

Canadian Farm Loan Act the manager to make loans on a valuation of 75 per cent. I know that some applications have been turned down, and rightly so, but I do feel some consideration should be given to the family farm unit, as one hon. member put it. I think it is important to help a young man get started in order to keep him on that family farm. I should like the committee to take into consideration increasing the lending value from 60 to 75 per cent.
I feel that it was a good thing to cut out the second mortgage. So far as the interest rate is concerned, it does seem high. Again, I believe this committee will look into that and if there is any justification, if the handling and administrative costs call for a rate of 5 per cent, 1 know that my people would not have any serious objection. What they really need is a place to go and get money when they need it. Today, with so many people investing in bonds and stocks which are so much easier for older people to handle and which give a secure return on a certain date, people are getting away from lending on mortgages. In my part of the province at least a farmer cannot go out as he used to do and borrow from his neighbour or some retired man who had a few thousand dollars. He has to depend on this loan board.
There is another unfortunate circumstance about which I do not think we can do very much. Many of our farmers will apply for this loan in the fall of the year, and of course you cannot have an inspection while the snow is on the ground. I do not suppose this difficulty can be overcome, but it means the farmer cannot get any money until spring. Often he has to dispose of assets at sacrifice prices in order to carry on until spring when he can have the place inspected and get a loan.
It looks as though this problem is difficult to overcome. However, in my particular area I think the inspector is generally quite familiar with most of the farms in the territory. I know that in several cases, if he were permitted, he could make just about as good a report on that place during the winter with the snow on the ground as he could when the snow has gone. I am asking, however, that the committee look into this matter. One thing I do feel like pressing for in behalf of my people is that the provisions of the act do not give sufficient latitude to the local manager in making loans. They hold him down to a valuation which is equivalent to a small part of the actual selling price of the place.


Mr. C. E. Bennett (Grey North):: I just want to comment very briefly on this bill. The Canadian Farm Loan Act has not been used

to any appreciable extent in my district, but I think it will become increasingly important in the next two or three years because the sources of first mortgage money on farms have been drying up. About five or six years ago we could get first mortgage money on farms from loan companies and individuals. These people are now finding more attractive investments, and I suppose that results partly from the fact the farmer's real income is down. I believe, therefore, the Canadian Farm Loan Act will be used to a greater extent in Ontario in the next few years.
I was glad to see that the percentage ratio of the lending value has been increased to 65 per cent. All in all this act has been administered effectively and well. If I were to offer any critical comment on the administration of the act, I would say that the appraisers have been rather conservative in making their appraisals. I hope that under the new amendments the appraisers will take the full market value of the farm and then apply the 65 per cent.
If I were to say anything else that could be construed as critical, I would say I do think it takes a long time to process the applications under this act. I know there are reasons for these delays. Sometimes it is the lawyers searching the titles; sometimes it is the appraiser being slow getting on the scene; sometimes it is the applicant himself. I wish though that the parliamentary assistant to the Minister of Finance would discuss the matter with the chairman of the Canadian farm loan board to see whether these loans can be speeded up. The fact is that one can get a loan much quicker through a trust company or an insurance company than under the Canadian Farm Loan Board Act.
Like previous speakers, I am glad that chattel mortgages and second mortgages are being eliminated. I do not believe they served any useful purpose. From the federal point of view I think all of us want to help the farmer, particularly the farmer whose real income is down. Sometimes from that federal point of view we are limited in the way in which we can help the farmer. The Canadian Farm Loan Board Act and legislation such as the Farm Improvement Loans Act constitute a way in which we can offer real help to the farmer, and therefore I welcome the amendments to this act. I welcome the fact that the legislation is being widened and liberalized and I say to the parliamentary assistant, I hope this act will be interpreted and administered in a generous and liberal way.


Mr. Charles Yuill (Jasper-Edson):: I think we in this group are very much in favour of this bill. However, there are aspects of it which do not appeal to me as the bill in

general does. I refer, of course, to section 6. The proposed amendment provides that loans may be made up to 65 per cent of the value of the land, with a maximum loan of $15,000. I come from a part of Alberta where the assessment on the land is at a very low level. It is a new area. The assessed value is perhaps equal to only about 30 per cent of the true sale value of that same property today. The result is, it makes it very difficult for worthy farmers to participate in these loans.


Mr. Benidickson:: I think my hon. friend is under a misapprehension. The board sends out an appraiser to establish its own appraisement. The assessment of the property does not govern.


Charles Yuill: I am sorry to contradict the parliamentary assistant. What I say is so. They use the municipal assessed value as the yardstick of values. I know that has applied to several loans I tried to have established.
I believe this will work very well in areas where the assessment is perhaps at its normal level. I do not think it will work any hardship there, because they will get a closer relationship to its true value than they get under conditions which exist in my particular area. Consideration could be given to the idea of having those loans geared to the true value. I do not mean the inflated sales value but the real sales value of the property. This would be much fairer in the administration of this legislation.
Another thing seems to be uppermost in the minds of the members of the administration who are responsible for appraising these loans. It seems obvious to me that they have the feeling that if you owe $100 in arrears of taxes it is a greater sin than if you owe $100 in some other legitimate debt. I have found that they frown on anyone who happens to be in arrears of taxes. Arrears of taxes should be given every consideration in their true perspective, but they should not be the reason a loan is denied. Emphasis should not be placed on this particular phase of the current debt.
In the main this is a wonderful thing. It is certainly going to be a boon to the farmers in my constituency. The availability of more money, with some of the other restrictions taken off, is certainly a step in the right direction. In all sincerity I would ask those in charge of the administration to take a little more realistic and kindly look at the financial ability of those people who merit a loan in the first place. I do not think it is fair to say that when a property is assessed at 30 per cent of its sale value and a credit of only 65 per cent is given, a very realistic 67509-147
Canadian Farm Loan Act view of the matter is being taken. I would urge that special consideration be given to granting 65 per cent of the sale value rather than the estimated assessed value in areas where the assessment is away down, and perhaps below cost.


Mr. H. P. Mang (Qu'Appelle):: I should like to express my pleasure to the government for introducing Bill No. 84, to amend the Canadian Farm Loan Act. It is the third bill brought in this session of particular interest to agriculture. Bill No. 82 and Bill No. 83 have already received royal assent, and this legislation now before the house will, I hope, be speedily passed so that it may become operative at the earliest possible moment.
The proposed amendments are important because they should give the act a wider application and, therefore, make it more useful. As has already been emphasized by previous speakers, the need for long-term credit facilities is becoming increasingly more necessary. This is so for various reasons. First is the fact that farm mechanization has brought about a higher level of capital requirements for efficient operation of the farm unit.
To illustrate, it is only as recently as 30 years ago, back in 1925, that the power on Saskatchewan farms was supplied practically entirely by horses. Only one in every 45 farms was powered by the tractor. When horses were used the natural increase supplied adequate power to operate a farm, with little cash outlay. The grain and hay used by the horses supplied the fuel requirements necessary to till the soil and to take off the crop. While it is true that this part of the farm operation had a cash value, nevertheless it did not require a cash outlay immediately. The actual power was produced on the farm itself without the cash outlay.
Today there are no horses, and tractor power requires a fuel which necessitates an outlay of dollars. In other words the cash requirements of the farmer are intensified. That is one reason inability to market a crop immediately after harvest causes a cash shortage. This matter has been discussed at length in the house very recently, and there is no advantage in labouring the point any further.
The requirement for a heavy immediate cash outlay in the operation of a farm is such that the need for flexible long-term credit machinery is imperative. In years gone by a larger proportion of the cash return from crops could be applied to the financing and repayment of any mortgage indebtedness. Today, due in great part to mechanization, the greater part of a year's production must go into current operating expenses.

Canadian Farm Loan Act
In a production area such as the western plains the crop fluctuations are sometimes fantastic. The fluctuation in Saskatchewan has been from a low level of 2-7 bushels per acre in 1937 to a high level of 26-5 bushels per acre in 1952. Taking the year 1954 as compared with 1955, the 1955 crop was practically twice the yield of 1954. It is this instability of production with the accompanying instability of cash returns, together with the rapid trend toward intensified mechanization, which emphasizes the merit of amending the Canadian farm loan legislation. More than ever this medium must provide longterm credit at the present time.
The second necessity for widening the application of the act stems from the problem confronting the young man who wants to go into farming and build a home of his own. In the vast majority of cases the parents have been operating the farm for the past 40 years or so. Most of the equity of the farm, if not all of it, is tied up in land and machinery. The son or sons who wish to take over have not the funds to buy out the parents, so of necessity there must continue a joint operation.
What the young man of today wants is to obtain enough cash so the parents can retire to the nearby village or town. In most cases he has already invested his lifetime of work in that farm. Where the working together of the son and the parents on the same farm is possible it is a highly satisfactory arrangement and provides for a happy continuity of the farm operation, but in many cases this is neither a practical nor a happy arrangement. The parents wish to remain independent of the young farmer and his wife, and the young farmer wants to build a home for himself and his wife and wants to live independently. This act, with the present proposed amend-nents, if applied in the proper spirit can do nuch to build morale and preserve the independence of spirit and contentment of both the parents and the young farmer who carries on.
The third angle I wish to stress is of a more local nature, yet has a fairly wide application in Saskatchewan and in Manitoba as well, I believe, due to circumstances which have arisen during the last four years of heavy rainfall. Some areas of the province of Saskatchewan have been particularly hard hit by flooding. The flooding of farm lands is a serious matter in the eastern part of my own constituency as well. Individual farms have been flooded for two, three or four years in succession, and there are prospects of another flood this year. Not only has it been impossible to seed these individual farm units, but in these areas pasture lands have been rendered useless. In these areas cattle as well as [Mr. Mang.l
grain are part of the farm production. Hay lands have been flooded and cattle holdings have had to be reduced.
For farmers in such a position it is an individual tragedy and a financial disaster which wrecks the hopes and aspirations of a lifetime. Taxes, living costs and general expenses are rapidly putting some people in a hopeless financial position and sentencing them to a hopeless and unhappy future. The tragedy of this situation is that a neighbour, whose land is of such elevation that it is not flooded, is reaping a harvest and raising stock. This destroys the morale of his less fortunate neighbour.
I have had personal experience with the situation I am describing, because on my own farm last year 25 per cent of my cultivated acreage did not see an implement. My immediate neighbours got a crop and I got the water which ran off their land. Over half the rural municipalities in my area have many individuals in this condition. In some cases besides losing their hay land the farmers have seeded less than 10 per cent of their cultivated acreage for the past several years, and the prospect for this year is not too good.
. The Canadian Farm Loan Act properly applied, with the present amendments, is the medium through which people in this position can be helped to survive and be rehabilitated. Indeed it is their only hope. Our Canadian farm economy on the prairies must have policies based on a long-term view because of the factors of instability due to weather and price. This act at the present time is the only act which provides machinery to assist in this stabilization for the farmer afflicted with flooding. The farmers in the position I have just dealt with cannot be rehabilitated under any other measure, either provincial or federal.
The hon. member for Moose Jaw-Lake Centre pointed out the other day that the provincial laws in Saskatchewan have been so designed as to preclude the free extending of credit by mortgage companies or private individuals. Indeed, the purchase of land today is practically on a cash basis. P.F.R.A., a federal agency, is not designed to meet the situation, nor is P.F.A.A. in its present form.


Edward George McCullough: Mr. Speaker-


Henry Philip Mang: Just a minute. You have talked quite a bit today. The amended Canadian Farm Loan Act is the only agency capable of filling the present need. However much I welcome the present amendments I cannot refrain, however, from making a few comments which in my view could make the act more useful and effective.
Had I the drafting of the amendments at my command, I would have raised the figure

to 75 per cent of the appraised value instead of 65 per cent. Also I would have included specific provisions for flexibility of repayment, offering, for example, a discount for prepayment of yearly instalments during good years. This act, like every other enactment, meets its final test in its application. My experience with the operations of the act has proven to me that its application requires closer personal attention.
Hon. members from Saskatchewan will recall that year after year we have seen news items in the Saskatchewan press to the effect that the board in Saskatchewan has not lost one dollar on its operations. I have had considerable experience with the board, and I am not surprised at this record. While the board has been fair in relation to the mortgage basis of its operations, anyone who has attempted to obtain or has been successful in obtaining a loan knows it is quite unlikely that the board will lose money.
My own view is that the Canadian farm loan board should administer the act, as it is being amended by the present bill, in the same spirit, for example, as the Veterans' Land Act. That would personalize the application of the act, and I believe that is what is needed. There need be no fear of unbusinesslike loans or severe losses. Under the Veterans' Land Act personal visits are made by the field staff, not solely for the purpose of collecting money but to assist the young farmer by way of advice and suggestions. The supervision is of a personal nature, and contacts are maintained throughout the period of the operation under that law. If the farm loan staff were increased with good public relations personnel, who could also be the appraisers, if you will, a great service could be rendered to both the borrower and the lender under this act with its new amendments.
I shall be watching the operations of the board under the new amendments very closely. I am confident that it will play a great and important part in the realistic farm program of the government, which has done so much throughout the years to stabilize agriculture, particularly during the last two decades. I apologize, Mr. Speaker, for keeping so close to my notes; this is the first time that I have adhered so closely to my text.


Edward George McCullough: I rise on a point of privilege. The hon. member stated that the province of Saskatchewan has legislation prohibiting the making of loans on farms. That is incorrect. He may be confused. Rather we have the farm security act, which provides security to the farm owner of a quarter section-
67509-147J
Canadian Farm Loan Act


Henry Philip Mang: Just to keep the record straight, of which I am very fond, I wish to say that I did not say "prohibited".


Mr. Deputy Speaker:: Order. The point of order raised by the hon. member for Moose Mountain was not a true question of order or privilege, in my opinion. On the other hand, the hon. member for Qu'Appelle had taken his seat and is not allowed to speak again.


Mr. H. W. Herridge (Kootenay West):: I had
a few words to say on this question during the resolution stage, but I do not apologize for rising again to re-emphasize one or two points I mentioned then, because this legislation is of considerable importance to a number of my farmer constituents.
I must say in the first instance that we welcome the legislation. Throughout the years the act has been of great advantage to many Canadian farmers, and this bill is some improvement. But I wish to re-emphasize three or four criticisms of the amendment itself and suggestions to the administration.
Again I say I cannot understand, after the experience with agricultural credit in the older countries and in view of the soundness of loaning money at 3 per cent, why our farmers are required to pay the present rate of interest. If there is any group of people in Canada who should receive money at something approaching cost, it is our farmers. I hope that when this bill goes before the committee the members of that committee will pay some attention to representations made in the house in connection with that matter.


William Moore Benidickson: It costs the government more than 3 per cent to borrow.


Herbert Wilfred Herridge: I question that. I think this money could be provided at 3 per cent, particularly if we use the machinery we have in the Bank of Canada. I notice there is an increase in the percentage of loan that can be given on the appraised value of the property. That is an improvement. I think the amount could have been raised as high as 80 per cent, according to the representations of the Canadian Federation of Agriculture.
Another point that is of interest to the federation is its recommendation for regional advisory committees. I am very much taken with that, because it is a practice that has been established in Great Britain, not only in connection with the advancing of credit but even in the operation of farms, marketing and a good number of other things connected with farming in general. I think it is

Canadian Farm Loan Act very necessary, because there is a tendency tor the board not to be in close contact with the farmers concerned and the particular areas concerned.
I agree with what the hon. member for Qu'Appelle said with respect to the administration of the Veterans' Land Act. I find there is a considerable difference in the personal touch as between officials of the Canadian farm loan board and officials of the Veterans' Land Act administration who pay periodic visits to a farmer after the veteran has been settled and has received his loan. Under the present circumstances, because of the lack of knowledge of the local land and circumstances, and sometimes complete lack of knowledge of the capacity of the farmer who is seeking to borrow the money, there are frequently unnecessary rejections of applications for loans.
I wish to illustrate that in two ways. Since the last war a man in my constituency of Kootenay West asked for a loan from the Canadian farm loan board. He was an experienced man who had been operating a farm some 25 or 35 miles south of that point. In this case I understand the application was rejected because they had no confidence in the capacity of the land to produce. It was rejected because they had not sufficient knowledge of the land and the local circumstances. That man managed to get along without a loan. Today he has a very successful operation and a large herd of beef cattle, and I think the farm would be worth in the neighbourhood of $35,000 or $40,000. That man has accomplished that since going on to that land in the last 11 years.
Then I have personal knowledge of loans being rejected because the board's officials did not have sufficient knowledge of the capacity of the farmer applying for the loan. In one particular instance there was a well known rancher in my district who was formerly an officer in the Indian army. When you spoke to him you would not be impressed with his knowledge of agricultural affairs but, as a matter of fact, he was known by his neighbours to be a very shrewd and capable man who soon picked up the art of farming. Anyway, he applied for a loan and was rejected; and it was purely on that account. I can understand that being done without the knowledge of the man himself. I remember one occasion when he first started farming. He purchased 200 day-old chicks and got sitting hens to mother them. After about two weeks half of them had died. He sent for the poultry commissioner for the district, and I can remember the poultry commissioner discussing them with him. He asked, "Did you do this?" "Yes".

He asked, "Did you do that?" "Yes". He asked, "What are you feeding them?" The man replied, "You silly ass; doesn't the mother feed them?" Because of that man's attitude and his lack of knowledge, his loan was rejected.
I can remember quite well another gentleman causing my wife considerable concern by arriving at our home when I was away and wanting my wife to attend to a certain matter. My wife suggested he tell her all about it. He said, "I try to be a gentleman, and I don't want to discuss a barnyard scandal with a lady". Anyway, he finally did. He asked my wife to go and gather up one of our white barn roosters because it was an abominably licentious fellow. Anyway, I mention this because I know one or two cases like that where keen, capable-minded persons were turned down because the officials made a shallow assessment of the man's ability.
If there had been a regional advisory committee that would not have happened in either case. A regional advisory committee selected from the local farmers' institutes, the locals of the B. C. federation of agriculture or from the locals of the British Columbia fruit growers' association would have known the circumstances concerning the land, and would have known the capacity of the individuals concerned. I think that is an excellent recommendation on the part of the federation of agriculture.
I also think something more should be done to promote a better knowledge of the act among the farming population generally, and to increase the business done. Instead of the officials making, as they do in British Columbia, a hurried trip into the interior to visit a farmer who has made an application, stopping at a hotel overnight and returning to New Westminster the next day, I suggest that they would be well advised to take the opportunity whenever possible to address meetings of farmers' institutes, locals of the B. C. federation of agriculture, even locals of women's institutes. Women are interested in these questions, and we have quite a number of women who are successful as poultry farmers. Incidentally, when applications for loans are made I think there should be no distinction as between men and women. By following such a course the officials would acquire a knowledge of local conditions, they would get in touch with the farmers themselves, and they would get a much better knowledge of the land and circumstances generally.
Finally, I suggest again that there should be a decentralization of the administration. In a province as large as British Columbia,

a growing province where we want agriculture to expand to meet the growing needs of industry, it is not good enough merely to have an office in New Westminster. As I said before, in my opinion there should be at least one official permanently stationed in the southern interior and one in central British Columbia, in addition to the present office in New Westminster.
That is all I am going to say at this time. When the members of the committee are discussing and studying the bill I hope they will pay some attention to the various suggestions that have been made by members on both sides of the house who speak with some knowledge of the needs of their constituents, the requirements of the farmers and the deficiencies in the act at the present time.


Mr. J. C. Van Horne (Resligouche-Mada-waska):: Mr. Speaker, my remarks will be very brief. It is the consensus of opinion of the farmers in my area that there exists an unnecessary lack of co-operation on the part of the farm loan board, and while we welcome the many improvements we find them insufficient. The delays are unnecessarily long in the processing of loan applications. The impression is given our farmers that unwarranted excuses are made to delay the inspection of applications. For this reason there is little need to wonder why so much bitterness sometimes crops up toward the farm loan board in my area. Instead of showing a spirit of helpfulness and co-operation with our farmers, some officials of the board are permitted to give the impression that every obstacle must be put in the way of our farmers when applying for a loan.
In my area there is some evidence of discrimination by farm loan board officials against our French-speaking farmers. Frenchspeaking personnel should be employed and made available, and the farmers of my area should be in a position to deal with the board in their own language. This is a right which is being denied many farmers in my area. I have in my riding thousands of families who speak no English, and they insist on their right to deal with government agencies in their own language.
Interest rates are unnecessarily high. The same observation applies here that applies to interest rates in the case of Central Mortgage and Housing Corporation. Over the years very few of our farmers in northern New Brunswick have been able to have their applications for loans from the farm loan board approved. As a result of all these factors I have mentioned, our farmers have thrown up their hands and do not go near the farm loan board because they all feel it is useless to do so. Therefore I suggest
Canadian Farm Loan Act that the procedure and the machinery for the processing of loans should be made more simple, and that facilities should be provided so that our French-speaking farmers can deal with the farm loan board in their own language.
The farm loan board should change their attitude of making loans hard to get, and adopt an attitude of co-operation and helpfulness toward our farmers. The restrictions should also be altered so as to make loans available to young farmers starting out. Loans should also be made available for operating costs over lean periods to help, for instance, our potato farmers who happen to be in their third year of very great hardship. The farm loan board in my area has a history of half service and lip service. It has never been an effective help to our farmers, and it has always been a case of too little and too late. A complete over-all shake-up is, in our opinion, long overdue in the farm loan board, as in so many other government agencies.
A whole new system of assessing the worth of properties should be adopted. As the hon. member for Victoria-Carleton and some members on the other side of the house have mentioned, our assessing for farm loan board purposes is often based on municipal assessments, which in my area run to about 50 per cent of the true value of the property. This means that in the long run the loans when finally approved, if ever, come to about 25 per cent of the value of the property. We also feel that the service could be improved by having a farm loan board office in northern New Brunswick.
Mr. Irvin Sluder (Swift Current-Maple
Creek): Mr. Speaker, a subject of this kind is of interest not only to farmers but also to all of the people of Canada. Because there are a great number of farmers and a great amount of money is involved, to the extent of nearly a billion dollars, no subject is of more vital and fundamental interest. The amendment of the legislation affecting the Canadian farm loan board is, in my opinion, one more instance of the government's advanced legislation on behalf of the farmers. It is the result of many years of experience, not only federal government experience but provincial government as well, because hon. members will recall that back in 1917 the province of Saskatchewan instituted a Saskatchewan provincial farm loan board. That board only operated until 1923.
Having profited from that experience, having determined what that board did not accomplish and determined to compensate for the lack of accomplishment and to profit

Canadian Farm Loan Act from the experience gained thereby, the federal government introduced legislation in 1927 to set up the Canadian farm loan board. I think we should dwell for a moment on what was the cause of the inefficiency, if we can call it that, of former farm loan boards.
I have here the report of the royal commission on agriculture and rural life in the province of Saskatchewan, which deals with the reasons why the Saskatchewan farm loan board of former years was not as effective as it might have been. I mention this because there is a demand among members that the interest rate should be reduced. We are all agreed that we want the lowest rate of interest possible, but not so low that it will defeat the purpose of the loan. The conclusion of the Saskatchewan royal commission on agriculture and rural life, as found on page 13 of their report, is as follows:
The Saskatchewan farm loan board was a useful but ineffective attempt to provide long-term credit to farmers on a provincial basis. Reasons for the failure of the board include: inefficient administration, interest rates too low to meet the costs of administration and of borrowing, difficult economic conditions of the 1930's and inability to spread loans over a larger risk area.
As a result of the experience of those years and with the discontinuance of the Saskatchewan farm loan board-the demise of it, it could be called-the federal government appointed individuals to gather the experience of all countries in the world with regard to farm loans. As a result of that experience, including the experience of the United States as well as that of every other country, the present Canadian farm loan board was originated and brought into existence in 1927 and became operative in 1929. Up to the present time it has lent nearly $1 billion. Hence this government, as the result of the wisdom of former people, has inaugurated a system under which it has assisted and extended credit to a great number of farmers and at the present time is extending those credits and those benefits to a larger number of farmers.
There have been some reasons mentioned as to why it is becoming more and more necessary to have government loans to farmers. There are several reasons. One among them is that private lenders are not lending the same moneys that were formerly lent, particularly in western Canada. I have before me here a brief submitted by Sol. Sinclair who is professor of agricultural economics at the University of Manitoba, who is a master of science and a doctor of philosophy. I think he was appointed by the Manitoba federation of agriculture and cooperation. The brief is entitled "Government action for long term credit for farmers in
[Mr. Studer.l

western Canada". This is a recent brief, being dated January 19,	1955. He gives
instances of the situation in regard to private centralized lenders that were formerly and are still in operation in western Canada particularly, but to a much lesser extent than formerly. He says that the decline in loaning set in mostly from 1947. He mentions that the decline has been continuous, and is especially marked for Saskatchewan. Then he says:
For example, in 1947, holdings-
That is private lenders' holdings in the province of Saskatchewan.
-in that province were $30,185,000.
That was in 1947.
In 1953, they had declined to $8,125,000.
Or in other words their lendings declined.
In Alberta and Manitoba, the decline, while evident, was not as drastic. For example, the 1947 holdings of these companies in Manitoba amounted to $7,297,000 and in 1953, they were $5,362,000.
That indicates what the private, centralized lenders think of the situation throughout that particular area. But here is a conclusion at which this professor arrives. At the end of that particular column he mentions the reason for the decline. He says:
This is due to the restrictive legislation relative to farm mortgages and their collection that exists in these two latter provinces.
The reference is to Saskatchewan and Alberta. That is not my opinion. It is the opinion of a professor of economics. If that is the situation, then we should do something throughout these provinces to remove those detrimental effects upon the lending that could be in evidence were that restrictive legislation not in existence.
In Saskatchewan we have some acts on the statute books. I do not wish to prolong this debate, but we wonder why the legislation is not used. Here we have the farm loan enabling act, which is chapter 209 of the revised statutes of Saskatchewan, 1953. It reads as follows:
An act to facilitate the operation in Saskatchewan of the Canadian Farm Loan Act.
This is what it does:
This act allows the provincial treasurer to subscribe to the capital stock of the Canadian farm loan board, sets up the provincial farm loan board to make loans directly to farmers or to co-operative and colonization societies and, in general, implements and supplements the Canadian Farm Loan Act.
I wish someone would outline to me what benefit this act has been to the farmers of Saskatchewan, if it has been operative.


Mr. Johnson (Kindersley):: Would the hon. member permit a question?


Mr. Sluder:: The fact is that it has not
been operative. If there is any government in Canada that should have the interests of the farmer at heart, it should be the Saskatchewan government. They are empowered under this permissive legislation to enable the farmers to take advantage of what the federal government is endeavouring to supply, and they in turn guarantee in effect what the provincial government may put into operation in Saskatchewan, learning from the experience of the past, learning from their own omissions, and thereby providing intermediate credit to the farmers of Saskatchewan, young and old, as the case may be.
One of the greatest reasons I think for the non-granting of loans in my part of Saskatchewan, which is the southwest area, is the fact that the land is poor in many instances. Over a period of years the land has not enjoyed the yield or the natural blessings that ordinary or normal land, we might call it, throughout the country has enjoyed. As a result of that fact, all lending institutions may be more hesitant in lending there than they would otherwise be. It is not a case of the farmer not being worthy. It is a case of the non-yield of the land over a period of years.
My understanding is that wherever land has come under the benefit of the Prairie Farm Assistance Act, the crop failure act, for a period of 10 to 12 years successively, that is land on which anyone might be hesitant to lend money. After all, the only way in which the land can repay the loan is through its yield, or in other words through its productiveness. I believe that more than the ability of the farmer, the land or the economic unit is the fundamental basis on which the money is lent. If we could devise an institution that will lend money to everyone, regardless of that situation, I think all of us would be happy. Unfortunately that has not been in evidence. If the province would just fulfil some of its obligations, perhaps they would be willing to take care of this marginal situation whereby the people of Saskatchewan would be primarily interested, and it would not affect all of the people all across Canada,
As was mentioned by the hon. member for Qu'Appelle the young farmer now is obliged to pay cash or close to cash. That seems to be the demand. In former years it was possible to sell land under almost any long term of repayment, but in recent years or during the past 10 years that situation seems to have disappeared, and people wishing to sell their land demand that more of a cash payment be made, if not an entire cash payment, for various reasons, some of which may be the same as those indicated here in this
Canadian Farm Loan Act brief to the Manitoba federation of agriculture by the professor of economics of the University of Manitoba.
I wish to extend the benefits, as does this government, to everyone who can in the least manner qualify. I think we must recognize the humanitarian sentiments of those people who live close to the soil, those people who wish to produce the necessities of life for the great number of people that are now in existence and will be in existence. They have humanitarian motives in endeavouring to provide the food for the masses. I do not think that our government institutions will be any less humanitarian in giving them proper consideration in connection with their right to a loan. I appreciate the efforts of all governments, provincial and federal, that may assist the farmers of Canada.


Mr. Hayden Stanton (Leeds):: Mr. Speaker, I am sure the farmers of Canada appreciate the fact that the farm loan act is being amended, through Bill No. 84, so it will more fully meet the needs of the farmers. But I feel that the farm loan act should be geared to meet more adequately the needs of the borrower, and should be administered with a more sympathetic understanding in the same way the Veterans' Land Act is administered. At the present time farmers of Canada are seriously in need of farm loans in order that the small size family farm may be restored to the position it rightly occupies within our agricultural economy. I believe that is why the small size family farm is fast disappearing. The young man cannot borrow an adequate amount of money to enable him to purchase the farm and continue his farming activities.
This may be attributed to three reasons. I can well remember that in most localities one was able to borrow money on farms. At the present time the lenders of money are looking for more attractive investments. The second reason is that elderly people who used to lend money are placing their money in stocks and government bonds. A few years ago an aged farmer could sell his farm and take the mortgage on that farm. Today it is impossible for him to do that because he would have to have a good sized farm in order to realize sufficient cash to purchase a residence in a town or village. It is necessary for him to receive almost the total amount of the purchase price of the farm in order that he may obtain a home for the remainder of his days.
I believe the size of the loans should be increased from $15,000 to $20,000. As we know, today farms throughout this country are on a much larger scale than they were. It is necessary, therefore, to have a larger down payment in order to purchase that

Canadian Farm Loan Act larger farm. I find that the grievance throughout eastern Ontario, and I believe it is general throughout Canada, is that there is too wide a differential between the amount of loan that can be obtained through Central Mortgage and Housing Corporation, and the amount that can be obtained through the farm loan board. I should like to give an illustration of that. A farmer may have three sons, two of whom may be working in industry for three or four years. The other boy is at home on the farm. The two who have been working in industry perhaps have saved $1,000 or $1,500. One of these boys is content to continue working in the town, but he wishes to build himself a home. He is able to do that through Central Mortgage and Housing Corporation and he can acquire a $10,000 home with a down payment of $1,000. The other boy may cherish the idea of going back on the farm. What does he find? In order to purchase a farm valued at $10,000 it is necessary for him to acquire enough money to equip that farm with machinery and cattle and still have $3,500 for a down payment.
This hardly seems fair. I hope when this bill goes to the committee for further consideration, the maximum amount of the loan will be raised to at least 75 per cent of the appraised value of the farm. When we speak about appraised value, it should be noted that appraisers are very careful and set a very moderate valuation. Generally speaking, the appraised value of the farm is somewhere near the assessed value, and that is nowhere near the actual sale value. I say that the 65 per cent of the appraised value mentioned in this bill means actually only 40 per cent or 50 per cent of the sale value. When this bill goes to the committee I hope it will be amended so it will meet the needs of the young men who are contemplating buying farms in the next few years. I was rather amused to hear the hon. member for Grey North (Mr. Bennett) make the statement today that the farmers of Canada were in need of help through farm loans, and that their income is not as good as it has been in the past few years. He is the first member on the government side of the house whom I have heard admit that. With those few rambling remarks, Mr. Speaker, I may say I hope the bill will get further consideration when it goes to the committee and is brought back to the house for third reading.


Mr. H. A. Bryson (Humboldl-Melforl):: I am very glad to have the opportunity of rising to support, in part at least, the proposed amendments to the Canadian Farm Loan Act. The part, of course, with which I am in agreement is the same as that with which other members have agreed, the part dealing with


second mortgages. I feel it is a good thing that section of the act has been deleted. It has been a stumbling block on a good many occasions. As everyone knows, a chattel mortgage ties up the borrower's power to make further borrowings and for that reason has restricted the operations of farmers who have used both sections of the act.
In so far as the part dealing with the maximum amount of loan is concerned, I feel that will not materially add to the usefulness of the act. I feel it is important the government has seen fit to bring these amendments before the house and thus have what has turned out to be a very useful discussion on this particular piece of legislation. This indicates to me the government's awareness that the Canadian Farm Loan Act has not lived up to the hopes the government had for it. I think the figures placed on Hansard this afternoon seem to bear out that belief. When we realize that after 26 years of operation the farm loan board has loaned something less than $100 million to Canadian farmers, I think that points to the fact that in many ways the act proves to be inadequate. However, I think it is important to realize that these amendments prove quite conclusively the government has failed to understand exactly what the problem is. We have seen the maximum amount raised on a former occasion, and apparently that was not the answer; otherwise what is being proposed today would in all probability not be considered as a major part of this amendment. We must go a lot farther in considering what is necessary in this country in so far as agriculture is concerned when we talk about farm credit. I do not propose to speak for the eastern farmer but I do feel that in Western Canada we have a problem which must be solved if we are to do something for Canadian agriculture.
I know we have been criticized in this house for talking about the surplus of wheat, for growing too much wheat, and so on. All of us from western Canada realize it is going to be pretty difficult to carry on in the west and grow the tremendous amounts of wheat we are growing and expect to get away with it. We have to make a completely new assessment of the whole western picture in so far as agriculture is concerned. I believe one of the ways in which that can be done is to bring about some kind of a comprehensive policy with regard to farm credit. We have to assess the situation in respect of a pattern of land tenure in western Canada. We have to make up our minds on the pattern of land tenure we are prepared to assist by way of a government loan. In this connection, there are two schools of thought.

The report made by the royal commission in Saskatchewan has been quoted quite widely in this debate, and I imagine it will be referred to again before the debate is ended. They are sure that this question of credit is a very important one; in fact, one of the greatest problems with which the farmers of western Canada are confronted. As I say, there are two schools of thought on what pattern of land tenure is best, not only for the farmer in western Canada but for Canadian agriculture in general. One school of thought thinks that we should have a large corporation farm which makes for efficient operation. The other school contends that we should support the family type of farm. I am convinced we should not argue in favour of the family farm on the basis of efficiency because I believe there is something else to be considered. In so far as agriculture is concerned, we should consider the family farm as a sound social structure. Therefore, the outcome of all of these investigations, the considered opinion of the people who have carried out this rather exhaustive royal commission investigation, has been to suggest that the family farm is a thing we should try to develop. I believe that any important source of credit that is to be made available to farmers should be based on the assumption that it is going to further the interests of and support the family farm type of land tenure.
At the present time banks and mortgage companies are not an important source of farm credit. While I suppose they have been considered an important source of farm credit in the past, yet I doubt whether they have operated in the interests of agriculture. Because of this, during the last 20 years, and more recently since the war, farmers have tried to devise some method of credit that would augment the types that are available at the present time. When I say that, I mean they have developed the co-operative use of machinery; they have experimented in some parts with co-operative farms; they have set up credit unions, and they have carried on with renting farms. In this modern day and age of mechanized farming none of these seems to be good enough. Therefore, we are up against the proposition that we must develop in this country some sort of credit that is going to be adequate to do the job that is necessary.
There are three categories of farmers who are in dire need of credit. First of all, there is the farmer who is operating what is commonly referred to as an uneconomic unit. He must expand if he is to stay in business. The result is, his financial position is such that it is very difficult for him to borrow money to get enough land to add to his own to make
Canadian Farm Loan Act up an economic unit. Because of the fact the farm loan board is rather a cumbersome way of borrowing money there are a great many delays in getting the deal put through. The farmer who has already become well established and has rather large holdings is, by and large, the man who grabs up or buys up those extra parcels of land in every community, which should be available to the man who is trying to operate an uneconomic unit.
Then, we have the next category, the farmer and his son in partnership. As was pointed out this afternoon, I believe by the hon. member for Qu'Appelle (Mr. Mang), in many instances all of the equity that the farmer who is getting on in years has is tied up in the farm and under the terms of this act the son is unable to apply for a loan, and the father is in no position to move off the farm without a very substantial payment to get out of the equity enough money for him to live on for his remaining days.
Then, we have the younger farmer who is just starting up farming. Possibly he is in the most difficult position of all, because it is not too good to start up and be undercapitalized. That is exactly what happens when we have the type of legislation we are dealing with today. Not enough money is forthcoming. I would like to suggest that possibly the Canadian federation of agriculture have come forward with a rather good suggestion when they say that on loans up to $8,000 or $10,000, eighty per cent of the maximum should be forthcoming in those cases, to give the young farmer considerably more money than is called for under this legislation. Therefore, in the west we have the tendency for fewer farmers to get in possession of more and more land, and it has a rather disastrous effect on the whole Canadian economy. The farmers who are dispossessed move into the cities and add to what is already a very serious problem. By and large most of them are unskilled in the different crafts and so they are forced to take whatever labour they can find to do, and add to, as I have said, the already very serious problem with which we are confronted in this country.
I should like to take the province of Saskatchewan as an example and put on the record just what is taking place in connection with the pattern of land tenure in that province. What I am about to put on record was brought out by the royal commission. In every 10-year period 25 per cent of the farmers retire. The commission found out that by and large farmers stay on the land for a period of 40 years. Because they did that we have a 2J per cent turnover each year, since there are 110,000 farms in the province. Each year there are 4,000 boys in that province

Canadian Farm Loan Act who reach the age of 20 years. Because there is a 25 per cent turnover we have 2,500 farms available each year and 4,000 young men competing for them. This presents a serious problem because the majority of that land is being bought up by men who already have large holdings and are well established and they are developing these holdings into large corporate farms which certainly will be to the detriment of Canadian agriculture in general.
I would hardly make the statement that was made by the hon. member on my left concerning land assessment but I will go so far as to say that it is arrived at in a rather arbitrary manner and I do not think that method is too good.
I believe the act should call for 75 per cent of the maximum of $15,000 being made available. As I mentioned in the first instance, I am glad the second mortgage feature has been removed. I think that is all to the good. I also believe that the repayment should be based on the productivity of the piece of land on which the money has been loaned. In this respect I think the V.L.A. has gone a long way. I would like to see the Farm Improvement Loans Act, the Canadian Farm Loan Act and some of the clauses in the Veterans' Land Act incorporated in one comprehensive credit bill. I think that would eliminate a lot of duplication both in office work and on the part of the field staff.
I would also suggest that much more could be done to safeguard the repayment of loans. I mentioned a moment ago that the credit unions have become an important source of farm credit. It will be argued by some people that the envious record established by the credit unions in Canada so far as repayment of loans is concerned is because the borrower's honesty and integrity is taken into account when loans are made. I know that this is true but nevertheless anyone who has had anything to do with credit unions knows that when loans are made those who make the loan are greatly concerned about the interests of the borrower. I think this policy could be carried out in any comprehensive government credit source for farmers in much the same way.
I think there is no question about it that the people who go out and appraise the land do an excellent job. I have known some of these men personally and as a matter of fact I have gone along with them. They do a good job in assessing the value of the land's productivity. I believe the personnel who are involved in this work should follow it up after the loan is made. I think these men should assist the farmers in seeing that they

carry out good agricultural practices and should help them in order to see that their loans will be repaid.
When the bill goes before the select committee I hope some consideration will be given to many of the suggestions which have been made by hon. members during the course of the debate this afternoon. With those few words I conclude, Mr. Speaker.


Mr. E. B. Huffman (Kent, Onl.):: Mr. Speaker, I would just like to take a few minutes to say a few words concerning this act. Any criticism that has been mentioned regarding the act this afternoon has, in the main, been levelled against delays and I am in sympathy with that criticism. One of the reasons for the delay is, I think, because of some of the regulations regarding inspection. I would hope that we could liberalize the terms and regulations to a degree in order that the applications for loans might be processed more rapidly.
Another criticism which I noted in some of the speeches that have been made refers to what I might call the human errors that are made by the appraisers. I am sure that in the main these men are doing the best they can in appraising properties, and again I would hope that they could liberalize their appraisals of the properties.
1 heard the suggestion made by the hon. member for Moose Mountain (Mr. McCullough) and by the hon. member who has just taken his seat to the effect that the inspectors should give technical information to farmers to whom loans have been made. I am sure that I would not want our inspectors to go about giving that type of information to the farmers because we have experimental farms, both provincial and federal, which can give excellent advice. These farms employ specialists in soils and farming practices. If an experimental farm is not close to the area where a loan is being made I would suggest that the agricultural representatives can and do assist farmers in problems of this nature. Because of the proximity of the agricultural representatives I feel that they can do an excellent job in advising the farmers in whatever locality they might be living.
One other suggestion was made this afternoon by the hon. member for Huron (Mr. Cardiff). He suggested that this act should be termed dominion farm loans limited. He then went on to suggest that the young farmers in Ontario in particular were not getting loans as they should. If any criticism at all should be levelled at government it should be levelled at the junior farmers loan board in Ontario because they can grant loans up to a certain sum to farmers under 35 years of

age. I cannot see why any criticism should be levelled at the federal department here in relation to inefficiency or concerning the fact that junior farmers in Ontario have difficulty in obtaining loans. The junior farmers loan board in Ontario makes loans at 1 per cent less than this act calls for.
The other question I heard mentioned here this afternoon was raised by the hon. member for Leeds (Mr. Stanton), who said that the hon. member for Grey North (Mr. Bennett) was the only hon. member'on the opposite side of the house who said there was some lack of purchasing power in the hands of the farmers and that farmers needed assistance. I would suggest that the hon. member for Leeds could not have been in the house on March 13 when the Minister of Agriculture (Mr. Gardiner) spoke. The minister said, as recorded at page 2091 of Hansard:
I have already said in answer to that question that I thought the farmer did requite more than he is getting.


The Acting Speaker (Mr. Applewhaite):: Order. I am sorry to interrupt the hon. member, but it being five o'clock the house must move to the consideration of private and public bills. In view of the nature of the interruption and the fact that I understand by consent we will have the budget speech this evening, perhaps I could suggest to the hon. member that he move the adjournment of this debate.


Edward Blake Huffman: I therefore move the adjournment of the debate.
On motion of Mr. Huffman the debate was adjourned.



PRIVATE BILLS


Mr. J. E. Lefrangois (Laurier) moved: the second reading of Bill No. 160, respecting the Personal Finance Company of Canada.


Some hon. Members:: Explain.


J.-Eugène Lefrançois: Mr. Speaker, the bill is relatively simple, as it involves two matters relating to the company: first, the change of its name, and second, an increase in its capital stock.
With respect to the change of name I may say that this company is in effect a wholly-owned subsidiary of Beneficial Finance Company, a company carrying on an extensive business in the small loan field in the United States. Personal Finance Company of Canada when incorporated in 1933 was incorporated as the Discount and Loan Corporation. In 1944 it changed its name to Personal Finance Company of Canada, and now it is considered
Private Bills
desirable that the name of the Canadian company be made similar to that of the United States company. Consequently it is proposed that the name should be "Beneficial Finance Company of Canada". The Beneficial company has had and used that name since 1914, and so far as we are able to discover, it is not similar to the name of any other company carrying on business in Canada.
As to the proposed change of capital stock, the presently authorized capital of the company is $1 million, all of which is issued and outstanding. At the time this company was incorporated, most companies of this type obtained authorized capital of $1 million. Now, on account of the amount of business carried on by the company, it is felt that its capital stock, to be consistent, should be increased to $10 million.
As at December 31, 1955, the company had in Canada 171 offices, and had outstanding in loans of $500 or less $18,317,989.27, and $41,934,604.27 in other business. In addition to the outstanding capital stock of $1 million, there was earned surplus of $5,368,571.66, and paid in surplus of $9,350,000.
In the light of these figures, it would seem that there could be no valid objection to the authorized capital being increased as set out in the bill from $1 million to $10 million.


Mr. J. M. Macdonnell (Greenwood):: This bill, as I understand it, goes to the banking and commerce committee, and therefore little needs to be said about it at this time. Indeed, I do not know that we would be called upon to say anything about it if it were not that at the present time we are in rather an unusual situation vis-a-vis the United States in respect to the incorporation of companies. We have been reading, to our great surprise, that in several states of the union legislation has been pending to prohibit the entry of a certain Canadian company into the state by reason of the fact that not 51 per cent of its stock was owned in the state. I am glad to be advised today that in at least one of those cases, namely Maryland, the governor has vetoed the bill, and I presume that that ends it as far as that state is concerned. Nevertheless, the situation has arisen and it has raised a good deal of concern in people's minds.
Referring more particularly to this small loans business, it is a fact that one or two large companies almost entirely dominate the field. When we hear of the increase from $1 million to $10 million we realize that the operations of this company are of very large bulk. When we come to the banking and commerce committee, I think it will be relevant to consider these questions.
I wish to say quite frankly that we have reason to be entirely in approval with one

Private Bills
aspect of the record of this company, namely, that it has come for incorporation here to the dominion parliament and has not come around by any side door. It is not merely incorporated under the Companies Act in one of the provinces, as it might have been, so I am informed. It has not come here merely for licensing, but has come here for its incorporation. Therefore we have the chance, particularly in the banking and commerce committee, to consider the whole situation.
The right to incorporate is fairly clear. The right to increase the capital is, I presume, clear. Certain questions arise and should be carefully considered as to just what are the implications of the increase in capital. In one way, of course, it is all to the good. From another point of view, it is the effect of the larger capital in proportion to the amount of earnings that is in the mind of the incorporators, and there is nothing improper in that. If they feel they wish their earnings to be measured against a capital, not of $1 million but of $10 million, which I understand is the new figure, there is nothing improper in that. I am merely pointing out that we have this situation that has arisen. It has arisen, of course, largely because of the fact, which we have noticed in Canada with some concern, that there is a very large increase of United States controlled companies.
It is interesting, in this connection, to refer to the speech made only yesterday by the president of the Canadian Pacific Railway-I think it was at the Canadian Club at Montreal -in which he had one or two interesting things to say. He speaks about Canada's political independence being, of course, a matter that is without question, one that was decided long ago. But he says that there still will be a battle to maintain economic independence. When we consider, as we must consider, the tremendous deficit that we have on our trading account with the United States at the present time, when we consider the very large amount that that means, and that we must receive in some way other than by the shipment of goods, either by borrowing or otherwise, it raises the whole question of United States influence and domination in our country. I hope that the meeting of the banking and commerce committee will be a natural place to discuss this matter, particularly by reason of the legislation still pending in four states of the United States.
Before I take my seat, I should add that I am informed that this is a company of high standing, that its directors are people of high standing and that the officials believe there is no reason whatever in the ordinary routine of matters why the request of the company for the change of name, which I understand is

just to conform with the name of the parent company, and for the increase of capital, should not be granted.


Mr. R. R. Knight (Saskatoon):: As I have just come from a committee and I find that loans are being discussed in the house, it has occurred to me what interest we seem to be taking in the matters of loans and lending institutions during this session of parliament. If one looks at the order paper one finds evidence of that. The government has on the order paper Bill No. 51 which deals with this matter and has as its purpose the reducing of the interest rate on some loans. I say "some" advisedly because some loans are not affected. I take it we can assume that this legislation will pass because the bill has already received second reading in the house.


Some hon. Members:: No.


Robert Ross (Roy) Knight: I refer to Bill No. 51, Mr. Speaker. Bill No. 51 has been approved on second reading by the house. It is a restricting bill, a bill restricting the amount of interest which may be charged by such institutions as the Personal Finance Company. Then we had a private member's bill, Bill No. 3, introduced by the hon. member for Assini-boia (Mr. Argue). Then we have Bill No. 160, and there is another such bill on the order paper, Bill No. 166. Altogether we have a lot of bills connected with the lending of money.
I referred to the government legislation, Bill No. 51, which restricts the amount of interest and has already been approved on second reading. It purports to reduce the amount of interest which these companies can legally charge, but I have noticed that for the type of loan most frequently indulged in by these people who borrow from these companies the interest rate is unchanged. I refer to small loans of $300 or less.
In the case of the $500 loan there is a slight reduction, but let me point out that the reduction is very slight. Whereas the legal rate has been 24 per cent per annum or less, as a result of the reduction by statute the rate on a $500 loan will amount to something less than 22 per cent per annum. That is the rate these companies will be allowed to charge for such a loan. I am still of the opinion that the rate of interest is much too high. The record of these companies has been one of very little loss and I doubt very much whether people who borrow $500 temporarily should have to pay as high an interest rate as almost 22 per cent. If my memory serves me right, we were informed in the debate on Bill No. 51 that 72 per cent of small loans made are in these two particular categories,

so that actually 72 per cent of loans are scarcely affected in the matter of an interest reduction by Bill No. 51.
I may have given the impression already, and if I have it is the correct one, that I am not particularly fond of the machinations or methods of conducting business followed by these small loan companies. I was going to say that I have seen too much distress caused by their operations and I think I will stick to the word "caused". Of course, these people are in trouble even before they go to these companies but I think they are in worse trouble after they have finished with them. In other words, only people who are driven by dire poverty, misery or want or who have got themselves into some type of financial trouble patronize these companies. I do not think anybody has ever been very successful in ridding himself of debt by borrowing money, certainly not by following this particular method which usually covers the simple matter of the transfer of one's debts from one place to another place with a greatly increased interest charge.
That brings me to the question of advertising, and I would suggest that the new name this company has chosen is not unconnected with the matter of advertising. The name proposed is "Beneficial". I can see that name blazing in bright lights down Sparks street, on Second avenue in Saskatoon or on some avenue somewhere else. This business of borrowing money is spreading almost like a pestilence and it is a queer comment on our much vaunted prosperity. I made it my business to look in the telephone directory and I found there that in the cities of Ottawa and Hull Personal Finance Company has eight offices open to do business, six in Ottawa and two in Hull. By a strange coincidence Household Finance has exactly the same number, six in Ottawa and two in Hull.
I was talking about the change of name to "Beneficial". Quite frankly, I do not consider that this or any other small loan company is beneficial. It is not even bene-ficient and it certainly is not benevolent. I mentioned advertising, and actually it was the advertising of these companies which interested me in their operation. It is very noticeable in any advertising you pick up that these companies do not state the amount of interest charged per annum for the use of the money. In fact, I have never seen any advertising in which they have stated the amount of interest. I want to emphasize the words "per annum". Oh no, they do not do that but they advertise that if you will just come along and have a nice little confidential talk with them they will lend you $1,200, let us say, and at the end of the
Private Bills
first month you will repay $111, at the end of the second month $111 and so on.
When you come to look the thing over you discover that when you have paid back the amount of the capital you have also paid $132 for the use of $1,200 for one year. Sir, the point I want to make is this. I know there is the old principle of caveat emptor, let the buyer beware, but I think we also have some responsibility to see that people who are in pinched circumstances and have to borrow money are afforded some protection. I suggest that the type of people who make these $300 loans and in the circumstances under which they borrow the money are not people who are very capable of picking up such advertising and figuring out the rate of interest they are going to have to pay for that type of loan.
I have talked to sheriffs, I have talked to people who have seen the misery and poverty, who have seen the predicaments into which these people get themselves. The average person who borrows money looks at the $132 and says: "Well, it is costing me $132 for the use of that $1,200, is it not?" Oh yes, but you know the catch in that. On the basis of $11 per month it would appear as if that might be the percentage per annum. To some people it looks like 11 per cent. Some people are not too smart about percentages, and of course they wake up afterwards to the fact that they have been paying not 11 per cent but double that rate. After all, if they repay $100 at the end of the first month and $100 at the end of the second month you can easily figure out how much money they have in the tenth and eleventh months that belongs to the company. Actually they only have the use of $1,200 for one month.
Is there anyone who can deny that statement? What are they paying this $11 for in the ninth, tenth and eleventh months? If you figure it out the rate of interest is a little more than double the amount that it appears to be upon the face of the advertisement. If I had had my way, if I had had anything to do with the bringing in of the government bill No. 51, I would have made a recommendation with regard to these institutions.
Every institution that goes out to advertise that it is in the money lending business should by statute be obliged to declare upon such advertising-not what they are going to pay back at the end of the month; not these rosy things that you see in neon lights down on the main streets in these cities-the amount of interest payable per annum in plain English and arithmetic. Then people would know what were the rates of interest

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that they were assuming. But that is the one thing they do not mention. They do not mention anything about rate of interest. They just say, "Come along with your financing troubles to us. We will not ask any questions. We will just give you a certain amount of money and you pay it back so much per annum". I think that is my case for advertising. This advertising is continually deceptive. I have examined a good deal of it.
Another thing is this. There has been a debate in the other place on this particular matter. We are told that most of this capital which is invested in these small companies is foreign capital. One of the gentlemen in the other place said that he was shocked to learn that 83 per cent of the small loans field in Canada is owned and controlled by two foreign corporations. I do not know what the two corporations were; he did not say. He naturally asks, as would I, what is wrong with our Canadian financial institutions if they cannot make some proper provision for people who need money on a short-term basis. These foreign companies are United States companies, I presume, although the senator did not say so; he said they were foreign companies. I do not know, of course, where they get the capital upon which they operate. I do not know, for example, whether they come to Canada, set up their pawn shop or their lending company or whatever it is, borrow Canadian money from our Canadian institutions and then go out and farm it out to those unfortunate people who must have it. I presume the profits of the corporation, if indeed it is United States controlled, will be sent off to the company's country of origin. As I say, I do not know about that matter, but it would be interesting if somebody-the sponsor or someone else-would tell us just what the situation is with regard to it.
As I say, we have come to the change of the name. After all, one might say, "What's in a name?" It intrigues me to notice that the company has already changed its name a time or two. In the bill it is stated that the original name was the Discount and Loan Corporation of Canada and then later it was Personal Finance Company of Canada. I suggest that when one changes his name, he usually has a reason for doing so. I could not hear the sponsor of the bill very well but I think he said that the reason for the change of name is the fact that the original or parent company in the United States had the name "Beneficial" and they wanted to bring the subsidiary into line. I can understand that desire. But I also see some useful purpose in that particular name from the point of CMr. Knight.]
view of advertising. As I say, I know nothing against this particular institution. I have nothing whatever against it or any other institution. However, I think that it is a rather unfortunate business that so many people are finding themselves in the position where they are obliged to patronize these particular companies. As I say, I was first of all interested in their operations by this advertising which I think is strictly deceitful and which I think should be governed by statute.
I think that is all I care to say on the matter. I noticed that my friend the hon. member for Moose Jaw-Lake Centre (Mr. Thatcher) protested the other day that perhaps we should be a little bit careful in our criticism of these countries, that perhaps we might drive that capital out of the country or that we might stop this flow coming in here so that this money would not be available for the small type of thing. At the risk of being accused of trying to control other peoples' business, may I say this. I think we have some responsibility in sometimes protecting people from themselves. I do not think it is a good element in our social and economic life. As I say, I have not yet noticed anybody being very successful in his ability to borrow himself out of debt.


Major James William Coldwell: Mr. Speaker, I should like to say a word on this bill because I take much the same view as does my friend the hon. member for Saskatoon (Mr. Knight) in relation to these loan companies generally. I was here when the small loans bill was before the house some years ago and when we reduced the interest rate from 2J per cent per month, I think it was, to 2 per cent per month. But that rate of interest is too high. However, that is not the question before the house just now. The question before the house is a bill which proposes to increase the capitalization of this company from $1 million to $10 million and to change the name.
Like my friend the hon. member for Saskatoon, I object to the use of a name which is as deceptive as is the name which this company seeks the right to use. I do not want to be unkind to these companies but if I were suggesting a name for any of these small loans companies charging an interest rate of 2 per cent per month or more for the higher amount loans they sometimes make, I think I would call them predatory loan companies, for such indeed they are. I think it is about time that we passed-as I hope we are going to do-legislation that will exercise some control over this usurious business, for that is what it is.

I notice that Mr. K. R. MacGregor, our superintendent of insurance, in his report on small loans companies and money lenders for the year ended December 31, 1954, has this to say:
In my report last year, I referred to the greatly increased interest being manifested in the small loans business in Canada by established lenders outside Canada, more particularly by those with head offices in the U.S.A. Several of these lenders entered the field during 1954 through provincially-incorporated subsidiary companies and the same trend has continued up to the date of this report.
This report was made on November 1, 1955. Then he goes on to say this:
Another noteworthy trend recently has been the relatively greater expansion of business in the unregulated field of loans made in amounts over $500-
Those are the loans that do not come under the legislation now in effect.
- (herein referred to as "large loans") than in the regulated field of loans of $500 or less (herein referred to as "small loans"). The outstanding balances of small loans at the end of 1954 showed an increase of 15 per cent over the balances at the end of 1952 but the corresponding increase in the outstanding balances of large loans made by licensed lenders during this two-year period was 76 per cent.
Expenses are relatively lighter for larger loans, thus justifying a decreasing rate as the size of the loan increases, yet the present general practice of licensed lenders is to charge the same rate (usually 2 per cent per month, or the equivalent) for large loans as for small loans.
As he says, the expenses of making these larger loans is very much less than the expense of making the small loan, but since they are unregulated they continue to charge at least 2 per cent.
Definite information is not available for unlicensed lenders since they are not required to file annual statements under the act but some of them are reported to be charging more than 2 per cent per month for large loans. The practice of charging 2 per cent per month, or more, for large loans, along with the trend toward expansion of this field, suggests the desirability of considering an extension of the scope of the Small Loans Act so as to apply to loans up to $1,000 or even $1,500 and of reconsidering the maximum permissible charges for all loans. I
I believe that is the purpose of Bill No. 51 which was introduced by the government at this session. We are told that 83 per cent of the capital of these companies, at least the ones to which we are referring, is United States capital. This Personal Finance Company is a typical example and I believe is one of the two large companies to which my hon. friend in the other place referred in his talk the other day, the other being the Household Finance Company.
Let us take a look at who the directors of this company are. There is the Beneficial Loan Corporation of Wilmington, Delaware,
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holding 9,825 shares and the amounts subscribed being $982,500. The amount paid in cash was $982,500. This represents the bulk of the capital of this company. The other directors have merely what is a qualifying capital investment. Of course, they are mainly Canadian. They are the front for this foreign small loans company. They are, L. A. Forsyth, Montreal, Quebec; 25 shares; amount $2,500, paid up; O. W. Caspersen, Andover, New Jersey, 25 shares; $2,500, paid up; W. P. Creagh, Montreal, Quebec, 25 shares; $2,500, paid up; C. S. Richardson, Montreal, Quebec, 25 shares; $2,500, paid up; C. H. Watts, Fort Lauderdale, Florida, 25 shares; $2,500, paid up; C. M. Benadom, Toronto, Ontario, 25 shares; $2,500, paid up; D. K. MacTavish, of this city, 25 shares; $2,500, paid up.
Now, those are the directors and the total amount of paid up capital, with the qualifying amount of the directors, amounts to $1 million. Of this amount $982,500 was paid up by the Beneficial Loan Corporation of Wilmington, Delaware, and $5,000 more paid by two gentlemen in the United States. There is the situation. They come along and say to us that our business is so profitable, our business is so large, that we need another $9 million of capital. Where are they going to get it? Is the Beneficial loan company of Wilmington, Delaware going to put up the additional $9 million? If that additional $9 million is put up, where are they going to get the funds to lend to the Canadian people? I think it is generally known that whatever the capital of these companies may be, and wherever they get it, like this one mainly in the United States, they borrow from the banks of Canada quite large sums of money in order to lend to the Canadian people.
I compliment the Bank of Commerce for going into this business, though it is limited by our bank acts as to the amount of interest that it can charge. Some other banks are doing the same thing. I think we should facilitate our banking institutions going into this business. I think the best form of lending in the country is the credit unions who are charging substantially 1 per cent per month. Of course, the participants in the credit union participate in any profit that may be made. These loan companies advertise, as the hon. member for Saskatoon (Mr. Knight) sqys, with bright neon lights. Read their tempting advertisements in the newspapers every day. As was remarked in the other place, they are spending millions of dollars in various types of advertising across this country. It is a profitable business being undertaken by foreign usurers coming into this country, borrowing money from our banks and lending it to our Canadian people at high rates of interest. They are draining off the

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profits into another country. As I have just indicated in this house by reading the directorate of this company, a paltry amount of capital was subscribed by these Canadian fronts of this Wilmington, Delaware company.
I think, Mr. Speaker, we should refuse to consider this proposition. We should refuse to consider changing this name which will tend to deceive our Canadian people into believing this is something beneficial, something in their interest. We should refuse to waste our time discussing it. I am going to move, seconded by the hon. member for Assiniboia (Mr. Argue):
That the word, "now" be left out and the words "this day six months hence" be added at the end of the question.


Mr. H. R. Argue (Assiniboia):: I rise to add my voice to those who are opposing this measure. I agree with those who say there is no advantage, indeed there is a great deal of disadvantage to Canadians, that may be derived from the change in name. The second provision of this bill for the increase of capital stock is wholly unnecessary. I feel it is probably placed in the bill because the company is becoming embarrassed by the very huge profits it shows in its balance sheets from year to year, and relating those profits to the very limited capital now set forth. This would tend to further mislead the public if they wish to relate the profits of the company to the authorized capital for which they are asking a tenfold increase.
This bill, as has already been listed, shows that it has been considered by members of the other place and by the banking and commerce committee of the other place. When I saw that this bill was to be considered by the House of Commons I looked up Hansard of the other place to go over the debate that took place there to see what I could learn about this company and about the proposed bill. I found what seemed to me something rather amazing. There was in fact no debate at all. The bill passed first, second and third readings without any debate having taken place. I hasten to say that the bill was considered by the banking and commerce committees of the other place and I do not believe that the hon. gentlemen would go through the bill in a hasty manner. But no minutes were kept by the banking and commerce committee of the other place; no evidence was taken and therefore I was unable to learn anything from a verbatim report of their deliberations as to what they were able to ascertain about this company when the bill was considered.
I do not think that any advantage at all will be derived by the Canadian people from
[Mr. Coldwell.l
the passage of this bill. As I have been able to study the field, I do not think any advantage will accrue to prospective borrowers or to Canadian citizens generally by any further increase in the number of small loans companies, or in the number of money lenders.
The superintendent of insurance has already made the statement publicly that he was rather concerned about the number of new companies that were going into this field and the expansion of some of the existing companies. It seems to me that since all of these companies follow the practice of charging the maximum interest rate allowed by law, the smaller companies in this field are apt to show a relatively small profit, and in their early years of operations may in fact show an operating loss, and this will be used as an excuse or reason to maintain interest rates at the current very high rate that is now legal. If we leave the field to those that are now in it-and they are making very large profits

they could in fact afford to take a very large reduction in the amount of interest that they may charge their customers. I do not think the ordinary concept of competition applies in this instance, or in the extension of this field to other small loans companies.
As has already been pointed out, this is not a case of Canadians going into this field with Canadian capital. This is not even a case of United States citizens coming into Canada to perform a service with United States capital. The United States citizens and United States corporations who come into this country and develop our natural resources are providing jobs. They are adding to the real wealth production of the country no matter what we may think of their being here as compared with Canadians entering the field. But when the United States citizens come into Canada with very little in the way of United States capital and go to Canadian banks and borrow Canadian money and relend it to Canadians they are in fact, in my opinion, serving no useful purpose whatever. The amount of profit they make is a net loss to our nation, and I can see no reason why they should be encouraged by this type of bill to add to their business, or by other bills to set up new companies.
Of course, they want to change their names. They want to make it appear to the public that they are doing something that is really beneficial to the borrower. They like to appear as though they are giving him a handout, as though they are doing him a huge favour. I suggest that one of the reasons why these companies like to have an attractive name, an appealing name, a misleading name, is the fact that Canadians generally, at least

partly because of the debate in this house and public discussion on this question, are becoming aware of the huge rates that are being charged by those companies, and this is an attempt, by this devious method, to make their business appear more attractive to prospective borrowers. They want to make it appear more respectable. I do not know why we should let them have such a name as "Beneficial" and use it in their advertising, as I say, in a misleading way.
In case hon. members may think I am talking of something about which I know little or nothing, I happen to have in my hand some of the literature that is being used by this company. The first piece of literature I have is a card about the size of a small blotter. It does not say what it is advertising. There is no company attached to it, but I am told on what I consider to be very reliable authority that this is one of the pieces of literature used by the Personal loans company. Here is the heading:
You are my pal!
That is the first thing. They want to get people in to ask for a loan and they say to a prospective customer:
You are my pal!
Well, of course, the prospective customer would be a real pal of the loan company if he came in and obtained more money and paid a very high interest rate. They might better have said, if you take a loan we will place you in the category of others that we consider to be suckers who come and ask for a loan. They go on and say this, after having said "You are my pal!":
That's what your friend, who needs extra cash, will say to you after he has come to us on your recommendation. You and he can depend on our treating him as a real friend, too.
A real friend at 2 per cent a month. I continue:
No obligation to you-but a real service to him. We like to say "yes" to anyone you recommend.
They like to say yes if they can fleece him for 2 per cent a month, but they will say no in a very certain manner if they think there is any risk in fact in making the loan.
Then, the second piece of literature I have -and there is no doubt about it; this in fact is something used by the Personal Finance Company because they have their name attached to it. They give the address of one of their offices in the city of Ottawa. This company must be making some profit. As a matter of fact, I can quote figures to show that it is making a very handsome profit. The report on small loans companies and money lenders for the year ended December 31, 1954, shows that on a total income earned on small loans of $3,769,000 this company made a gross
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profit of $923,000, or a gross profit of some 25J per cent on the income earned. They are making a lot of money, and it is no wonder that in this metropolitan area of Ottawa and Hull they have no fewer than eight offices, six in Ottawa and two in Hull.
This piece of literature has this on the cover:
Take this good friend on vacation with you.
Then they say that they are going to have a cash credit account, and they go on to say this:
Take your Beneficial credit card on vacation and be sure you won't run short of cash!
Nobody goes on vacation expecting to run short of cash.
They tell you very confidentially:
Every year, however, thousands do run short due to an emergency like a car breakdown or some unforseen expense.
When you carry your credit card, these money emergencies needn't bother you. Because no matter where you are, if there is a Beneficial loan system office near, you can get the cash to tide you over.
It's a wonderful feeling to know for sure that the nearest Beneficial loan system office will be a friend in need. And thousands who never expected to use their credit card on vacation were mighty glad they had the foresight to take it along.
Here is more of the high pressure salesmanship:
Here's How Your Credit Card Works!
1.	Your cash-credit card identifies you at over
800 affiliated offices of the Beneficial loan system . .	. coast to coast in Canada and the United
States.
2.	Your cash-credit card means that you will never be a stranger in a strange town . . . the local manager will offer you service just as if you were one of his own customers.
3.	Your cash-credit card can be used at home ... or away from home. Should you want extra cash, present your card to the manager of any office displaying the Beneficial loan system symbol.
4.	Your cash-credit card is free . . . you pay nothing for it. You pay only for the loan you take and the length of time you use the money.
I suggest this is another example of this kind of misleading advertising. The third card I have is somewhat similar but it has this to say:
We welcome this opportunity to serve.
This also refers to vacations and it suggests that you should get a credit card and then you can fly on credit.
For extra fast service fill in below and hand to cashier-or phone in for 1-visit service.
This is really prompt service; a phone call, one-visit service. It invites you to fly on credit. And all this can be done at 2 per cent per month. As the hon. member for Saskatoon (Mr. Knight) said, that is the thing they forget. I would suggest, as he has, that it should be a part of the law of this country that when a company such as this puts out advertising such as this they should

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be required to state that this credit policy will cost the applicant 2 per cent per month, the appropriate rate of approximately 24 per cent per annum. The card has some other things to say:
Beneficial Finance System's cash-credit card-a valuable extra ... at no extra cost!
This exclusive card identifies you immediately at the more than 960 affiliated Beneficial Finance System offices in Canada, United States and Hawaii. With it, you may get extra cash in a hurry-either at home or away. You get this valuable card only at Beneficial Finance System offices.
I should like hon. members to listen carefully to this sentence as I read it again:
This exclusive card identifies you immediately at the more than 960 affiliated Beneficial Finance System offices in Canada, United States and Hawaii.
In other words, this company which is asking parliament at this time for a change in its name from the Personal Finance Company of Canada to the Beneficial Finance system is in fact already using the latter name despite the fact that it has not had the approval of parliament. I can remember many instances of hon. members of the government announcing government policy outside of the house and saying that the government intended to put particular proposals before parliament, but before those proposals were placed before parliament the facts of those proposals had become the law of the country. Many of us have said it was an affront to parliament that the government by statement should in fact inaugurate a change in the law. But here is an affront to parliament by a private company. This company has the effrontery to come to parliament now and ask to have its name changed when in fact the company has already been using the new name in the normal course of its business.
I wonder if one of the reasons the company felt it could use this kind of advertising and could use this name in its Canadian literature is because D. K. MacTavish is a member of the board of directors of the company and appeared as the legal counsel for the company in proposing this bill when it was first brought to the House of Commons.


An hon. Member:: Who is he?


Hazen Robert Argue: Someone says "Who is he?" I have here a statement made by Harvey Hickey in the Globe and Mail of March 2 in which he refers to Duncan K. MacTavish as an Ottawa lawyer and president of the national Liberal federation.
The fact that this company has used the new name in its advertising without the approval of parliament for the official change

should be sufficient reason for us to seriously consider the bill which is now before the house. We have already had this subject referred to the banking and commerce committee by way of Bill No. 51. I expect and I hope that the whole subject of small loans companies will be thoroughly studied by hon. members of parliament who serve on the banking and commerce committee. After we have had a thorough study of this entire field we would be in a much better position to judge whether or not a bill like this should in fact be passed by this house. If we say that we approve of this change at this time I wonder if we are not tying our own hands as far as the committee is concerned. We should have the opportunity to permit the banking and commerce committee to study this whole question thoroughly. By so doing we would be able to judge in a much more intelligent manner whether or not it is advisable in fact for this bill to be passed. Without having had the opportunity to learn the facts of the case from witnesses I certainly intend to vote for the six months hoist and later to vote against second reading of the bill.


Some hon. Members:: Six o'clock.


Hazen Robert Argue: Mr. Speaker, may I move the adjournment of the debate?
On motion of Mr. Argue the debate was adjourned.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


Hon. W. E. Harris (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, on the first day of spring one cannot help feeling buoyant and optimistic, and I think that what I have to say tonight will bear out that we have had a buoyant and optimistic year.
The world economic situation has during the past year shown nothing but solid progress in almost every civilized country. While the increase in economic activity has been most apparent in North America, substantial increases have also occurred in the United Kingdom, continental Europe and other parts of the world, and the flow of world trade has been very considerably enlarged. For many

countries, this improvement came on top of an impressive growth of economic activity in previous years.
Continued rapid expansion in both investment and consumption expenditures has brought on a renewal of inflationary pressures in many countries; but it is highly encouraging that the general tendency has been to counter these pressures by fundamental monetary and fiscal policies which, in our judgment, go to the root of the trouble, rather than by a relapse into physical restrictions and controls.
As for our own economy, hon. members will recall that the situation at the time of the last budget was somewhat clouded. It was clear that we were beginning to recover from the recession of 1954, but the rate of recovery was still uncertain. To me it seemed that the prospects for economic expansion were reasonably good, and I based my revenue forecasts on the expectation that there would be an improvement of at least 5 per cent in production, and that the gross national product would reach an annual rate of about $26 billion by the end of the year. There were many who felt that such a view was altogether too sanguine. As a matter of fact, at a later time during the year, someone wrote that he could only conclude that some of the optimism of the Minister of Trade and Commerce had rubbed off on the new Minister of Finance. I would like to say that I would be happy if other qualities of the Minister of Trade and Commerce were also to rub off on me.


Mr. Fleming:: Be careful.


Walter Edward Harris: In the event, the Canadian economy advanced rapidly and continuously throughout 1955 and total production for the year as a whole was about $264 billion. This was some 10 per cent greater than 1954 and nearly 9 per cent higher than the level of 1953. Since the average cost of living remained fairly stable, there was a significant increase in the wealth and welfare of most Canadians. More people were at work than ever before, unemployment was greatly reduced, wages and incomes were higher and the consumption of goods increased substantially. By virtually every standard, 1955 was a year of exceptional economic advance.
Nevertheless, some sectors of industry and agriculture have not fully shared in this rate of progress. For example, wheat farmers had a much better than average crop, but during the first part of the crop year were unable to deliver as much as all of us would like to have seen. However, this has changed materially since the session began, and sales have greatly improved.
The Budget-Mr. Harris
Geography and climate impose upon us a substantial amount of winter unemployment but conditions are distinctly better this year than they were last winter. Part of this improvement is due to the response of industry and commerce to the program of promoting more winter employment initiated by my colleague the Minister of Labour.
However, admitting some unevenness in the rate of expansion, it is clear that Canada as a whole enjoyed an extraordinarily active and encouraging year in 1955 and that the momentum of expansion is still carrying us forward.
Perhaps I may be permitted to emphasize certain features of this expansion. The progress we have made over the last year or more can be related to at least three important factors: a high level of exports, a large program of capital investment, including residential housing, and a continuing increase in consumer expenditures. These were the things that caused production, employment and incomes to grow so rapidly. But behind all these things lay something less tangible, but fundamentally important and essential,-the confidence of Canadians in the economic future of our country.
The particular forces which encourage economic expansion are so inter-related that it is difficult to single out the one which was of most importance in 1955. However, I think that I would put the renewed growth of exports first on my list.
Canada's ability to produce and export is a measure of the enterprise of those Canadian individuals and companies-and of nonresidents too-who have explored and developed our natural resources, or planned these new or enlarged mills, factories and mines, and of the workers and technical staffs who build or operate them.
On the demand side, the briskness of the United States economy in 1955 was the biggest single factor in the expansion of our exports. Our exports to the United States increased by $250 million out of a total increase in exports of about $400 million. However, the increase in our exports to our other traditional markets overseas in 1955 was also impressive. There was a 20 per cent increase in our sales to the commonwealth, and exports to western Europe increased 11 per cent.
With a very large program of capital investment taking place in Canada, and with consumption expenditures running at higher levels, imports also rose sharply in 1955. But it should be noted that fully two-thirds of our increased imports are accounted for by increased raw materials, machinery and equipment for Canadian factories and industries. Over $400 million of the $600 million increase

The Budget-Mr. Harris in imports consisted of such items as industrial machinery and equipment, primary iron and steel, aircraft and automobile parts, farm machinery, crude petroleum and rubber, raw cotton and raw wool. Our heavy expansion of capital investment, part of which was made possible by foreign investment, not only made necessary these large imports of capital goods and raw materials, but also created many thousands of new jobs all over the country in secondary trade and industries which benefited from all this increased purchasing power.
The result of a greater increase in imports was a deficit on commodity trade of $185 million. This was mainly responsible for the increase in the total current-account deficit, which amounted to $665 million last year. The net inflow of long-term capital into Canada was less in 1955 than in 1954, the net inflow of short-term capital was greater, and there was no marked change in Canada's official reserves of gold and dollars. The value of the United States dollar in Canada rose from approximately 96| cents Canadian at the end of 1954 to approximately 99 J cents Canadian at the end of 1955.
Changes in the relative levels of interest rates in Canada and the United States made the United States market less attractive for the issue of new Canadian securities than was the case in earlier years. This factor also stimulated a greater volume of repurchase by Canadians of Canadian securities held abroad.
The sscond dynamic element in the economy last year was the sharp growth in the amount of new capital expenditure. Here, too, the optimistic expectations of the early part of last year were more than confirmed by events. New capital expenditure rose by over 11 per cent to a total exceeding $6 billion and absorbed 23 per cent of our total national output.
Investment in housing comprised one-quarter of all new investment. Parliament has attached a great deal of importance to the encouragement of residential construction and home ownership. The housing legislation of 1954 made provision for further government encouragement and assistance by measures that are familiar to all of us. The success which attended these efforts has been most encouraging. In the last ten years almost a million new homes have been built and our cities and towns are being visibly transformed by the growth of new suburbs. 1955 was the first full year of participation by the chartered banks in the financing of insured residential mortgages and their entry into this field has considerably broadened the market for new home financing. 127,000 new


dwelling units were completed during the year, an increase of 25 per cent over the previous year.
Another important stimulus to the expansion of the economy in 1955 was, of course, the increase in consumer expenditures on goods and services. This was particularly striking in the case of durable goods. Total sales of consumer goods and services increased by nearly 7 per cent or almost twice the increase of the previous year. Allowing for the growth of population, this means that the consumption of the average individual showed a 4 per cent increase, the largest annual increase since the war. A significant portion of this increase was the result of a wider use of instalment credit, but the principal explanation is the growth of employment and the increases in wages and salaries.
A year ago I referred to the part played by federal welfare and income maintenance policies in the stabilization of economic activity. During 1954 when business and employment in many sectors were failing to rise, or even declining, such measures as unemployment insurance, family allowances and the like automatically served to maintain incomes and employment. I have heard it said that the tax reductions of my last budget helped as well.
During 1954 the policy of the Bank of Canada was directed towards easy monetary conditions and the positive encouragement of enterprise so far as the availability of credit was concerned, and this policy was still in force at the beginning of 1955. As the slack in the economy was taken up, monetary policy shifted to one of neutrality and then to one of restraint. With the rapid growth of production in almost every direction, the possibility of shortages of such items as steel, cement, building materials, and of certain kinds of labour began to appear, and in these circumstances the Bank of Canada's operations were directed increasingly towards moderating the rate of expansion in the use of credit.
Looking now to the year ahead I feel that the evidence points to a continuation of the progress that the economy enjoyed in 1955. Both in the United States and overseas, the economic situation remains favourable so that we can anticipate a further growth in exports. Within Canada itself there are many other indications that 1956 should be a year of further expansion. The present investment intentions of industry, business and governments are much higher than they were last year, according to the survey tabled by my colleague the Minister of Trade and Commerce (Mr. Howe) recently.
We cannot expect, however, to see a physical rate of growth this year equal to that of

1955 when we had a certain amount of slack to begin with so I think that for purposes of revenue forecasting I should not count on an increase in the total national product of more than 5 per cent over last year, this being about the average annual rate of increase in recent years. Assuming stable prices, average crops and no untoward events, this would give a gross national product of close to $28 billion.
The blessings of an economy operating at a high level are pleasant indeed to a minister of finance but they bring with them new responsibilities for all of us. The objective should be to maintain a steady growth in economic activity without the process of expansion giving rise to inflation and instability. Consequently, in times like the present when private expenditures are expected to rise still further, the federal government itself has a special responsibility to see that its fiscal policies continue to be directed towards economic stability. The use of the flexible instruments of monetary policy is also being directed towards this objective. But careful judgment and wise spending policies are not solely matters of concern to public authorities. They are the normal responsibility of each one of us, regardless of his role in the economy.



GOVERNMENT ACCOUNTS, 1955-56

[Stage Direction]
I turn now to report on the government's accounts for the fiscal year which will be closing a few days hence. At this time I can indicate only approximate figures because it will be several months before our books of account can be finally closed and audited.
Hon. members will recall that a year ago I budgeted revenues this year at $4,202 million, expenditures at $4,362 million, and consequently a deficit of $160 million. The result I am glad to say has been considerably better. In fact, our revenues will be about $4,385 million, or 4 per cent greater than forecast, our expenditures $4,437 million, or 2 per cent above forecast, and our deficit will be $52 million, or only about one-third of my earlier expectations.
The increase in revenues is a reflection of a rate of recovery and expansion somewhat greater than I had felt justified in assuming a year ago. Of the increase in expenditures over forecast, which amounted to $75 million, $20 million represents the wheat storage costs absorbed this year in accordance with legislation passed a few weeks ago; $5 million is on account of the support of agricultural prices and $15 million represents higher charges for interest on the public debt.
In addition to our outlays for government services which are included in the budgetary
The Budget-Mr. Harris accounts, we have as usual made loans and advances and disbursed large sums for a variety of other essential purposes. During the fiscal year these outlays, all of which of course have been authorized by parliament, will amount to $285 million. To meet them we will have substantial sums available from non-budgetary sources, details of which are given in the white paper.
Although the budgetary deficit is $52 million, our cash balances at the year end will be about $295 million higher than a year ago. This is the result of receipts of $385 million from annuity, insurance and pension accounts, the repayment of loans and investments and other non-budgetary sources plus an increase of $245 million in our debt outstanding in the hands of the public, less the $285 million paid out for loans, advances and other non-budgetary purposes.
Our public debt operations during 1955-56 have included the redemption or refinancing of a large volume of matured or called bond issues. A notable feature of the year's operations has been the net increase of about $710 million in the amount of treasury bills outstanding reflecting the government's desire to meet the growing market demand for shortterm securities. Net sales of Canada savings bonds series 10 are estimated at $645 million. In addition to the refunding or conversion of treasury bills, new securities were issued amounting to $3,230 million and old securities were redeemed or acquired for our sinking fund or securities investment accounts in the amount of $2,985 million. As a result, our unmatured debt held outside these government accounts was increased during the year by $245 million.
Interest rates rose sharply during the year at home and abroad, particularly on shortterm securities. The average rate of interest on the government's unmatured debt will be about 2-86 per cent at the year end compared with 2-74 per cent at the beginning of the year.
I should like at this point to report briefly on the operations of the old age security fund during the fiscal year now ending. As hon. members know, pensions of $40 a month are paid from the fund, the revenues of which are derived from a 2 per cent tax on sales, a 2 per cent tax on corporation profits and a 2 per cent tax on personal incomes (with a maximum individual payment of $60). Pension payments from the fund during the year are about $366 million, revenues about $316 million and the deficit for the year of about $50 million has been financed by a temporary loan from the Minister of Finance. Following the practice introduced last year 1 propose to ask parliament in the June supplementary
2328	HOUSE OF
The Budget-Mr. Harris estimates for authority to charge the past year's deficit to 1956-57 expenditures.

[Stage Direction]
The subject of federal-provincial relations has taken up a good deal of our time during the past twelve months. There have been four meetings of premiers, as well as other conferences of ministers. Last April we met to agree on an agenda and to conduct a general consideration as to those questions which seemed to be most urgent. In June we laid the ground work for a federal contribution to provincial costs of providing unemployment assistance not covered by unemployment insurance and other federal policies. In October we discussed the whole field of federal-provincial fiscal relations. In January we examined the question of health insurance.
It was also in January that the Prime Minister communicated to the provincial governments definite proposals respecting federal-provincial fiscal arrangements, and these were the subject of the last meeting of premiers eleven days ago. In commenting upon our federal-provincial fiscal proposals this evening, I do not need to go into detail, because parliament has been kept fully informed. In broad outline we have proposed:
First, that the federal government make unconditional equalization payments to provincial governments to bring their yield of certain standard tax rates applied to personal incomes, corporation incomes and successions, on a per capita basis up to the average per capita yield in the two provinces with the highest per capita yields.
Second, that whenever necessary the federal government makes unconditional stabilization payments to provincial governments to bring their available revenue in these tax fields up to a specified guaranteed minimum.
Third, that the federal government offer five-year tax rental agreements to the provincial governments, the annual payment being the estimated yield of the standard rate in that province.
Fourth, in provinces and fields where no tax rental agreement has been made, the federal rate of tax applicable in that province and field be reduced by the standard rate, leaving that provincial government free to impose whatever rate it deems appropriate.
Fifth, where a provincial government prefers to impose its own tax, the federal government at the request of the provincial government would be prepared to enter into a tax collection agreement under certain conditions on a fee basis, provided the provincial basis and rate of tax did not differ from the standard rate.
[Stage Direction]

Our first suggestions made in October would have provided an increase in provincial revenues from these sources in 1957-58 of about $65 million, or 12 per cent over the estimated payments that would be payable in 1957-58 were the present agreements renewed without change. In successive negotiations we have improved our proposals in several ways, including increasing the standard rate on corporation incomes from 8J percentage points to 9 percentage points; putting all calculations on a current year basis instead of a preceding year basis; and offering to withdraw from the insurance premium tax field in favour of the provincial governments. We have also improved considerably our first suggestions respecting the guaranteed minimum to the provincial treasuries.
The sum total of these improvements in our offer has been to enlarge the increase in provincial revenues available from these sources from the $65 million of last October to $109 million in February.
I should explain that all the figures I am using relating to 1957-58 are not forecasts but calculations based on an assumption that total revenues from these three tax fields will increase by 5 per cent per annum over the 1955 figures.
On this assumption our proposals would make available to the provincial governments in 1957-58 revenues of $640 million. In the same year the present tax rental agreements if renewed without change would provide $531 million. Having regard to our national responsibilities and commitments we cannot see how we can go further. Under all the circumstances we believe our offer is eminently fair and that it is reasonable and realistic in the light of federal and provincial responsibilities.
As a result of further consideration since March 9, we are, however, prepared to make an improvement in the stabilization feature of the proposals. Our offer hitherto has been that the revenue available to a provincial government under these arrangements will be not less than the highest of, (a) the dollar amount received or available in the final year of the present agreements, or (b) the per capita rate paid or available in that year, or (c) 90 per cent of the average of the two preceding years under the new arrangements. We are now prepared to give the further guarantee that the amount available will be not less than the amount that would have been available if the present tax rental formula had been continued throughout the next five years, nor will it be less than 95 per cent of the average of the two preceding years under the new arrangements. Every

province is therefore guaranteed that under the new arrangements it can never get less than it would have received had the present agreements been renewed without change, and that above this floor it will have access to the revenues from the insurance premium tax.
Since both the federal government and the provincial governments must have time to make decisions and to set up any consequential administrative machinery, we propose to introduce legislation later in this session to prescribe the nature of and to provide authority for unconditional equalization payments and unconditional stabilization payments to provincial governments, and to authorize the government to enter into tax rental agreements or tax collection agreements.
The Prime Minister has written to the premiers on these matters, and the letters will be tabled tomorrow.
Before I turn to the question of how we should raise our essential revenues in the coming year, there are two other matters in the field of finance to which I should like to make reference.
First, a few words about credit unions and co-operative savings and lending societies. These have been growing very rapidly in numbers, membership and resources during the past fifteen years. In 1940 there were over 1,000 societies with assets of $25 million. The most recent figures available indicate that there are now more than 4,000 societies with over 1,600,000 members and close to $600 million of assets. Members' savings and deposits in these credit unions exceed $500 million and loans to members $350 million. Clearly the credit union or co-operative savings society is filling a most useful and rapidly expanding role in our financial system. We are getting a number of requests to treat credit unions, for a variety of purposes, as if they were banks, and particularly to allow them to participate in various kinds of government guaranteed loans.
May I make it clear that the federal government has no intention or desire to intervene in the general field of co-operative credit societies, but we are prepared to sit down with interested groups to discuss under what circumstances and conditions we could properly extend to them privileges and opportunities which are not now open to them. I hope to arrange such discussions shortly, and I should add, Mr. Speaker, we have already had some informal discussions on the subject.
May I repeat that it is not our desire to extend our supervision in this field unless,
The Budget-Mr. Harris and only to the extent that credit unions may desire to participate in these government activities.
The second matter is our regulations affecting trade in gold.
Late in 1931, when the United Kingdom and Canada went off the gold standard, the export of gold was made subject to a system of licensing administered by the Minister of Finance. At the same time arrangements were made with Canadian gold producers whereby all newly mined Canadian gold was turned over to the royal Canadian mint, and the mint became in effect the agent of the gold mines.
In 1946 and 1947, the international monetary fund, of which we are an active member, became increasingly concerned with the serious extent to which gold throughout the world was being diverted into private speculative holdings. In March 1948, in line with the international monetary fund's policy, which we fully supported, of discouraging hoarding, the government gave notice that gold imported into Canada after that date would not be granted an export licence.
In 1951 the fund decided that it was impracticable to expect uniformity in the measures taken by its members in respect of their control over gold transactions, and as world-wide monetary conditions improved our regulations have been liberalized from time to time. For example, in 1951 we allowed Canadian gold producers, under certain conditions, to sell gold in the world markets. In 1953 we liberalized the conditions under which we would release gold for industrial uses, and last May we undertook to grant export licences for gold imported into, or purchased in, Canada for safekeeping for account of foreign central banks and official international financial institutions.
We now propose to remove all remaining restrictions in this field. Effective tomorrow, both residents and non-residents of Canada will be free to buy gold for export or for safekeeping, and the regulations under the Gold Export Act requiring an export licence have been suspended. Mines agreeing to forgo aid under the Emergency Gold Mining Assistance Act will be able to sell their gold wherever they desire subject merely to reporting their production and sales to the Department of Finance.

[Stage Direction]
I come now to the question of an appropriate tax policy for the coming year. Last year I said that with our proposed level of taxes and a gross national product of $26 billion we could expect revenues to flow in
[Stage Direction]
The Budget-Mr. Harris at the rate of about $4,350 million. In the event our gross national product went a bit over $26 billion, and our revenues were $4,385 million,-which is quite a close fit to my forecast.
I said earlier I am now assuming a gross national product of about $28 billion for 1956, and on that basis I would expect our present tax structure to produce revenues of $4,775 million. This is a very large increase for a single year. The explanation lies largely in the way in which our corporation income tax returns flow in. Under the Income Tax Act corporations must pay their tax in monthly instalments, but their first nine instalments may be based either on their estimate of their current rate of profits or on their last year's actual taxable income. We know that profits in 1955 were considerably higher than in 1954, but our tax receipts are almost exactly the same. During the coming months our inflow of corporation income tax receipts will be abnormally high as corporations catch up on their 1955 tax liability and at the same time are paying currently on a much higher base.
If I may have unanimous consent I shall place in Hansard at this point a table showing the details which go to make up the $4,775 million of revenue which we would expect to receive in the coming year if tax rates remained unchanged.
Mr. Speaker:: Is there unanimous consent?


Some hon. Members:: Agreed.


Walter Edward Harris: The table is as follows:
Revenues before tax changes (in millions of dollars)
Preliminary Forecasts
Personal Income	1955-56	1956-57Taxes 	
Corporation Income	$1,180	$1,265Tax 	1,035	1,315Non-resident tax ....	67	70Succession Duties ...	75	65Customs Duties 	475	485Excise Duties 	245	258Sales Tax	640	675Other Excise Taxes ..	260	265Other Taxes 	16	17Total Tax	Revenue 	3,993	4,415Non-tax Revenue ...	392	360Total Revenue ..	$4,385	$4,775
I should like to say again that this forecast of $4,775 million, which is an increase of $390 million over the year just closing, 



TAX CHANGES

[Stage Direction]
Although for reasons just stated it is not possible for me to recommend to parliament any reduction in the general level of income tax this year there will be some changes in certain provisions in the Income Tax Act. Of these amendments some will be mainly technical in their nature while others will contain substance of interest, but on balance there will be no appreciable effect on total revenues.
There will be some changes in the tax treatment of proceeds from plans under which employers share their profits with employees. In future under deferred profit-sharing plans, gains and losses resulting from investment portfolio transactions will be excluded in calculating the taxable portion. The dividend element in the income allocated to a member will be recognized for tax credit purposes. Also, there will be postponement of tax liability for the first three years on amounts allocated to a member of a plan if the unconditional right to receive such amounts has not been assured to the member within this period. With these changes our tax provisions for profit-sharing plans will be established on a pretty satisfactory basis.
Over the past year my colleague the Minister of National Revenue (Mr. McCann) and I have given considerable thought to the general requirements to which pension plans must conform in order to establish the right of tax deductibility for contributions. We have concluded that it is desirable to revise the blue book which contains the general instructions regarding pension plans. In particular we have examined with some care the provisions relating to limits on the discretion of the trustees in investing funds placed under their administration and we have studied the urgent representations made to us for the removal of some of these restrictions. Our decision is that we should remove the percentage limitations relating to equity investments so that trustees will be able to govern their own investment policies in the light of the particular pension requirements of the plans under their administration.
Members of the professions and others who have been affected by a recent Exchequer Court decision which ruled out a deduction for convention expenses will doubtless be interested in learning that the act will be amended to allow for 1955 and onward the deduction of expenses for two conventions annually iD Canada.
[Stage Direction]
The Budget-Mr. Harris
The recent decision of the Supreme Court of Canada in the Home Oil case has created a situation which calls for some amending legislation. In brief the court decided that under the Income Tax Act and regulations thereunder as they were in 1949 and 1950 an oil producer was entitled to have the so-called depletion allowance calculated on an individual well basis rather than on the basis covering total operations. This decision has affected the basis in law for the policy which has been followed for the oil industry during the course of its development.
In 1951 the regulations which had been in force during the years covered by the Home Oil appeal were amended by the governor in council with a view to establishing greater legal certainty for the basis on which taxpayers in the industry were being, and had in the past been assessed. The reasons for judgment given by the court in the Home Oil case have created some uncertainty as to whether the present law and regulations as amended in 1951 are in sufficiently clear terms to support assessments made since 1951. It is proposed, therefore, to amend the law and regulations now to ensure that the intent of the 1951 amendment shall govern for the intervening period! and for the future. This amendment will not deprive any taxpayer of his rights under the Supreme Court decision for the years prior to 1951.
In recent months there have been frequent references to foreign ownership and control of Canadian companies. It has been suggested that a certain feature of our tax law may be discouraging the foreign owner from allowing Canadian participation in his enterprise. Under our law the standard rate of tax payable by non-residents on dividends from Canada is 15 per cent. However, the tax is only 5 per cent on a foreign corporation if it owns all the shares which, under all circumstances, have full voting rights. It might be noted in passing that the tax position of the foreign company is not adversely affected by issuing for public participation in Canada other kinds of shares in the Canadian company.
This general provision in our tax law to which I have just referred has in many cases been modified by tax treaties with various countries in recent years. For example, in our treaties with Sweden, Ireland and Denmark a company may secure the preferred rate of 5 per cent on dividends if it has more than 50 per cent ownership of the Canadian company. Negotiations for tax conventions are currently active in South America, Australia, Holland and Germany.
By amendment to our treaty with the United States six years ago the percentage ownership required for the 5 per cent rate
	.* |i
[Stage Direction]
was reduced from 100 per cent to 95 per cent. For some time we have had this item on our agenda for discussion with the United States administration, and toward the end of last year the question of a further reciprocal lowering of the percentage ownership requirement was proposed. I have reason to hope that this proposal will be acceptable to the United States and that an amendment to our tax convention will in due course be effected.
Other changes in the Income Tax Act which are contemplated will be explained upon introduction of the amending bill.

[Stage Direction]
The resolutions which I am placing before the house tonight contain, as usual, some tariff changes. These are rather fewer than in recent years. One of the reasons is that tariff negotiations are in progress in Geneva under the general agreements on tariffs and trade, the results of which will be announced when they are complete.
Many of the tariff changes I am announcing tonight are matters of form, to facilitate administration, rather than substance. In a certain number of cases, however, the rates of duty are being altered. While all these individual changes are in a downward direction, the total effect on the revenue will not be significant.
Only one change is of sufficient general interest to warrant mention at this time. This relates to parts for agricultural machinery and equipment. Government policy has, of course, been that the parts, like the machinery and equipment itself, should enter Canada duty-free. However, certain judicial decisions by the tariff board, relating to the wording of particular tariff items, have resulted in important changes in tariff classification practices, and the scope of duty-free entry has been substantially narrowed. This undesirable result has been brought to my attention by many interested persons and organizations. The action taken tonight is intended fully to restore duty-free entry in this important field.
As I explained in my last budget, it is my intention to keep our tariff abreast of technical and industrial changes and, for this purpose, to refer tariff items or groups of tariff items to the tariff board from time to time. Since my last budget I have made three references and have received one report.
The board's report on potatoes reached the government in November; last month its contents were studied and discussed at a joint meeting between our officials, representatives of the growers, and representatives

of various provincial departments of agriculture. I hope to be able to make a statement to the house on this subject fairly soon.
The next reference to the tariff board was primary iron and steel and the board is now well into its investigations. These will be followed by investigations into the closely related area of pipes and tubes of iron and steel. The reference on chemicals will be going forward soon.
I have two or three new tariff board references in mind for the coming year. One covers zinc and manufactures of zinc; another covers fire brick. Then if the board's program allowed, I would also think of referring to it a group of tariff items relating to the manufacture and assembly of radio and television sets.
It is clear that the tariff board will continue to bear a heavy burden. This point has been brought to my attention both by the chairman of the board itself and also by others concerned with the board's work. Accordingly it is our intention to enlarge the membership of the board from three to five; later in this session I shall introduce a bill for this purpose.

[Stage Direction]
I now turn from tariffs to sales and excise taxes.
For reasons already stated I am unable to propose any reduction in the general rate of sales tax, or in the standard level of 10 per cent for the special excise taxes.
A year ago I told the house of our intention to appoint a committee to study various aspects of the Excise Tax Act. This has been done and I am tabling at this time a copy of the committee's report. I should like to take this opportunity of thanking the committee publicly for the high quality of their work in this specialized field. It is a tribute to the business community of this country that objective and painstaking studies can be obtained so willingly from those who would otherwise be so busy with their own affairs. I think the country owes them a debt of gratitude for their willingness to take on these arduous duties in the public interest.
The committee's report is being given careful study by the departments concerned. I am unable to say at the moment how far the recommendations made by the committee will And a place in this year's amending act. Some of the recommendations involve some rather fundamental changes in the structure of the law. These we shall have to consider carefully. I think the most I can say at this time is that we are adopting some of the committee's recommendations for greater simplicity and certainty through making certain 67509-148J
The Budget-Mr. Harris additions to the exemption list. These, along with some other additions, will be found in the resolution which I shall be tabling at the conclusion of this statement. The most important additional exemptions arise out of a broadening of the definitions of building materials and of production goods. It is estimated that the total reduction in taxes through these additions to the exemption schedule will amount to about $12 million in the forthcoming fiscal year. As usual it will be provided that the above commodity tax changes will be effective from midnight tonight. In accordance with standard practice my colleague the Minister of National Revenue has asked me to give notice that no claims for refunds arising out of tax reductions in respect of goods on which tax has been paid will be entertained.
Mr. Speaker, as usual, but with the utmost sincerity, may I express my appreciation to the Minister of National Revenue (Mr. McCann) and his staff for collecting such a tremendous sum of money.
For several years past the publishers of Canadian magazines have made representations to the government regarding the increasing inroads of magazines from abroad both into their circulation in Canada and also into their sales of advertising. We have been able to help them to a small extent by some redistribution of routine government advertising. Nevertheless, their relative position has declined. A number of Canadian magazines have been abandoned and others have had to reduce the number of issues per year. Magazines from abroad have meanwhile extended their activities to such an extent that the long run continuation of Canadian magazines appears to be in jeopardy. Already, something like four-fifths of the magazines read in Canada are not Canadian, and the proportion has been creeping ominously upward.
Competition from abroad takes two forms. First, we have what may be described as normal imports; scores of magazines normally on sale in London, Paris, New York or elsewhere, are brought in and sold in Canada. Second, in a few cases, the publisher of a magazine abroad has arranged to put on sale in Canada an edition of his magazine that is quite similar to the magazine he sells in his home market but not identical with it. This special edition will usually differ from the home edition both because it prints a few pages of reading material about Canada and also because it sells some pages, often a great many pages, to Canadian advertisers.
We have been considering this problem for some time, and we have decided that, in this field, very exceptional measures can be justified-measures that certainly could not be
2334	HOUSE OF
The Budget-Mr. Harris justified in connection with any ordinary line of business or commerce. The publication and circulation of magazines by Canadians, for Canadians, telling about Canadians and what they are doing and what they have to sell, seems to us a basic and essential thread in the fabric of our national life. And I am talking now, not merely of the magazines that deal to a greater or lesser extent with broad political and economic affairs, but also about the magazines that circulate among housewives and businessmen and members of trade associations.
I wonder whether we could contemplate a time when we would not have a Canadian magazine, when there would not be an opportunity for persons with the talent and with the time to sit down and contribute an article of a critical nature on government or scientific matters or on some other topic, or if we could contemplate a time when our children could not read a magazine in which there would be Canadian stories based on Canadian history or Canadian fiction. I doubt very much, sir, if we could look to an occasion like that.
The government would be very reluctant, however, to interfere with the normal and traditional imports of ordinary magazines into our country but the special editions constitute a very special problem. They are relatively new arrivals on the scene. Each is essentially a by-product of some magazine published abroad and, being a by-product, its costs of production are well below the costs of a comparable purely Canadian magazine. It uses its advantage not only to enlarge its circulation but also, and far more serious to Canadian publishers, to sell its advertising services, thus diverting revenues from Canadian publishing houses. In recent years this diversion has become very substantial.
Accordingly, we have decided to put a special excise tax on these special editions. It will be at the rate of 20 per cent and will be levied on all revenues they receive from advertising. It will not come into effect until January 1, 1957 so that those concerned may have time to adapt their affairs to it. The tax will apply to all special editions, whether printed in Canada or abroad, in English or in French.

[Stage Direction]
This concludes my review of our proposed tax changes, and I can now summarize my budgetary position. The total reductions in taxes I am recommending to the house amount to $12 million, and my expected revenues for the coming year will be $4,763 million, and my prospective surplus $113 million. I should again remind the house that in figures of
[Stage Direction]

these magnitudes there will always be some uncertainty in estimation, and that a variation of as little as one per cent in our estimates in either direction is a matter of close to $50 million.
I should like now to say a further word about federal-provincial relations.
I have seen it suggested that we have been seeking political rather than economic solutions in this field.
If by political solutions is meant taking account of national interests greater than mere dollars and cents, I believe that the objective historical verdict on the past year will be that we have in our frequent federal-provincial meetings given first place to the highest political considerations: the unity and welfare of the whole Canadian people.
At these meetings we have laid the foundation for a working arrangement with the provinces for assistance to the unemployed who cannot qualify for unemployment insurance under existing federal law; we have laid the foundation for a joint federal-provincial plan for hospital care whenever a majority of the provincial governments representing a majority of our people signify their agreement.
We have proposed a new-and for the provinces a more advantageous-tax-sharing plan to replace the tax rental agreements which expire early in 1957.
This is a record of achievement in this field which will be unmatched for some time.
Since I became Minister of Finance in July, 1954, fiscal relations with the provinces have been receiving the continuous attention of my department and of the government.
It appeared to me that, with the tax rental agreements running out soon, a very careful review of what had been accomplished by that system was in order.
Hon. members will recall that there were three main purposes given for the tax rental agreements-and I am referring here only to the post-war agreements.
These purposes were:
(a)	To eliminate duplication and inefficiency in taxation as much as possible;
(b)	To place the provincial governments in a more stable financial position, having in mind the necessity for providing a certain minimum standard of provincial services;
(c)	To give the federal government in cooperation with the provinces sufficient control over the fiscal policies of Canada to permit the effective combating of economic difficulties.
The house, of course, knows that when I entered the Department of Finance I had no experience in these particular matters except as a supporter of this party and this government.

In considering our fiscal relations with the provinces, we have had the advantage of the unequalled experience and knowledge of the Prime Minister, who has lived with these problems since some eighteen years ago he became counsel to the Rowell-Sirois commission.
We have also had the advice and careful consideration of the Minister of Justice, who in 1937, as provincial treasurer of Manitoba took the initiative which was the real beginning of all the activities which have resulted in our present federal-provincial fiscal proposals.
It appeared to all of us that the objective of the tax rental agreements with respect to provincial revenues was much the most important.
Today it is inconceivable to think of going back to the pre-war situation where the provinces with smaller tax potentials had to fend for themselves.
If all the provinces are to carry out their constitutional responsibilities, there has to be some system of tax sharing, of equalization, which will make it possible for them to provide provincial services.
The other objective: to eliminate duplication and inefficiency in taxation is also a valid objective. The British North America Act gives parliament no power to limit the exercise of the rights of the provincial legislatures to tax their peoples for provincial purposes. What we can do is to shape our policies so as to remove the need for duplication as much as possible.
And we are doing that just as effectively with our new proposals as with the tax rental agreements.
As for the third objective, it is still desirable; though we can hope it will not be necessary for a long time to combat grave economic dislocations.
But, under our constitution we cannot control the fiscal policies of the provinces; all we can do is to make co-operation as easy and natural as possible, and our new policies, just because they do not require hard and fast agreements, will, I believe, make co-operation easier.
The situation as we saw it some months ago was this. One provincial government had steadfastly refused to make a tax rental agreement; the government of another province had entered into an agreement which the premier of that province called a stopgap and a second best; and the representatives of another province were reported to be quite unhappy about being bound by a tax rental agreement.
The Budget-Mr. Harris
Our task was to find a substitute for a system which was not acceptable to the government of a province containing almost one-third of our people, and which had won only the reluctant acquiescence of the governments of two other provinces containing more than one-half the rest of the people of Canada.
The tax rental system-good as it was- and it was a great advance over the pre-war fiscal chaos-had to be improved if at all possible.
There has hardly been a week in the past twenty months that we have not given consideration to alternative plans.
The new proposals were evolved gradually and the original suggestions have been greatly modified and refined to remove objections and difficulties.
This new tax sharing plan is a reaffirmation of our belief that the government of the nation has a duty to provide some mejns of sharing tax returns with those provinces which cannot, without extraordinary measures, find the funds to provide a Canadian standard of public services; it recognizes that double taxation can be costly and inefficient; and it is a reaffirmation of our belief that the federal system has virtues which, if maintained, will benefit us all.
I am confident that every Canadian today believes we should all assist the provinces to provide a reasonable Canadian level of public services in all parts of Canada; nationhood would be meaningless if it were not so.
I am also confident that our tax-sharing plan is not open to serious constitutional or practical objections; though, of course, I do not suggest that it is perfect or will receive universal approval.
But may I make it quite clear that not one provincial premier is on record as saying that this new tax-sharing plan is not as good as the present tax rental agreements; and I am prepared to go further and say that almost all of them have stated that the principle of the new plan is better than the present system.
As the house will understand, these matters have taken a great deal of time in the past eighteen months-not only our time, but the time of the provincial governments as well.
In all our conferences there has been complete frankness and a full measure of goodwill.
This, I attribute to the good sense of everyone present and to the fact that, while every one represented those for whom he spoke vigorously and firmly, all who sat at
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The Budget-Resolutions the table unhesitatingly conceded the fair-mindedness, the integrity and the sympathetic approach to the problems of the chairman of the conferences: the Prime Minister.
And I believe that what we have achieved will be a lasting tribute to his patience and his wisdom.

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Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, among other things:
1.	That the sales tax on the following goods be repealed:
(a)	boxes for farm wagons, and articles and materials to be used exclusively in the manufacture thereof;
(b)	poisons used in agriculture or horticulture;
(c)	vermiculite;
(d)	material for use exclusively in the production of vaccine for prevention of poliomyelitis;
(e)	certain building materials which are in addition to those already exempted, viz.:- additives for concrete; ceiling and acoustical material for buildings; hard surface composition yardage flooring for permanent bonding to floors; material for waterproofing and moisture proofing buildings; additional structural steel for buildings; soil pipe for buildings; tar and asphalt for roofing; skylights; ventilators and louvers, not motor operated;
(f)	certain machinery and apparatus for manufacturing or producing goods which are in addition to that already exempted, viz:- structures which are adjuncts to or provide access to the machinery and apparatus for manufacturing or producing goods; repair and maintenance equipment used by manufacturers or producers for servicing their machinery and apparatus for manufacturing or producing goods; safety devices and equipment for the prevention of accidents in the manufacturing or production of goods; systems installed by manufacturers or producers for exhausting dust and noxious fumes from their manufacturing operations; equipment used to carry refuse or waste from production machinery; equipment for hospitals and first aid stations in manufacturing establishments;
(g)	identification tags or labels for designating the grades or quality of meat, poultry, fish, eggs, fruit and vegetables, and materials to be used exclusively in the manufacture thereof;
(h)	goods enumerated in Customs Tariff items 409t, 409u and 409v, and articles and materials to be used exclusively in the manufacture thereof;
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(i)	antiques, as enumerated in Customs Tariff item 693 (ii) and (iii);
(j)	national manufacturing, industrial or mercantile trade directories but excluding statistical, financial or biographical surveys, reports, year books or directories, and transportation, telephone, municipal or street directories, guides or rate books.
2.	That the excise tax on the following goods be repealed:
(a)	antiques, as enumerated in Customs Tariff item 693;
(b)	settlers' effects.
3.	(a) That the exemption from excise tax on the goods enumerated in sub-paragraphs (a) and (b) of item 12 of Schedule I be repealed when the sale price is one dollar or
less;
(b) That the exemption from excise tax on the goods enumerated in sub-paragraph (c) of item 12 of Schedule I be repealed when the sale price is fifty cents or less.
4.	(a) That there be imposed, levied and collected in respect of each copy of a special edition of a non-Canadian periodical issued to the public in Canada a tax of twenty per cent of the value of the advertising material contained therein;
(b)	That for the purposes of sub-paragraph (a) a "special edition of a non-Canadian periodical" means a periodical printed in or outside Canada for publication in Canada
(i)	containing editorial material at least
twenty-five per cent of which is the same or substantially the same as editorial material contained in a nonCanadian periodical, whether in the same or in some other language, and
(ii)	containing any advertising material that is not contained in such non-Canadian periodical;
(c)	That any enactment founded upon this paragraph shall come into force on the first day of January, nineteen hundred and fifty-seven.
5.	That any enactment founded upon paragraphs 1, 2 and 3 of this resolution be deemed to have come into force on the twenty-first day of March, nineteen hundred and fifty-six.

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1.	Resolved, that Schedule A to the Customs Tariff be amended by striking out tariff items 13a, 172, 206c, 219d, 279, 288b, 326e, 372, 376a, 390, 390a, 390b, 409e(l), 409f, 410t, 410u, 410w, 425a, 428g, 437b, 442, 443, 445m, 476b, 476c, 478(2), 549a, 657b and 700, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
Tariff Item	British	Most- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	Preferential Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff13a	Lard compound and similar substances, n.o.p	
per pound	1J cts.	1J cts.	2 cts.	1} cts.	1] cts.	2 cts.137a	Molasses powder without admixture or mixed only with any necessary anti-caking agent	
per one hundred pounds	35 cts.	45 cts.	50 cts.	15 p.c.	20 p.c.	25 p.c.172	Books, pamphlets and charts, printed or published by any government abroad; official financial and business reports and statements issued by companies or associations abroad; books and pamphlets, and replacement pages therefor, for the promotion of religion, medicine and surgery, the fine arts, law, science, technical training, and the study of languages, not including dictionaries. Scripture and prayer cards, and religious pictures and mottoes, not including frames* books, bound or unbound, which have been actually printed and manufactured more than twelve years* manuscripts* insurance maps* freight rates, passenger rates and timetables issued by transportation companies abroad and relating to transportation outside of Canada, in book or in pamphlet form	Free	Free	Free	Free	Free	Free206c	Bottles- tubes, bail bands, labels, corks, stoppers or other closures, for use with bottles, whether or not assembled into units partially filled with anticoagulating solutions or not- filters, drop counters, clamps- all of the foregoing, when imported to be used exclusively for the collection, preparation, storage, transportation or administration of human blood (whether whole or in the form of liquid or dry serum or plasma) and extenders or substitutes therefor- component materials to be used exclusively in making the foregoing articles, anti-coagulating solutions and extenders or substitutes	Free	Free	Free	Free Free	10 p.c. Free	10 p.c. Free219<2	(1) Chloroform and ethyl chloride for anaesthetic purposes	Free	Free	Free	Free	Free	Free
The Budget-Customs Tariff

Tariff Item	British	Most- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	-	Preferential Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff219ii Con.	(2) Sulphuric ether; chloroform, n.o.p.; preparations of vinyl ether for anaesthetic purposes	Free	25 p.c.	25 p.c.	Free	25 p.c.	25 p.c.S76g	Corn oil, crude or refined	15 p.c.	20 p.c.	25 p.c.	15 p.c.	20 p.c.	25 p.c.279	Degras and grease for stuffing or dressing leather	Free	Free	Free	Free	Free	Free2886	Hand forms of porcelain for use in the manufacture of rubber gloves	Free	10 p.c.	35 p.c.	Free	20 p.c.	35 p.c.326e	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 factories	Free	Free	221 p.c.	Free	Free	221 P-c.S$6m	Articles of glass, not including plate or sheet or machine-made tumblers, to be cut or mounted, when imported by manufacturers of cut or mounted glassware, for use in the manufacture of such glassware in their own factories, under such regulations as the Minister may prescribe	Free	Free	321 p.c.	Free	Free	321 p.c.S26n	Machine-made glass tumblers, when imported by manufacturers of cut or mounted glassware, for use in the manufacture of such glassware in their own factories, under such regulations as the Minister may prescribe..	10 p.c.	10 p.c.	321 P-c.	10 p.c.	10 p.c.	321 p.c.372	Electric or blast furnace slag	Free	Free	25 p.c.	Free	Free	25 p.c.376a	Chromium metal and tungsten metal, in lumps, powder, ingots, blocks or bars, and scrap of alloy metal containing chromium and tungsten, for use for alloying purposes	Free	Free	Free	Free Free	Free Free	Free Free390	Castings, of iron, malleable, in the rough as from the moulds, n.o.p	15 p.c.	25 p.c.	271 P-c.	15 p.c.	25 p.c.	271 P-c.390a	Castings, of iron, non-malleable, in the rough as from the moulds, n.o.p	15 p.c.	25 p.c.	271 P-c.	15 p.c.	25 p.c.	271 P-c.
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25 p.c
15 p.c.
402ff
Welded netting, of iron or steel, coated or not, made from wire of seventeen gauge or heavier, with meshes not smaller than one-half inch by one-half inch and not larger than two inches by two inches, when for use exclusively on fur farms, under such regulations as the Minister may prescribe	
12J p.c.
409e
(1) Spraying and dusting machines and attachments therefor, including hand sprayers, for agricultural or horticultural purposes; apparatus for the destruction of predatory animals by the discharge of poisonous cartridges and poisonous cartridges for such apparatus; automatic explosive bird-scaring devices; apparatus specially designed for sterilizing bulbs; pressure testing apparatus for determining maturity of fruit; pruning hooks; pruning shears; dehorning instruments; parts of the foregoing	
Free
409/
Automatic stock watering devices;
Barn hay forks, carriage, pulleys and track;
Barn litter carriers and track;
Grain crushers;
Grain or hay dryers;
Grain or hay grinders;
Grain loaders',
Elevators (other than storage elevators);
Hitches and couplings;
Hydraulic hoists for unloading vehicles;
Land levellers;
Machines and tools for use on tractors, including blades, loaders, rippers, rakes and related operating and controlling gear;
Milk coolers;
Sodium metabisulphite;
Sprinkler irrigation systems;
Steel stanchions for confining livestock either in pens or individually, and complete equipment for milking parlors;
All the foregoing for use on the farm for farm purposes only;
Brooders for rearing young farm animals;
F-nsilage cutters;
Fodder or feed cutters;
Hay loaders;
Hay tedders;
Post hole diggers;
Potato diggers;
Potato planters;
Snaths;
20 p.c
Free
27} p.c.
35 p.c.
Free
The Budget-Customs Tariff
[DOT]. Harris.]
Tariff Item	-	British Preferential Tariff
409/ Con.	Stumping machines; All other agricultural implements or agricultural machinery, n.o.p.;	
		
4091	Axles, belts and belting, bolts, chains, nuts, pulleys, washers; all the foregoing when for use with the goods entitled to entry under tariff items 409,409a, 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i, 409j, 409k, 4091,	
409u	Electric freezing machines and parts thereof, for use in the processing and storing of frozen semen at temperatures below minus seventy degrees Fahrenheit	Free409v	Steel wall sections, with or without doors incorporated therein, for the construction of steel silos for storing	10 p.c.410(	Blowers, of iron or steel, for use in the smelting of ores, or in reduction, separation or refining of metals, ores or minerals' furnaces, rotary kilns and revolving roasters, of metal, for use in the roasting of ore, mineral, rock or clay furnace slag trucks and slag pots:	(1) Of a class or kind made in Canada" parts thereof	12£ p.c.(2) Of a class or kind not made in Canada- parts	410w	Machinery, n.o.p., for use in the concentration or separation of ores, metals or minerals, namely: flotation machines, flotation cells, oil feeders and reagent feeders for flotation machines and flotation cells, pumps, vibrating and impact screens, jigs, filters, magnetic separators and magnetic pulleys; parts of all the foregoing	5 p.c.General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most- Favoured-Nation Tariff	General TariffFree	Free	Free	FreeFree	Various	Various	Various40 p.c.	17$ p.c.	20 p.c.	40 p.c.35 p.c.	10 p.c.	22$ p.c. [DOT]	35 p.c.20 p.c.	12$ p.c.	17$ p.c.	20 p.c.Free	Free	Free	Free20 p.c.	5 p.c.	7$ p.c.	20 p.c.
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The Budget-Customs Tariff
67509-149J
425a	Power lawn mowers, whether or not containing the	10 p.c.
426b	Air-cooled internal combustion engines of greater than	
	one and one-half horsepower rating, and parts thereof; parts of power lawn mowers; all the foregoing for use in the manufacture or repair of power lawn mowers..	10 p.c.
42 Sg	Starter cartridges, fuel injection pumps and nozzles,	
	and parts thereof, for diesel and semi-diesel engines.	Free
4376	Motor rail cars or units and chassis for same, of a	
	class or kind not made in Canada, for use on railways for the carriage of passenger, baggage, mail or express traffic; engines and transmissions for such motor rail cars or units; parts of the foregoing		Free
	On and after July 1, 1957	Free
442	Articles and materials which enter into the cost of	
	manufacture of the goods enumerated in tariff items 409, 409a, 4095, 409c, 409d, 409c, 409/, 409#, 409A, 409*, 409/, 409A, 409Z, 409m, 409n, 409a, 409g, Jfi9t, 4275(1), 439c and 6185(1), when imported for use in the manufacture of the goods enumerated in the aforesaid tariff items, or in the manufacture of parts therefor, under such regulations as the Minister may prescribe		Free
443	Apparatus, and parts thereof, for cooking or for heat-	
		15 p.c.
445m	(1) Flameproof electric switchgear, for use in mines	
	in which inflammable gases exist, and complete parts thereof		Free
	(2) Flameproof electric transformers, rectifiers, cable-connecting devices, trailing cable extensions with couplers moulded on, junction boxes, and complete parts of the foregoing, when of a class or kind not made in Canada and for use in mines in which inflammable gases exist		Free
U6j	Steel box toes, for use in the manufacture of safety foot-	
		Free
462c	Lenses, shutters, and parts thereof; for use in the manu-	
	facture of cameras		Free
462d	Parts, unfinished, for use in the manufacture of cameras..	Free15 p.c.	32| p.c.	10 p.c.	15 p.c.	32£ p.c.15 p.c.	32£ p.c.	10 p.c.	15 p.c.	30 p.c.Free	Free	Free	Free	FreeFree	Free	25 p.c.Free	35 p.c.	On	and after July 1,	195620 p.c.	35 p.c.	Free	20 p.c.	35 p.c.Free	Free	Free	Free	FreeVarious	Various	Various25 p.c.	30'p.c.	15'p.c.	25 p.c.	30 p.c.20 p.o.	30 p.c.	Free	20 p.c.	30 p.c.p.c.	37$ p.c.	Free	10 p.c.	37£ p.c.Free	35 p.c.	Free	Free	35 p.c.Free	30 p.c.	Free	Free	30 p.c.Free	Free	Free5 p.c.	p.c.	Free	5 p.c.	p.c.
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[Mr. Harris. 1
Tariff Item	British	Most- Favoured- Nation Tariff	Rates in Effect Prior to Rates Proposed in this Budget	-	Preferential Tariff	Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff4766	Surgical suction apparatus including motive power; ethylene; operating room lights designed to minimize shadow, not including bulbs; all the foregoing of a class or kind not made in Canada, and complete parts thereof, for the use of any public hospital, under such regulations as the Minister	Free	Free	Free476c	may prescribe	
Prepared surgical sutures, of a class or kind not made in	Free	Free	Free	478	Canada	
(2) Aural, nasal and mastectomy prostheses; ileostomy, colostomy and urinary appliances designed to be worn by an individual; materials and articles required therewith for proper application and main-	Free	Free	Free	Free Various	Free Various	Free Varioustenance	Free	Free	Free	Free 15 p.c.	Free 20 p.c.	Free 25 p.c.549a	Wool, not further prepared than scoured	Free	Free	Free	Free	Free	Free597d 696,f	Harpsichords	
Apparatus, and parts thereof, for the heating of hot packs	5 p.c.	7i p.c.	30 p.c.	15 p.c.	17$ p.c.	30 p.c.700	for use in the treatment of poliomyelitis	
Goods imported for a period not exceeding three months for the purpose of display at a convention or a public exhibition, held by an association not engaged in business of a private or commercial character, at which the goods	Free	Free	Free	Free Free 15 p.c.	Free 7$ p.c. 22$ p.c.	Free 35 p.c. 30 p.c.of various manufacturers or producers are displayed,. The Minister may make regulations respecting the warehousing and bonding of such goods.	Free	Free	Free	Free	Free	Free
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2. Resolved, that Schedule A to the French version of the Customs Tariff be amended by striking out tariff items 328a, 386(A) and 389, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
The Budget-Customs Tariff
328a	Pieces, non finies, pour la fabrication de montures de lunettes et de lorgnons	En franchise	S p.c.	6 p.c.	En fr.	5 p.c.	5 p.c.386	h) Feuilles, t61es, feuillards, bandes ou rubans, c6-ment£s, trempGs ou moulds, non autrement ouvres quo taillfis en forme, Sana bords dentelfes, lorsqu'ils sont imports par des f abricants de scies pour servir exclusivement 4 la fabrication de scies dans leurs propres fabriques	En franchise	10 p.c.	12$ p.c.	Enfr.	10 p.c.	12J p.c.389	Sur tout article 6num6r6 dans les num6ros 377, 377a, 378a), 3786), 378c), 388a, 388b et 388c de la prfisente liste, dont la valeur ne depasse pas Gj cents la livre, il sera impose, perpu et paye, sous le regime de reglements prescrits par le Ministre, en plus des taux tarifaires 6num6r6s dans ces numOros du Tarif, une surtaxe ad valorem de 5 p. 100 quand cet article contient l'un ou plus d'un des elements suivants: a)	Vanadium, 0-15 p. 100 ou plus au poids. b)	Molybdene, 0-15 p. 100 ou plus au poids. c)	Nickel, 0-4 p. 100 ou plus au poids. d)	Chrome, 0-4 p. 100 ou plus au poids. e)	Tungstene, 0-4 p.100 ou plus au poids. /) Cobalt, 04 p. 100 ou plus au poids. g)	Manganese, 1-0 p. 100 ou plus au poids. h)	Silicium, hOp. 100 ou plus au poids. i)	Tout autre Element, qui ne consiste pas en fer ou en carbone, depassant 5 p. 100 au poids.	
3. Resolved, that Schedule C to the French version of the Customs Tariff be amended by striking out item 1215 and by inserting therein the following item:
1215	Automobiles et vehicules & moteur de toute sorte, usages ou d'occasion, fabriqu6s ant6rieurement k l'ann^e civile pendant laquelle on cherche k les importer au Canada. Ce num6ro ne doit aucunement viser les automobiles et vehicules k moteur: # . a)	Importds sous le regime des numdros 702, 705a, 706, 707 ou 708 du Tarif, ou en vertu de permis pour vehicules de touristes ou de voyageurs; b)	Import6s par un colon authentique, k sa premiere arriv6e, mais ne beneficiant pas de la franchise en vertu du numero 705a du Tarif; c)	Achetes de bonne foi le ou avant le premier juin mil neuf cent trente et un, par des consommateurs pour leur propre usage et non pour la revente; d)	Confisquds par suite d'une infraction aux lois douanieres, ou aux lois de toute province du Canada; e)	Provenant de legs; . . /) Exempts des dispositions du present num6ro par un r&glement du gouverneur en conseil dans un cas particulier ou une categorie de cas particuliere.4.	Resolved, that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the 21st day of March, 1956, and to have applied to all goods mentioned in the said resolutions imported or taken out of warehouse for consumption on or after that day, and to have applied to goods previously imported for which no entry for consumption was made before that day. 5.	(1) Resolved, that Schedule C to the Customs Tariff be amended by striking out item 1209 and by inserting therein the following item:	1209	Any goods (a)	in association with which there is used any description that is false in a material respect as to the geographical origin of the goods, or (b)	the importation of which is prohibited by an order under section 51 of the Trade Marks Act.
(2) Resolved, that any enactment founded upon this resolution shall come into force six months after the day on which that enactment is assented to.
(See also Budget Papers, pages 2357 to 2449.)
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The Budget-Customs Tariff
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The Budget-Mr. Macdonnell
James MacKerras Macdonnell: Mr. Speaker, I don't think "there ain't going to be no election this year".


Walter Edward Harris: Mr. Speaker, I am sure the hon. member for Greenwood is happy.


James MacKerras Macdonnell: Mr. Speaker, I am always interested in the applause which follows the delivery of this speech but I am always surprised too. This year I am more surprised than ever. Of course, if those sitting opposite were government contractors I could quite imagine that the expenditure of $5 billion would be very agreeable to them, but why they are applauding so vigorously the expenditure of $5 billion, because there is certainly nothing else to applaud, I hardly know.
The minister to me is an interesting study and I want to reflect on him for a minute or two. When I say "reflect" I do not mean in any unpleasant sense of the word. I want to think aloud about him for a minute or two. I remember that a year ago last November the minister, in speaking in Montreal at the tax conference, used words which interested me a good deal. He was quite new then and he teased us along that night. I was not quite sure what he meant but he did say that he felt a certain awe of the fiscal instrument that he found in his hand which could compel Canadians to pay nearly $5 billion. The amount he mentioned then was $4,800 million.
Well, Mr. Speaker, I do not know how much awe the minister felt then but if he felt it he has certainly come a long, long way. We remember that last autumn we had legislation by letter-not by radio, as we had years before, but by letter. I felt that the minister was coming along when he did that, and tonight he takes it in his stride. Nothing seems to bother him. He seems to accept this authority that he has without question. He reminds me of the costermonger in the great general strike in England years ago. Vehicles had to move along the street with cards of permission. A costermonger was seen walking along with a barrow and as he got closer people could see a little card on the barrow which said this: "By kind permission of me own bloody self."
I feel that the minister is very much in that mood now, that we have just got to take what he does because, of course, with these serried ranks we must take what he does and be as well content with it as we can. The minister has been presented to us in various guises and I should like to ask which of them is correct and what he has done to live up to them. In the first place, the minister has been presented as a kind of prophet breathing fire and vengeance against all evil doers, all people who do not toe the straight and narrow line. Second,

and this is really very amusing considering that, after all, he is only a lawyer, he has been presented to us as the barefoot boy from Markdale who is going to reintroduce austerity, thrift, saving and all the homely virtues which I suppose they once practised in Mark-dale. I do not know whether or not they do now. Third, we all remember the cartoon of a year ago in which he was represented as Hercules striking off the heads of the hydra, striking off the heads of the spenders. The head of the Minister of Justice (Mr. Garson) rolled, I remember. Why he should be picked out I do not know, but I can see his head. It was off.
When the minister came in last year without all the economies which had been foretold the excuse was that he really had not had a chance. Just wait until next year and then you will see what he will do. You will see how he will swing about then. Well, this is next year, Mr. Speaker, this is next year, and as far as I can make out none of the promises has been carried out. We are spending more than ever. The spenders have got hold of him. Last year we were told that he was good at subtraction and division but this year he is only good at addition and multiplication. He has a surplus of $125 million, yes, but it could have been $250 million if he had only taken $125 million more from us. It is all in his own hands and the boys will vote for it.
Of course, none knows better than he how many people like spending. That is one of the things, no doubt, that faces a minister of finance. It is one of the reasons the Minister of Trade and Commerce (Mr. Howe) has such a vogue because he, I suppose, has been the instrument of more spending than anyone else. Over the last 15 years, at any rate, he has spent by the billions, and people say: "Good old C.D."


Some hon. Members:: Hear, hear.


An hon. Member:: You have finally seen the light.


James MacKerras Macdonnell: I imagine there are even Conservatives who say "Good old C.D." if they happen to be in the contracting business. And now what about this budget?


An hon. Member:: What budget?


James MacKerras Macdonnell: I was going to ask when is a budget not a budget, but at any rate we will come to that. I doubt if the minister's biographer will refer to it very fully. I venture that prediction. I have also predicted that there will be no election because, of course, if you are going to have an election money has got to be spent. Where would the Minister of National Health and Welfare be in an election if there were no promises to

make? We all remember Harry Hopkins, F.D.R.'s associate, and his motto, "Spend and spend, vote and vote, elect and elect." The minister shakes his head. That is the sense of it, at any rate.
The Minister of National Health and Welfare knows all about this. He says in effect: What are taxpayers for except to provide money to persuade them to vote for you? After all, does anybody know the fertilizing power of the spending of money in elections better than the Minister of National Health and Welfare? As I say, he gets the people's money and then persuades them to vote for him. I suppose the minister feels in his heart of hearts that he will never be defeated as long as the money holds out.
We must not ignore the budget although we could easily do so. It has got to be mentioned, but in fact there could hardly have been a budget which could have so little impact on the public consciousness. The gold industry will receive it with satisfaction. It will be interesting to those engaged in the industry and it will be interesting to see just what impact it has on general business, on exchange and such.
There being nothing to discuss in the budget, I propose to spend a few minutes discussing certain matters of government policy. I have asked myself very earnestly again and again what government policy is and I always come back to the same answer which does not seem to me to be any answer. I think government policy is the great United States boom. I think the government have sat back and have been content to be wafted along. They have hardly had a thought of their own. They have hardly had initiative of any kind, but the boom has carried them along. Delightful! George does all the work.
It would not be fair to say they have entirely ignored the matter of thinking about our problems but they have found a wonderful solution. They have handed it all over to the Gordon commission and they do not have to think at all. What is that line from Gilbert and Sullivan: "I always voted at my party's call and never thought of thinking for myself at all." I think you have it here. The boom comes along and carries them in its beneficent arms on the crest and then, so far as thinking is concerned, they have handed the matter over to the Gordon commission. Some day I think the Gordon commission will come in with some ideas and then no doubt the government will take notice of that fact and they may begin to think again. Who knows?
In the meantime I should like to ask about some of the things they might have been doing. There are people in this country to whom it is not of much interest to know that
The Budget-Mr. Macdannell the estimated gross national product is $28 billion. You cannot eat the gross national product and you cannot wear it. There are many people who not only are not interested in it but who are not coming off very well. There are many sore spots in the country, and I think it would be reasonable to ask just what the government is doing about that matter. One of them was discussed in this house last night in an extremely interesting way, namely the dispersal of industry or rather of one particular aspect of the dispersal, namely in the maritime provinces. The discussion was extremely interesting. Views were expressed quite freely. When the cat is away the mice will play. The Minister of Trade and Commerce (Mr. Howe) was not in his seat and we had some extremely interesting views expressed from the other side of the house. I was delighted to hear what hon. members on the other side of the house had to say because it is exactly the kind of thing we on this side of the house have been saying for years, with nobody to give us a sympathetic ear. But last night the situation was quite different. I should like to read something that was said by the hon. member for Inverness-Richmond (Mr. MacEachen). It struck me as being sane and as absolutely contrary to what has been the attitude of the government in this matter for years. As reported at page 2288 of Hansard, he said:
.	.	. I feel we are really following a great
historical tradition in this house when we talk about policies that may serve to build up areas of Canada which up to the present have not participated in our prosperity in the manner that we all desire.
How true that is! We can all accept that statement in theory. It is well put. Yet what has been done about it? I have never believed that the Minister of Trade and Commerce, who is so influential, was very enthusiastic about it. I have here a quotation which is attributed to the minister. I am sure that it is believed and] I know it is quoted in the maritime provinces. He has never denied it and I hope he will not deny it now because it represents what I have always felt about the minister's attitude. I have always felt that he was very cold, not interested and that is what this quotation shows: "Maritime rights? What are they? I have never heard. Birth and death and a free ride on the I.C.R." That does not seem to me to go very far to deal with the problem.


Mr. Howe (Port Arthur):: Mr. Speaker, I rise on a point of order. My hon. friend will never find anywhere that remark attributed to me. I know to whom it was attributed but certainly it was not attributed to me.


James MacKerras Macdonnell: I am always sorry to differ from the minister, as he knows. But

The Budget-Mr. Macdonnell he is quite wrong in saying that the remark was not attributed) to him, because it was.


Clarence Decatur Howe: Then bring on your quotation.


James MacKerras Macdonnell: I was very careful on that point. I said that I had been informed and by a most reliable authority that this quotation had been used and that it was believed in the maritime provinces. I will say this. If I myself were to describe what I believe is the minister's attitude towards the maritimes, I doubt if I could do it any better.


Clarence Decatur Howe: Mr. Speaker, just so that we shall get the matter straight, I may tell my hon. friend that remark was made by the Hon. Charles Dunning and he regretted it for the rest of his life.


James MacKerras Macdonnell: I have great respect for Hon. Charles Dunning. It may be that he used words which the hon. gentleman may also have seen fit to use. The hon. gentleman is extremely forgetful. We know that. In any event, I will to this extent adopt them and say that I have always felt that the hon. gentleman never took the matter seriously. For example, I never felt that he could agree with the quotation that I read from the speech of the hon. member for Inverness-Richmond where he said:
.	.	. I feel we are really following a great
historical tradition in this house when we talk about policies that may serve . . .
And so on. That is what I myself feel. I feel that through no fault of their own the maritimes have not had a chance. Do we believe that the people in the maritimes are not as good as the rest of us? What is the story? We know that wherever they go, whether it be in Canada, the United States or further afield, they become leaders. They succeed far beyond the average. The reason that the maritimes have lagged behind is that they were disappointed in the expectations held out to them and that they did not, as far as I can see, get a fair deal as confederation worked out. Furthermore, as was stated by the same member in this house last night, I feel that much can be done. I shall not take the time in which to deal with that matter now. I have another chance at this subject.
I now want to say a word about unemployment. We talked a great deal about unemployment last year. We all agreed that it was extremely bad. It is only because it was extremely bad last year that we do not think it is bad this year. There are hundreds of thousands of our fellow citizens who are unemployed. To them a g.n.p. of $28 billion does not mean much. It does not give them


much comfort when the Minister of Labour (Mr. Gregg), in answer to a question asked by my friend the hon. member for Hamilton West (Mrs. Fairclough), pointing out to him the extent of unemployment, says this. This is a quotation from his answer:
I hope and believe we are learning many things which will be useful to us in the future.
That is not going to comfort the unemployed greatly. They cannot cash in on that statement. That is what I complain about. I believe that, from every sign right across the board, the government has been so dazzled, delighted and almost mesmerised by these great figures on which the Minister of Finance (Mr. Harris) gambled successfully a year ago that they have felt, "Well, boys, everything is fine; we don't need to do anything".
In the United States they have not behaved in that way. They have a boom in the United States. Things are going strong. But they do not use that fact as an excuse for sitting back and doing nothing for those who are not getting along well. They have vigorous organizations to deal with small business, to deal with the soft spots. As far as I can see, here we have nothing except the efforts of the Industrial Development Bank.
I want to say a word just in passing about the textile industry and its troubles, about the potato industry and its troubles, and about the rubber shoe industry suffering from the cheap labour in Hong Kong. I also want to say a word about another point which they make in the United States. The government there states-and I think correctly-that it is trying to "get out of the way", as Churchill said, and to let private enterprise deal with as many things as possible. The government is trying to get out of as many things as possible. Is that true here? As a matter of fact exactly the opposite is true here in certain cases. Here we actually keep private enterprise out. I am referring particularly to the T.C.A. I should like to quote briefly from the Winnipeg Free Press which the other day criticized the speech which the Minister of Transport (Mr. Marler) so nobly made in defence of his colleague the Minister of Trade and Com-mer who controls the T.C.A. The editor refers to the argument made by the Minister of Transport, which he does not think was very good, and he says this argument for tightly restricting licences is valid only so long as the traffic is light in reference to the initial investment by one operator. He goes on and speaks very strongly against monopoly. I do not know whether the minister, when he was in business, was so

successful that he had practically a monopoly, but whatever the reason is we all know that the minister has one curious side to him. Though he believes in private enterprise in theory, when it comes to practice he does not seem to be very keen about it.


Clarence Decatur Howe: Except in pipe lines.


James MacKerras Macdonnell: Well, that is a matter we will come to later.


Edmund Davie Fulton: That is a mongrel sort of private enterprise.


James MacKerras Macdonnell: We know the minister says there are many debates he does not like. We know he did not like the debate last summer and I presume he does not like the debate on the pipe line. Indeed, it has even been rumoured now that closure might be applied.
I am not suggesting the minister is responsible, but that is a pleasant suggestion at the beginning of the debate. What I wanted to say was this. We have heard of the United States government's attempt to help people in private enterprise. Here we have this monopoly which is being maintained in spite of everything. I am glad to see there is a great deal of editorial comment against it. I hope it will not last long.
I want to say a word about the balance of trade and the balance of payments. The Minister of Trade and Commerce (Mr. Howe) told the hon. member for Eglinton (Mr. Fleming) the other day when he pointed out the tremendous unfavourable surplus with the United States and asked what was being done about it, that we were not doing anything. I believe that is taking it far too lightly. A competent journalist in the present Financial Post deals with the question and has some very serious things to say. He points out there may be several serious consequences flowing from it, one of them obviously being the possibility of a much greater depreciation in our dollar. It has gone down several cents, but as long as it still remains at par we do not worry. This writer points out that the "inflow" of capital in the last year was not sufficient to take care of the excess of our imports. We are living on our fat. We remember 1947 when, of course, conditions were different because then we had our dollar pegged at an entirely arbitrary and unreal rate. We did have legislation then, as we remember, of a restrictive nature.
Now, I want to come to an old friend we always have, the question of expenditure. The minister, as I say, has been taken over by the spenders. I want to refer to one aspect of the activities of the Minister of National Health and Welfare (Mr. Martin). It is
20, 1956
The Budget-Mr. Macdonnell delightful to know that the minister thinks of every one of us from the cradle to the grave and tries to help us on our way. I discovered to my great interest that he not only thinks of us ordinary people, but he thinks of the ministers too. I believe you will agree with me when I read one or two of the publications he has got out. There is a child training series, and one of these is, "Baby Talk, and what can be Done About it". I think when we recall the interest of the Minister of Citizenship and Immigration (Mr. Pickers-gill) in the affairs of babies and his discriminating knowledge of them, we will feel that this "Baby talk and what can be done about it" is perhaps especially prescribed for him. He will be grateful to the minister. There is another one called "Temper, How Can I Control my Child's Outbursts?" There are members of the cabinet who might perhaps be interested in that too.
Now, coming to a more serious item of expenditure, I read with some interest that the defence expenditures, which last year had been $1,775 million, were to be exactly the same. I thought to myself, that is an extraordinary coincidence. Then, I thought again and I said it is not a coincidence at all; it simply means that is not a real estimate, that is just a figure thrown in. I feel that if one reflects about it, really that is one of the greatest, what shall I say, slights ever put upon this house. It means that we have had no estimate made. This does not go merely for the defence department, but it goes for the finance department. What right has the finance department to send an item of that kind which is no item at all, $1,775 million? We have had a slogan which has been passed around this house a good deal to the effect, what's a million? We will have to alter it now and say, what's $50 million or what's $100 million, when we deal with these fabulous figures.
One can only imagine the defence department saying, oh well, do not worry; pass it on to parliament and they will never notice. I am going to abandon the ordinary word arrogant for this, Mr. Speaker, and use a less dignified word. I think it is almost impudent when you have an item of that kind being produced and sent to this house on a serious item. After all, the finance department knows the situation. They know that senior retired military officers are questioning whether tens of millions of dollars are being spent unnecessarily because of a desire to keep up with the Joneses. They know that senior military officers have suggested that if we would build by licence from types developed in the United States, we might save tens of millions of dollars. This is a matter which has to be more closely scrutinized. I point out at the-

The Budget-Mr. Macdonnell same time that the defence department has not been allowed to go to the estimates committee, notwithstanding the efforts of the leader of this party for years to try to get to the bottom of the facts. So far as the government can see to it, we are going to be frustrated again.
I want to say just a word about dominion-provincial relations. The minister talked about it so long tonight that I knew he was uneasy in his mind. "Qui s'excuse s'accuse." I hope if I am wrong the Prime Minister will correct me, but I think it means he who excuses himself really accuses himself. I am going to say only a word about dominion-provincial relations. They have been bandied about for 10 years. Do not let us believe a final solution has been found. This is a step in the right direction but do not let us believe it is more than that. As a matter of fact, the reason it cannot be more than that is because it is only a palliative and because the whole principle of this approach is unsound. What the federal government is doing is trying to satisfy the immediate budget needs of the various provinces, when what they should be doing is trying to enable the citizens of the various provinces to be in a position where by their own production they would be able to be on a level with the other provinces. Now, that is the task.


John Whitney Pickersgill: Go and say that in
Newfoundland.


James MacKerras Macdonnell: That is the task in Newfoundland and everywhere else. I was glad to hear the hon. member for Inverness-Richmond (Mr. MacEachen) use words which I submit indicated that last evening. He knows that. I come back to it again. Why should people who are among the best of our whole population be left in a position where they appear-it is only appearance-not to be able to pull their weight, and where some people presume to regard them almost as if they were second class citizens.
What is the use of giving a man who cannot pay his way just a gift and leaving it at that? What he needs is to be put in a position where he can earn his own way. I state deliberately that I find no serious attempt to do that when we consider the billions and billions that have been spent. It may be said that in wartime you could not do it. But in those last years for anyone to tell me that there was not a great deal that could have been done to help the eastern provinces, as far as I am concerned, that argument will not work. I just do not believe it, and I say again that I have seen no sign of any earnest continuing endeavour. Commissions are piled on commissions, yes; here a little and there a

little, bits and pieces but no real comprehensive continuing concerted, sincere attempt to get to the bottom of this problem.
May I say just a word about immigration? We have a feeble, uncertain, indecisive, wishy-washy policy, and it is bringing in its results. In 1954 we received 154,000 immigrants, and in 1955, 109,000. I do not think it is adequate to say that conditions in Europe have changed. I believe you will find a very different situation in Australia. But, of course, though the number of immigrants comes down we must not expect the expenses to come down in the same way. Actually, in 1955 the expense per immigrant to the department was $87 as against $33 in 1951.


Edmund Davie Fulton: A measure of the minister's achievement.


James MacKerras Macdonnell: Mr. Speaker, I have gone on longer than I intended and longer than you approve and I shall end my remarks by saying that I am able to find no policy except the policy of being carried along by this roaring boom in the United States. I say that the spenders are in the saddle and the government is taking it easy. In the meantime, people from the United States are coming in and acquiring more and more of our Canadian companies, partly owing to the great deficit that we incur when we buy hundreds of millions of dollars' worth of goods for which we have to pay by getting money from the United States, and the Minister of Trade and Commerce says his department is doing nothing about it.
This is an alarming situation. A nation is not so very different from an individual. If an individual goes on spending more than he is making year after year he knows what happens to him, and in the long run, perhaps not too long run, that will happen to us. And so, Mr. Speaker, I say that in spite of all the sunshine which the minister gave us in the budget which he read, the fact is that the government is not dealing with the problems that face it, and that if they rely on booms that are to go on forever-well, it has never been a safe reliance in the past.
I move the adjournment of the debate.
On motion of Mr. Macdonnell the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: Tomorrow we will take supplementary estimates and interim supply.


Louis Stephen St-Laurent: I move that the house do now adjourn.
Motion agreed to and the house adjourned at 9.47 p.m.



ANSWERS TO QUESTIONS

[Stage Direction]
The following answers, deposited with the Clerk of the house, are printed in the official report of debates pursuant to standing order 39:

Mr. Dinsdale: 1.	How many adult offenders in Canada have been placed on parole in each province for each of the years 1950 to 1955?
2.	What has been the rate of recidivism among these parolees for each of the years 1950-55?
3.	How many parole officers have been employed in each province for each of the years 1950-55?
Answer by: Mr. Garson:
1 and 2. Tickets of leave granted, showing province of destination on release, number of recidivists, rates of recidivism, showing different types, 1950-1955 inclusive.
Questions
Note:
(a)	Revocation refers to a person who violated the conditions of his ticket of leave and was returned to prison to serve the remanent of his sentence.
(b)	Forfeiture refers to a person who, while on ticket of leave was convicted of an indictable offence and was returned to prison to serve the remanent of his original sentence, in addition to the new sentence imposed for the new offence.
(c)	Subsequent sentence to provincial institution refers to a person who successfully completed his ticket of leave, but was later convicted of a new offence and sentenced to a provincial institution.
(d)	Subsequent sentence to penitentiary refers to a person who successfully completed his ticket of leave, but was later convicted of a new offence and sentenced to a penitentiary.



BRITISH COLUMBIA

[Stage Direction]
1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	85	63	74	87	78	133	520(b) Instances and rate of recidivism-	(1) Revocation	2	-	1	1	-	1	5%	2-35	-	1-35	1-14	-	[DOT]75	[DOT]96(2) Forfeiture	2	2	1	3	8%	2-35	-	2-70	1-14	3-84	-	1-53(3) Subsequent sentence to provincial	institution	13	16	13	13	4	1	60%	15-29	25-39	17-56	14-94	5-12	[DOT]75	11-53(4) Subsequent sentence to peni-	tentiary	6	3	6	5	1	-	21%	7-05	4-76	8-10	5-74	1-28	-	4-03Total	23	19	22	20	8	2	94%	27-05	30-15	29-70	22-98	10-25	1-50	18-07

[Stage Direction]
1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	56	62	78	82	86	114	478(b) Instances and rate of recidivism- (1) Revocation	
%	1 1-78	3 4-83	4 5-12	1 1-21	-	1 [DOT]87	10 2-09(2) Forfeiture	
%	1 1-78	2 3-22	-	5 6-09	-	5 4-38	13 2-71(3) Subsequent sentence to provincial institution	
%	11 19-64	11 17-74	13 16-66	7 8-53	12 13-95	4 3-50	58 12-13(4) Subsequent sentence to penitentiary 	
%	4 7-14	4 6-45	1 1-28	4 4-87	1 1-16	2 1-75	16 3-34Total	
%	17 30-35	20 32-25	18 23-07	17 20-73	13 15-11	12 10-52	97 20-292350 Questions	HOUSE OF COMMONS SASKATCHEWAN	1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	28	33	14	21	27	41	164(b ) Instances and rate of recidivism-	(1) Revocation	1	-	1	-	-	1	3%	3-57	-	7-14	-	-	2-43	1-82(2) Forfeiture	1	1	1	-	3%	-	3-03	7-14	-	3-70	-	1-82(3) Subsequent sentence to provincial institution	6	7	4	5	3	25%	21-42	21-21	28-57	23-80	11-11	-	15-24(4) Subsequent sentence to peni tentiary	3	3%	-	-	-	14-28	-	-	1-82Total	7	8	6	8	4	1	34%	25-	24-24	42-85	38-09	14-81	2-43	20-73

[Stage Direction]
1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	57	26	40	33	42	74	272(b) Instances and rate of recidivism	(1) Revocation	-	-	-	1	-	1	2%	-	-	-	3-03	-	1-35	0-73(2) Forfeiture	2	3	3	2	1	1	12%	3-50	11-53	7-50	6-06	2-38	1-35	4-41(3) Subsequent	
sentence to	
provincial	10	5	9 *	4	3	1	32institution	%	17-54	19-23	22-50	12-12	7-14	1-35	11-76(4) Subsequent	
sentence to	2	2	2	2	2	10penitentiary	%	3-50	-	5-00	6-06	4-76	2-70	3-67Total	14	8	14	9	6	5	56%	24-56	30-76	35-00	27-27	14-28	6-75	20-58

[Stage Direction]
1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	158	138	111	170	175	338	1090(b) Instances and rate of recidivism	(1) Revocation	3	6	3	3	2	10	27%	1-89	4-34	2-70	1-76	1-14	2-95	2-47(2) Forfeiture	3	2	7	7	19	38%	1-89	-	1-80	4-11	4-00	5-62	3-48(3) Subsequent	
sentence to	
provincial	25	15	9	15	13	6	83institution	%	15-82	10-86	8-10	8-82	7-42	1-77	7-61(4) Subsequent	
sentence to	6	6	1	8	4	25penitentiary	3-79	4-34	0-90	4-70	2-28	-	2-29Total	37	27	15	33	26	35	173%	23-41	19-56	13-51	19-41	14-85	10-35	15-87MARCH 20. QUEBEC	1956	Questions	23511950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	435	326	328	361	403	460	2,313(b ) Instances and rate of recidivism-	(1) Revocation	5	3	5	2	5	10	30%	1-14	0-92	1-52	0-55	1-24	2-17	1-29(2) Forfeiture	14	5	12	12	14	12	69%	3-21	1-53	3-65	3-32	3-47	2-60	2-98(3) Subsequent sentence to provincial	institution	81	48	32	42	18	3	224%	18-62	14-72	9-75	11-63	4-46	0-65	9-68(4) Subsequent sentence to peni-	tentiary	28	22	29	25	14	2	120%	6-43	6-74	8-84	6-92	3-47	0-43	5-18Total	128	78	78	81	51	27	443%	27-12	23-92	23-78	22-43	12-65	5-86	19-15NEW BRUNSWICK	1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	39	43	45	24	34	44	229(b) Instances and rate of recidivism-	(1) Revocation	-	2	4	-	1	2	9%	-	4-65	8-88	-	2-94	4-54	3-93(2) Forfeiture	1	1	1	-	1	-	4%	2-56	2-32	2-22	-	2-94	-	1-74(3) Subsequent sentence to provincial	institution	3	4	-	5	1	-	13%	7-68	9-30	-	20-83	2-94	-	5-67(4) Subsequent sentence to peni-	tentiary	2	1	5	3	-	-	11%	5-12	2-32	u-ii	12-50	-	-	4-80Total	6	8	10	8	3	2	37%	15-38	18-60	22-22	33-33	8-82	4-54	16-15NOVA SCOTIA	1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	48	56	54	30	47	92	327(b) Instances and rate of recidivism	(1) Revocation	-	-	1	-	-	2	3%	-	-	1-85	-	-	2-17	0-91(2) Forfeiture	1	3	4	2	1	2	13%	2-08	5-35	7-40	6-66	2-12	2-17	3-97(3) Subsequent sentence to provincial	institution	3	2	4	1	3	1	14%	6-25	3-57	7-40	3-33	6-38	1-08	4-28(4) Subsequent sentence to penitentiary	4	5	6	-	-	4	19%	8-33	8-92	11-11	-	[DOT] 	4-34	5-81Total	8	10	15	3	4	9	49%	16-66	17-85	27-77	9-99	8-51	9-78	14-98
Questions

[Stage Direction]
1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	13	3	6	7	8	7	44(b) Instances and rate of recidivism	(1) Revocation	
%	-	-	-	-	-	-	-(2) Forfeitures	
%	-	-	-	-	-	-	-(3) Subsequent sentence to provincial institution	
%	1 7-69	-	-	1 14-28	-	-	2 4-54(4) Subsequent sentence to penitentiary %	1 7-69	-	-	-	1 12-50	-	2 4-54Total	
. %	2 15-38	-	-	1 14-28	1 12-50	-	4 9-09NEWFOUNDLAND	1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	3	2	5	5	4	6	25(b) Instances and rate of recidivism- (1) Revocation	
%	-	-	-	-	-	-	-(2) Forfeiture	
%	-	2 40-00	2 8-00(3) Subsequent sentence to provincial institution	
%	1 33-33	-	-	-	-	-	1 4-00(4) Subsequent sentence to penitentiary 	
%	-	__	-	-	-	-Total	
%	1 33-33	-	2 40-00	-	-	-	3 12-00YUKON AND	N.W.T.	1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	2	2	1	5	* 	10(b) Instances and rate of recidivism- (1) Revocation	
%	-	-	-	-	-	-	-(2) Forfeitures	
%	-	-	-	-	-	-	-(3) Subsequent sentence to provincial institution	
%	-	-	-	-	-	-	-(4) Subsequent sentence to penitentiary 	
%	-	-	-	1 20-00	-	-	1 10-00Total	
%	-	-	-	1 20-00	-	-	1 10-00
Questions
CANADA (Totals)
1950	1951	1952	1953	1954	1955	Total(a) Tickets of leave granted	924	754	756	825	904	1309	5472(b) Instances and rate of recidivism- (1) Revocation	
%	12 1-29	14 1-85	19 2-51	8 0-96	8 0-88	28 2-13	89 1-62(2) Forfeiture	
%	24 2-59	15 1-98	27 3-57	29 3-51	28 . 3-09	39 2-97	162 2-96(3) Subsequent sentence to provincial institution	
%	154 16-66	108 14-32	84 11-11	93 11-27	57 6-30	16 1-22	512 9-35(4) Subsequent sentence to penitentiary 	
%	53 5-73	41 5-43	50 6-61	51 6-18	23 2-54	10 0-76	228 4-16Total	
%	243 26-29	178 23-60	180 23-80	181 21-93	116 12-83	93 7-10	991 18-11
3. The remission service maintains two regional offices, one in Montreal and one in Vancouver. These offices have been in operation since 1949. There are two field representatives in the Montreal office and one in the Vancouver office. In November 1954 another field representative was appointed, who is stationed in Ottawa.
Only part of the time of the field representatives is given to direct supervision of persons on ticket of leave. Direct supervision is usually given by staff members of (a) prisoners' after-care agencies across Canada, (b) provincial probation services in British Columbia, Saskatchewan, Ontario and Nova Scotia, and (c) the provincial parole service of Ontario. In the year 1949 supervision by a member of a social agency or a government service was provided in only 152 cases. In the year 1955 this type of supervision was arranged in 865 cases.

Mr. Smith (Battle River-: Camrose):
1.	How many hogs were marketed in the province of Alberta, in the years 1954 and 1955?
2.	How many hogs were consumed in the province of Alberta, in the years 1954 and 1955?
Answer by: Mr. Gardiner:
1. No statistics available for slaughterings on farms and small establishments which do
not come under inspection by the Department. of Agriculture. The record of slaughterings in approved and inspected establishments of hogs originating in Alberta, together with exports, are as follows:
1954	1955
In Alberta	
1,062,551	1,239,532In other provinces ...	399,219	446,355Exported from Canada	14,479	5,3062.	The total per capita consumption of pork for Canada in 1954 is calculated by the dominion bureau of statistics at 53-7 pounds. Based on this figure the consumption of hogs in Alberta for 1954 would be approximately 350,000 hogs. Estimated consumption for 1955 has not yet been calculated.



AIR CONDITIONED GOVERNMENT BUILDINGS

Mr. Fraser (Peterborough): 1.	Are any buildings or offices owned or used by the government of Canada air conditioned?
2.	If so, where are they located?
3.	By what department or agency are they occupied?
Answer by: Mr. Winters:
1. Yes.
2 and 3. The records of the department indicate that the following buildings under the administration of this department which are air conditioned in whole or in part, except by means of window cooling units, are listed by location and occupancy:
Type of Air Conditioning	Location	Name or Address of Building	Occupied by
Air-conditioned throughout-			
Government-owned				Department of Public Printing and Stationery Income tax
	Windsor, Ontario		Sandwich-Windsor-Amherstburg- Railway building		
Leased	Hamilton, Ontario	
Ottawa, Ontario	
Toronto, Ontario	
Halifax, Nova Scotia	
Toronto, Ontario	Old public building, King and John streets	
Supreme court	
385 Yonge street (air-conditioned by owner).... Industrial building	
215 Victoria street (air conditioned by owner)...	Post Office Department Department of Justice Department of Public Works Department of National Health and Welfare Department of TransportLondon, Ontario	R.C.A.F. recruiting centre, 147 King street (air conditioned by owner)	Department of National DefenceAir-conditioned in part-	Government-owned	Ottawa, Ontario	
Ottawa, Ontario	
Ottawa, Ontario	Food and drug laboratory, Tunney's pasture	
Virus laboratory	Department of National Health and Welfare Department of National Health and Welfare Hansard distribution rooms Prime Minister's office House of Commons chamber Privy council chamber Department of National RevenueOttawa, Ontario	Montreal, Quebec	Old converters building, Lagauchetiere street...	National Film Board Post Office DepartmentHalifax, Nova Scotia	Federal building	2354	HOUSE OF COMMONS
Questions



TRANS-CANADA HIGHWAY, BANFF, ALTA.

Mr. Nickle: 1.	Were tenders invited by the dominion government for construction of a section of trans-Canada highway from mile 21 to mile 31 west of Banff in the province of Alberta?
2.	If so, who were the persons who tendered and what was the price named in each tender?
3.	To whom was the contract awarded?
4.	Was it awarded to the lowest bidder, and if not, what were the considerations that influenced the government in its decision?
Answer by: Mr. Winters:
1.	Yes.
2.	J. A. Moulson Construction Ltd., $1,335,463.50; Square M Construction Limited and Coleman Collieries Limited, $2,184,207.50; Poole Engineering Company Limited, $2,206,948.50; Mannix Limited, $2,248,635.25; New West Construction Company Limited, $2,274,590.00; Standard Gravel and Surfacing of Canada, Limited, $2,298,460.00; W. C. Wells Construction Company Limited, $2,360,942.50.
3.	Square M Construction Limited and Coleman Collieries Limited.
4.	The lowest tenderer withdrew his bid.



CANADIAN NATIONAL RAILWAYS


Mr. Hamilton (Notre Dame de Grace): For only those tickets which cover travel over at least some portion of the main transcontinental system of the Canadian National Railways, and for each of the three months May, June and July, 1955, what percentage change was recorded over the same months in the preceding year (a) in passengers: (b) in passenger revenue?
Answer by: Mr. Marler:
The Canadian National Railways advise as follows:
(a)	May, 1955, -02 per cent increase; June, 1955, 34 per cent increase; July, 1955, 10-5 per cent increase.
(b)	May, 1955, no change; June, 1955, 24 per cent increase; July, 1955, 12-80 per cent increase.



APPLICATIONS, CANADIAN FARM LOAN ACT- EDMONTON

Mr. Smith (Battle River-Camrose): 1.	How many applications for loans under the Canadian Farm Loan Act were received by the Edmonton branch of this service for the year ending December 31, 1955?
2.	How many of these applications were granted?
3.	How many were refused?
4.	How many are still under review?
Answer by: Mr. Harris:
The Canadian farm loan board advises as follows:
1.	497.
Questions
2.	338.
3.	93.
4.	66.



P.F.A.A.-AWARDS GRANTED

Mr. Pommer: 1.	What is the total amount of awards granted under the Prairie Farm Assistance Act for 1955 crop year to March 1, 1956?
2.	What is the total number of awards for the same period by provinces?
Answer by: Mr. Gardiner:
1.
Province	No. of awards Amount
Manitoba 	8,725	$1,318,687,	.50Saskatchewan 	4,437	758,465,	.75Alberta 	5,738	905,734,	.25British Columbia ..	225	33,625,	.75Totals 	19,125	3,016,513	.25
2. See answer to No. 1.



RURAL MAIL CONTRACTS-TEMISCOUATA COUNTY

Mr. Balcer: For what period of time were the following rural mail contracts signed and what is the annual amount involved in each case:	(a) Mr. Joseph
Belanger (No. 2), St. Louis du Ha! Ha!, county of Temiscouata; (b) Mr. Rosario Belanger (No. 1), also of St. Louis du Ha! Ha!, county of Temiscouata?
Answer by: Mr. Lapointe:
(a) Contract authorized 17th February 1956, 4 years-$1560.
(b) Contract authorized 17th February 1956, 4 years-$1560.



POST OFFICE PERSONNEL


Mr. Knowles: 1.	With respect to postal employees, what is the basis for determining priority as to annual leave?
2.	Is the basis for determining such priority the same throughout the postal service?
3.	Does service for purposes of annual leave date from an employee's temporary appointment or permanent appointment?
4.	Is the answer to this question the same for all branches of the postal service, and in all parts of the country?
5.	Have there been any requests that the basis of annual leave be reconsidered? If so, is such reconsideration being given thereto?
Answer by: Mr. Lapointe:
1.	Seniority.
2.	No.
3.	(a) Headquarters staff-Seniority determined by date of assignment to the unit according to class or grade, (b) Operating service-Seniority determined by both; depending upon the class of employee.
4.	Yes.
5.	Yes. Federated association of letter carriers requested change as it applies to supervisory letter carriers. Change will take effect on 1st April, 1956.

The Budget-Appendix



BUDGET PAPERS

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presented by
the Honourable W. E. Harris, M.P., for the information of Parliament in connection with the Budget of 1956-57
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.[DOT] *r [DOT]
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The Budget-Appendix

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The purpose of these Papers is twofold:
1.	to present a general economic review of 1955, bringing together in one
place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government accounts for the
fiscal year ended March 31, 1956.
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The Budget-Appendix

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Page
1.	National Accounts-
National Income and Product	 2361
National Expenditure	 2363
Personal Income and its Disposition	 2366
Source and Disposition of Saving	 2269
Investment and Capital Expenditure	 2371
Revenue and Expenditure of All Governments	 2373
2.	Balance of International Payments	
23773.	Employment and Earnings	
23814.	Monetary and Credit Developments	
23835.	Price Trends	
2387
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies. Some of the figures appear for the first time; others have been published elsewhere. All 1955 estimates are preliminary and subject to revision.

The Budget-Appendix

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National Income and Product
In 1955 there was a sharp economic recovery which regained the ground lost in 1954 and carried production and incomes to new peaks. The major factors in the recovery appear to have been the large increases in investment and in exports, the availability of credit and the resurgence of confidence engendered in part by the evidence of prosperous conditions abroad. Consequently, the slack which existed at the beginning of the year was rapidly reduced as the year . progressed, and by the third quarter had virtually disappeared. Thus, the seasonally adjusted estimates of quarterly gross national product excluding agriculture indicate a rise of 2 per cent for the first quarter, 5 per cent for the second quarter, 3 per cent for the third quarter, and 1 per cent for the fourth quarter. For the year 1955 as a whole, gross national product is estimated at $26 [DOT] 6 billion, a very large increase of 10 per cent over the reduced ouput of 1954 and 9 per cent above 1953. The year-to-year increase in population was 2\ per cent and there was a like increase in the civilian labour force. However, after the first quarter of the year employment rose more rapidly than the labour force and there was a progressive reduction in unemployment which continued until the seasonal increase late in the year.
Since prices were on the average little higher than in 1954, most of the increase in the dollar value of gross national product represented a gain in real output. The volume of production increased by about 9 per cent of which the gain in agricultural production accounted for about one-sixth. The largest part of this increase in agricultural production was because of the change from a very poor western grain crop in 1954 to a considerably better than average crop in 1955. The volume of non-agricultural output rose by somewhat more than 7 per cent. The largest increases were in the goods-producing industries.

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BILLIONS OF 00LLARS	'SCO tVDD	BILLIONS OF DOLLARS
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The Budget-Appendix Mining output rose by about 16 per cent and output of the construction industry rose by 12 per cent reflecting the large increase in home building and in non-residential construction. Manufacturing output as a whole increased by 7 per cent. Industries'such as textiles and electrical apparatus which had experienced some difficulties in 1954 showed greater strength in 1955. For the services group the gain in output was somewhat less than for the whole nonagricultural sector but the output of services had expanded in 1954 when the goods-producing industries showed some reduction in output.
The improvement in economic activity in 1955 was reflected in the earnings of Canadians. Wages and salaries increased by 7 per cent. The major factor in the increase was the substantial rise in employment but there was also some increase in rates of pay and in the average number of hours worked per week. The rise in total labour income has continued without interruption throughout the post-war period including the year 1954 when national income declined.
In 1955 investment income increased by $756 million or by about one-fifth, and reached a total of $4,471 million. Although larger interest payments and rental income contributed to the increase, the principal factor was the expansion in corporate profits. Corporate profits are particularly sensitive to economic conditions. In 1950 and 1951 under conditions of active demand and with prices and production increasing substantially, corporate profits rose rapidly. In each of the three succeeding years despite large additions to plant and equipment, corporate profits declined as costs of production increased and as competition, particularly from imports, became more severe. With conditions of strong demand prevailing in 1955, with production consequently at or near capacity and with a further substantial increase in the country's stock of plant and equipment, corporate income recovered rapidly and reached a level estimated at $3 billion, 24 per cent above 1954 and 7 per cent above the previous high in
1951.
Net farm income rose by over one-third from the previous year's low level of $1,058 million, and reached a total of $1,421 million in 1955. The partial recovery of 1955 resulted from increases in production which were sufficiently

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-	1952	1953	1954	Prelim. 1955
		(Millions c	f Dollars)	
I. Wages, salaries and supplementary labour income.	10,868	11,706	11,989	12,8612. Military pay and allowances	270	309	367	3943. Investment income	3,763	3,800	3,715	4,4714. Net income of unincorporated business-	(a) farm operators from farm production1	1,851	1,653	1,058	1,421(b) non-farm unincorporated business	1,574	1,688	1,645	1,7535. National Income (1+2+3-1-4)	18,326	19,156	18,774	20,9006. Indirect taxes less subsidies	2,714	2,901	2,914	3,1777. Depreciation allowances and similar business costs	2,120	2,411	2,511	2,6798. Residual error of estimate	95	-19	-51	-1329.	Gross National Product at Market Prices (5+6+7+8)	
10.	Index of G.N.P. in Constant Dollars	23,255 100	24,449 104	24,148 101	26,624 110
1 Includes undistributed Wheat Board trading profits, and inventory valuation adjustment on a aalendar year basis for grain held by Wheat Board.

The Budget-Appendix
large to more than offset some further decline in agricultural prices. Most of the increase was because of a better than average western grain crop compared to the very poor harvest of 1954. It is estimated that this factor alone accounted for an increase of some $300 million. Despite the recovery, however, net farm income was 14 per cent below the level of 1953. In this same two-year period, the agricultural labour force declined by 4 per cent. Whereas net farm income rose by $363 million in 1955, farm cash income fell by $55 million. The principal reason for this is found in the movement of inventories. Accrued net farm income is based on the value of annual production at current market prices, whereas farm cash income only takes into account final sales and excludes that part of production which is added to inventories. Thus in 1955, largely due to the increased grain crop, part of output was added to inventories and was not reflected in farm cash income.
. Net income of non-farm unincorporated business increased by 7 per cent in 1955 compared to a decline of 3 per cent in the preceding year. There was a recovery in retail trade from the decline in the previous year. However, by far the greatest part of the increase in income in 1955 occurred in construction.
National Expenditure
The buoyancy of demand at home reinforced by the recovery in the United States and the continued strength of overseas markets, affected most sectors of the Canadian economy during 1955. Although shortages were not common and an overall balance between supply and demand was achieved at a high level of economic activity, some strain on the supply of certain commodities such as

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1.	Personal expenditure on consumer goods and
services	
2.	Government expenditure on goods and services...
3.	Gross domestic investment-
(a) housing, plant and equipment-total1..
new residential construction	
new non-residential construction..
new machinery and equipment	
fb) change in inventories-total	
grain in commercial channels2	
farm grain and livestock2	
all other inventories3	
4.	Exports of goods and services4	
5.	Imports of goods and services4	
6.	Residual error of estimate	
7.	Gross National Expenditure at Market Prices
(1+2+3+4+5+6)	
8.	Index of G.N.E. in Constant Dollars	
1952	1953	1954	Prelim. 1955
	(Millions of Dollars)		
14,366	15,125	15,776	16,8114,245	4,359	4,361	4,6144,256	4,840	4,666	1,268786	1,061	1,166	1,4761,554	1,706	1,659	1,7751,916	2,073	1,841	2,017S10	549	-280	45091	146	-15	-20237	50	-145	213-18	353	-120	2575,573	5,400	5,136	5,696-5,400	-5,843	-5,562	-6,347-95	19	51	13223,255	24,44#	24,148	2C,624100	104	101	1101	Includes private businesses and institutions, and publicly owned public utilities.2	Value of physical change.3	flange in value* Includes privately financed industrial and trade inventories.
, 4- adjustments have been made to the figures of current receipts and payments shown in Table 10 and in lhe Canadian Balance of International Payments, 1952 to 1955", Dominion Bureau of Statistics, to achieve consistency with the other component series.
2364
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The Budget-Appendix


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The Budget-Appendix
steel, non-ferrous metals and building materials became apparent in the course of the year. Prices of these commodities rose, particularly in the latter half of the year and together with the higher level of wages resulted in cost increases. This affected prices throughout the investment field; but despite these cost increases competition was sufficiently effective to bring about lower prices at other points, notably in consumer durable goods. Final sales increased at a rapid rate and this had a dampening effect on the growth of business inventories. Although there was some increase in business inventories during 1955, it was in part a reaction from the decline during the short recession of 1954. Business inventories as a proportion of sales remained below the level of 1953.
. Expenditures by consumers on goods and services represent the largest single claim on production. In 1955, consumer expenditures rose by more than 6 per cent compared with an increase of 4 per cent in the previous year. The rise in consumption during 1954 took place in the face of declining economic activity and indicated a considerable degree of strength in consumer outlays closely related to the growth in labour income. In 1955, consumption rose somewhat less rapidly than gross national expenditure as a whole but at a rate more consistent with the underlying longer-term growth factors. The experience of the last two years serves to emphasize the stable pattern and the sustained stimulus to production which has characterized the rising trend in consumer expenditure throughout the post-war years.
The increase of $1,035 million in consumer expenditure in 1955 accounted for 42 per cent of the total expansion in gross national expenditure. On a seasonally adjusted basis, consumption rose throughout the year. After a relatively slow start in the first quarter, consumer outlays increased rapidly during the spring and summer months and continued to expand at a lesser though substantial rate in the fall. The fourth quarter increase was relatively small. With consumer prices practically stable there was a comparable increase in the volume of consumption. Per capita real consumption was 4 per cent above 1954, one of the largest increases of the post-war period.
. Government expenditures on goods and services, which had remained stable in 1954 because increases in non-defence expenditure were offset by declines in outlays for defence, increased by about 6 per cent in 1955 and reached a total of $4,614 million. About two-thirds of this increase was accounted for by increased expenditures of provincial and municipal governments. Federal government defence expenditure, which had declined by $180 million in 1954, rose by $33 million or 2 per cent but remained about 8 per cent below the peak reached in
1953.	With an increase in non-defence expenditures of $52 million, total federal expenditure on goods and services reached a level of $2,498 million, 3 to 4 per cent above 1954.
Investment expenditures, which had declined by 4 per cent in 1954 and contributed to the weakness of that year, played a dynamic role in the economy in 1955 and were a major factor in the recovery. Gross domestic investment exclusive of inventory change rose by 13 per cent or $602 million in 1955 and accounted for 24 per cent of the increase in gross national expenditure. Slightly more than one-half of the total increase in 1955 was accounted for by the striking increase in residential construction; 138,000 housing units were started and the value of construction rose 27 per cent above the previous year. This increase followed a growth of 10 per cent in 1954, a year when other investment declined, and a 35 per cent increase in 1953. Since 1952, investment in housing has almost doubled and has risen from 18 per cent to 28 per cent of total capital investment. As in 1954, residential construction was stimulated by fairly easy financing under the National Housing Act, which provides as well for the insurance of loans on residential real estate, and by the availability of credit. It was supported as
67509-150£
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The Budget-Appendix well by the substantial growth in population and incomes. Non-residential construction, which had declined by 3 per cent in the previous year, rose by $116 million in 1955, and reached a level 4 per cent above the previous peak in
1953.	Investment outlays for new machinery and equipment, which had declined by 11 per cent in 1954, recovered substantially and rose by $176 million or almost 10 per cent in 1955.
Inventories of farm grain and livestock and grain in commercial channels increased by $193 million in 1955 compared to the decline of $160 million in
1954.	Most of this variation between the two years was because of wheat. A very poor western crop in 1954 led to the running down of inventories while the very good crop of 1955 resulted in a substantial build-up. The value of business inventories increased by $257 million in contrast to the previous year when there had been a decline of $120 million. However, little more than half of this net change of $377 million between the two years represents increased investment in 1955 since price changes were almost as important as volume changes. In volume terms business inventories increased by somewhat less than 2 per cent in 1955 compared with the decline of about 1 per cent in 1954.
Notwithstanding the great increase in domestic demand during the post-war period, the level of exports remains a strategic factor in Canadian economic prosperity. Exports exerted a great stimulus on the economy in 1955, rising by $560 million or 11 per cent to a level 2 per cent above the previous peak in
1952.	Imports rose even more sharply and the trade deficit for 1955 was therefore greater than in the previous year.
Personal Income and its Disposition
Personal income differs from national income in a number of ways although the components of these two totals are for the most part similar or identical. While national income is the total of the annual earnings of Canadian residents from the production of goods and services, personal income is the sum of the current receipts of income regardless of whether these receipts are earnings from production. For example, personal income includes only that part of

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-	1952	1953	1954	Prelim. 19551.	Wages, salaries and supplementary labour income. Deduct: Employer and employee contributions to social insurance and government pension funds 2.	Military pay and allowances	
3.	Net income received by farm operators from farm 4.	Net income of non-farm unincorporated business... 5.	Interest, dividends and net rental income of	10,868 -358 270 1,882 1,574 1,566 1,360 27 25	(Millions o 11,706 -390 309 1,658 1,688 1,669 1,460 28 28	: Dollars) 11,989 -395 367 1,085 1,645 1,825 1,601 28 28	12,861 -416 394 1,396 1,753 2,010 1,706 34 286. Transfer payments to persons (excluding interest; (a)	from government	
(b)	charitable contributions made by corpora-	(c) net bad debt losses of corporations	
7. Personal Income (1+24-3+4+5+6)	17,214	18,156	18,173	19,766
>
Excludes undistributed profits of the Wheat Board and an inventory valuation adjustment on a calendar year basis for grain held by the Wheat Board.
* Includes all government debt interest paid to persons.

The Budget-Appendix
corporation profits which is actually received by Canadian persons as dividends. On the other hand, transfer payments such as family allowances, old age pensions, veterans' benefits and charitable contributions of corporations, are part of personal income although they are not payments for services and, therefore, do not form part of national income.
In 1954 the modest rise in salaries and wages, in certain elements of investment income, and in transfer payments was offset by the large decline in farm income; and for the first time in the post-war period there was no gain in total personal income. In 1955, however, improved business conditions brought about a large increase in labour income and there was at the same time a substantial recovery in net farm income because of a better western grain crop. These were the major factors in the increase of $1,593 million or 9 per cent in total personal income. Labour income, which is by far the largest element in personal income, rose by $872 million or 7 per cent, and accounted for 55 per cent of the total increase. About 20 per cent of the increase in total personal income accrued to farmers while the other major components, income from unincorporated business and from investment and transfer payments, together contributed 25 per cent to the expansion in personal incomes. A little more than one-quarter of the $111 million increase in transfer payments was due to payments under the Prairie Farm Assistance Act. As in previous years, social security benefits such as old age pensions and family allowances, rose during the year. These increases were partly offset, however, by a decline in unemployment insurance benefits as the labour market improved.
Despite substantially higher personal incomes, personal direct taxes increased by only 4 per cent for the year. Personal income tax collections remained practically unchanged, largely because reductions effective July 1, 1955 in the federal tax rates tended to offset the effect of increases in total taxable income. The yield from succession duties and other miscellaneous taxes for all three

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-	1952	1953	1954	Prelim. 19551. Personal direct taxes-	1,177 73 73	(Millions c 1,287 73 71	( Dollars) 1,290 77 59	1,296 117 GS
(c) miscellaneous taxes					
				
	1,323	1,431	1,426	1,481
2. Personal expenditure on consumer goods and services- Goods-				
	8,374 1,588 4,404	8,578 1,793 4,754	8,980 1,682 5,114	9,493 1,873 5,445
				
				
				
	14,366	15,125	15,776	16,811
3. Personal saving- (a) personal saving excluding farm inventories				
	1,288 237	1,550 50	1,116 -145	1,261 213
				
	1,525	1,600	971	1,474
4. Personal Income (1+2+3)					
	17,214	18,156	18,173	19,766
				
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The Budget-Appendix levels of government combined rose by $49 million during 1955. Since the growth in personal incomes was not offset to any substantial extent by an increase in personal direct taxes, Canadians had considerably more money available for spending and saving.
Personal disposable income, or personal income after deduction of direct taxes, rose by $1,538 million or 9 per cent in 1955. There was a large increase in personal saving from current income but this was for the most part because of the change in saving in the form of farm inventories which was largely involuntary. In 1954, farm inventories declined by $145 million while there was an increase of $213 million in 1955. Exclusive of the change in farm inventories, personal saving from current income rose by only $145 million to $1,261 million in 1955. There was, therefore, practically no change in personal saving exclusive of farm inventories between 1954 and 1955 when calculated as a proportion of disposable income. In 1955, personal saving exclusive of farm inventories constituted 6-9 per cent of disposable income compared with 6-7 per cent for the year 1954.
Percentagewise the largest increase in consumer spending was in expenditures on durable goods which rose by 11 per cent in 1955 compared with a decline of 6 per cent in 1954. Since there was a noticeable decline in the prices of certain durable goods during 1955, the volume increase was larger and is estimated at 17 per cent. There was a striking increase in purchases of passenger cars as well as substantial increases in expenditures on home appliances and furniture. Outlays on non-durable goods expanded more slowly and rose by 6 per cent in 1955 compared with an increase of 5 per cent in the previous year. On the average, prices of non-durable goods did not change appreciably although there was a very slight downward movement for the year. Higher outlays on food and beverages accounted for about one-half of the overall increase in expenditures on non-durable goods.

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BILLIONS OF DOLLARS	CALENDAR YEARS	BILLIONS OF DOLLARS1946	1947	1948	1949	1950	1951	1952	1953	1954	1955
The Budget-Appendix
On a seasonally adjusted basis, the rise in purchases of consumer goods was particularly sharp in the second quarter of 1955. In terms of value, the increase over the first quarter was 5 per cent for non-durable goods and 12 per cent for durable goods. During the third quarter of 1955, further gains were made but the rate of increase was more moderate. In the fourth quarter, spending on durable goods actually declined although it remained 4 per cent above the second quarter of 1955, and 20 per cent above the fourth quarter of 1954. Outlays on non-durable goods continued to rise moderately in the fourth quarter and were 6 per cent above the comparable period in the previous year. Spending on consumer services expanded steadily throughout the year but the largest increase occurred in the fourth quarter. Expenditures on shelter, education and transportation accounted for some of the major increases. For the year as a whole, consumer spending on services rose by 6 per cent, of which more than one-third was due to higher prices.
Source and Disposition of Saving
Saving is the source from which investment expenditure is financed. In addition to personal saving, which is discussed in the preceding section, there is business saving and government saving.
In 1955, total saving increased by $1,188 million or 30 per cent. This is in contrast to 1954 when saving declined by about one-fifth. All three major sectors, business, persons and government, contributed to the increase in saving.
Government saving is represented by the surplus of revenues over expenditures for all three levels of government combined. In the calendar year 1955, revenues as shown for National Accounts purposes exceeded expenditures both current and capital by $269 million. This compares with a surplus of $18 million in 1954, the smallest surplus of any post-war year. The increase in government saving between 1954 and 1955 as shown in Table 5 has no fiscal significance and was produced in the federal accounts by the adjustment of corporate tax revenue to an accrual basis. Excluding the effect of this adjust-

[Stage Direction]
-	1952	1953	1954	Prelim. 1955Personal saving	1,525	(Millions c 1,600	f Dollars) 971	1,474Gross business saving-total	S,7S6	S,1S1	S,07S	8,588(a) Undistributed corporation profits	667	748	617	913(b) Depreciation allowances	2,120	2,411	2,511	2,679(c) Net bad debt losses of corporations	-25	-28	-28	-28(d) Undistributed Wheat Board trading profits and inventory valuation adjustment on grain held by Wheat Board	-31	-5	-27	25(e) Inventory valuation adjustment1	5	5	-1Adjusted government surplus (+) or deficit (-)2	288	253	18	269Residual error of estimate3	95	-19	-51	-132Total	4,644	4,965	4,011	5,1991	The adjustment has been made only to grain held in commercial channels.2	See Table 9.
8 See Tables 1 and 2.
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The Budget-Appendix ment, government saving was actually negative in 1955, the small surplus of provincial and municipal governments combined being slightly more than offset by a modest deficit in the federal accounts.
Business saving is composed of two principal items, depreciation allowances and undistributed profits. Both of these items increased in 1955 but at a considerably different rate. With the continued growth of physical assets, depreciation allowances increased in 1955 by $168 million or 7 per cent. Undistributed profits are affected by the change in total profits, by the amount paid in direct taxes, and by amounts paid out as dividends. Corporation profits are estimated to have risen by $580 million in 1955. Although there was an increase in tax liabilities of $196 million and an increase in dividends paid out of $88 million, there was also a very sharp rise in undistributed profits, amounting to $296 million. This rise in undistributed profits contributed about three-fifths of the total increase of $515 million or 17 per cent in business saving. Business saving is much the largest element in total saving and constituted 69 per cent of total saving in 1955 compared with 77 per cent in 1954.
It is estimated that Canada's total payments abroad on current account exceeded total receipts by $651 million in 1955 and the increase of like amount in net foreign liabilities was considerably greater than in 1954. The deficit on current account in 1955 was financed, as in previous years, by capital inflows

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. -	1952	1953	1954	Prelim. 1955
		(Millions of Dollars)		
Gross domestic investment-				
Housing, plant and equipment	4,256	4,840	4,666	5,268Change in inventories	310	549	-280	450Net increase in foreign assets (including foreign	exchange) adjusted1	173	-443	-426	-651Residual error of estimate2	-95	19	51	132Total	4,644	4,965	4,011	5,1991	Minor adjustments have been made to the figures appearing in Table 10.2	See Tables 1 and 2.

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-	1952	1953	1954	Prelim. 19552,670 -1,378	(Millions c 2,580 -1,226	f Dollars) 2,420 -1,164	3,000 -1,360
1,292 -625	1,354 -606	1,256 -639	1,640 -727
				
				
	667	748	617	913
				
1	Includes depletion charges and is adjusted for losses, and for conversion to a calendar year basis.
2	Taxes paid or payable in respect of the calendar year's income (See Table 9).
2 Includes charitable contributions made by corporations (See Table 3 Item 6 (b)).
4 See Table 5.

The Budget-Appendix
from abroad and there was no significant change in Canada's reserve of foreign exchange. Although the amount of capital from abroad was considerably larger in 1955 than in 1954, it was only moderately more important in the nation's financing because of the higher level of domestic investment in 1955. Direct investment continued to be the largest single source of funds from abroad and Canadian borrowing abroad was much smaller than in previous years. These transactions are treated more fully in the section on the Balance of International Payments.
Investment and Capital Expenditure
Table 8 gives the industrial distribution of business capital expenditures and brings them together with public capital outlays included in government expenditures on goods and services in Table 2. At the same time a reconciliation is provided between gross domestic investment in housing, plant and equipment as it appears in Table 2 and total capital outlays shown in Table 8.
The total of public and private capital expenditures is estimated to have increased by $610 million or 11 per cent in 1955. This is considerably in excess of the 6 per cent increase forecast at the beginning of the year on the basis of

[Stage Direction]
-	1952	1953	1954	Prelim. 1955
		(Millions of Dollars)		
Agriculture and fishing	555	546	388	424Forestry	39	34	46	62Mining, quarrying and oil wells	211	257	278	301Manufacturing	973	969	822	939Electric power, gas and water works	
Transportation, storage and communications	583	548	483	471576	661	641	570Construction industry	73	91	97	107Trade, finance and commercial services	344	526	582	578Institutions	278	301	337	409Housing	826	1,084	1,178	1,496Government departments	827	824	768	873Total Capital Expenditure'	5,285	5,841	5,620	6,230Total Capital Expenditure as a percentage of	Gross National Expenditure	22-7	23-9	23-3	23-4Index of total Capital Expenditure in Constant Dollars	100	107	103	111
1 For reconciliation with Gross Domestic Investment in housing, plant and equipment in Table 2, see below.
Prelim.
1952	1953	1954	1955Public and Pbivate Capital Expenditure-Table 8	
Deduct:	5,285	5,841	5,620	6,230Provincial hospitals and schools, and municipal schools	-159	-151	-169	-214Government housing excl. C.M.H.C. rental housing	- 40	- 23	- 12	- 20Direct government department outlays	-827	-824	-768	-873Other	- 3	- 3	- 5	- 5Add:	Unallocated Adjustment2	150Gross Domestic Investment in Housing, Plant and Equip-	ment-Table 2	4,256	4,840	4,666	5,268
JThis figure represents an upward revision to data given in "Public and Private Investment, Outlook 1856", Department of Trade and Commerce, to take account of later available information.
2372
[Stage Direction]
The Budget-Appendix business intentions and illustrates the rapid recovery in capital outlays during
1955.	Total capital outlays for 1955, including both government and business, reached a new high of $6,230 million, or about 7 per cent above the previous peak in 1953.
Almost all major industrial groups spent more money for capital purposes in 1955. The goods-producing industries increased their expenditures by 12 per cent. More than one-half of this expansion occurred in manufacturing with investment up by $117 million or 14 per cent. The greater part of this new investment was concentrated in the export industries. More moderate increases occurred in the construction industry and in primary industries other than forestry, where capital outlays rose by over one-third.
The major increases during 1955 in investment in manufacturing were concentrated in raw material processing and in the chemical industry. Thus, expenditure on plant and equipment for making paper products rose by $50 million or 58 per cent to a total of $138 million. This was the largest amount invested in manufacturing in 1955 and was followed by petroleum and coal products with total capital outlays of $108 million. Investment rose by $30 million in the non-ferrous metal group, and $21 million in the chemical industry, each being an increase of more than 50 per cent. Apart from these few key industries which determined the upward movement of manufacturing investment as a whole, the remaining industries followed a mixed pattern of moderate increases and decreases.
New investment in public utilities declined during 1955 by $83 million or 7 per cent to a total of $1,041 million. Most of this decline was due to the reduction of $77 million in capital outlays for steam railways and telegraphs. Decreases also occurred in expenditures on municipal water works and central electric stations. At the same time, large-scale projects scheduled in gas dis-


[Stage Direction]
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3.0
1950
1952
1954
1948

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The Budget-Appendix
tribution and work associated with the St. Lawrence Seaway remained still in'their initial stages so that the impact was relatively minor as far as investment in 1955 is concerned. There was a further extension of telephone facilities and a sizeable expansion in outlays by motor carriers.
The increase in urbanization and a steadily improving standard of living during the post-war period resulted in a marked growth of investment in the trade, finance and commercial services group. This expansion provided an important offset to declines in expenditures by defence-supported industries in the years following the Korean war. Capital outlays in the trade, finance and commercial services sector grew by almost 70 per cent between 1952 and 1954.
In 1955 this upward trend was arrested although outlays continued at the relatively high level of $578 million. Within this total, a decline in expenditures by the trade and finance group was almost balanced by an increase in outlays for commercial enterprises.
Associated with the growth in population, the need for additional facilities continued in the institutional field during 1955. Out of a total increase of $71 million in investment by institutions, about one-half was accounted for by the building of new schools. Hospitals absorbed $25 million more than in 1954, raising capital expenditures of these institutions by 21 per cent to a total of $147 million. Governments increased their capital outlays by $106 million or 14 per cent.
Revenue and Expenditure of All Governments
In Table 9 "Government Transactions Related to the National Accounts" an attempt is made to bring together in one statement and under uniform headings, the activities of all governments in Canada on a calendar year basis.
The table is designed to include only those transactions which have relevance for the National Accounts, and consequently the surpluses or deficits shown here differ from those shown in the various public accounts. It has been necessary to adjust the governments' accounting statements of fiscal year revenue and expenditure to exclude certain transactions such as those relating to reserves, write-offs, amortization, and other similar items, as well as the purchase and sale of existing capital assets; and to include the transactions of extra-budgetary funds such as unemployment insurance, old age security, workmen's compensation and government pension funds. In addition, corporate taxes have been adjusted to an accrual basis in the federal accounts. Total expenditure includes both current and capital expenditure but government loans and investments and debt retirement are excluded. Municipalities are for the most part on a calendar year basis but the provincial and federal fiscal year figures are adjusted to the calendar year basis. Some of the more substantial adjustments to the federal accounts are shown in the reconciliation statement appended to Table 9.
The surplus or deficit as calculated for national accounts purposes is affected by the adjustment of federal revenue to place corporation taxes on an accrual basis. In 1954 the adjustment was of moderate size and increased revenue by $43 million. In 1955 the adjustment was very large and increased revenue by $291 million. Excluding the effect of this adjustment, which has no relevance from a fiscal standpoint, the revenues and expenditures for all levels of government combined were approximately in balance in both years, and the overall fiscal effect of government operations was approximately neutral.
Income and expenditure of provincial and municipal governments both increased by about 9 per cent, and the modest surplus of $23 million in 1954 was virtually unchanged in 1955. In the federal accounts, excluding adjustment for
2374
[Stage Direction]
The Budget-Appendix

[Stage Direction]
-	1952	1953	1954	Prelim. 1955
		(Millions of Dollars)		
Government Revenue-		1,431	1,426	1,481
Direct Taxes-Persons		1,323			
Income-	1,277 13	1,269 27Federal	
Provincial and Municipal	1,177	1,287	Succession Duties-	41	55Federal	39	40	Provincial	34	33	36	62Miscellaneous-	1	Federal	7	2	1Provincial and Municipal	66	69	58	67Direct Taxes-Corporations	1,378	1,226	1,164	1,360Income-	1,295Federal	1,269	1,150	1,100	Provincial	109	76	64	65Other Direct Taxes-	54	58	67Withholding taxes-Federal	55	Indirect Taxes	2,814	3,011	3,001	3,254Federal	1,595	1,697	1,612	1,744Provincial and Municipal	1,219	1,314	1,389	1,510Investment Income	532	562	563	618Federal	217	225	223	261Provincial and Municipal	315	337	340	357Employer and Employee Contributions to Social	358	390	395	416Insurance and Government Pension Funds	Federal	230	250	255	272Provincial and Municipal	128	140	140	144Transfers from Other Governments-	430	450Provincial and Municipal	368	412	Total Revenue	6,828	7,086	7,037	7,646Federal	4,589	4,705	4,567	4,964Provincial and Municipal	2,239	2,381	2,470	2,682Deficit (or surplus-)	-288	-253	- 18	-269Federal1	-256	-175	+ 5	-245Provincial and Municipal	-32	-78	-23	-24Total Revenue plus Deficit (or minus Surplus)...	6,540	6,833	7,019	7,377Federal	4,333	4,530	4,572	4,719Provincial and Municipal	2,207	2,303	2,447	2,658
1 For reconciliation with Public Accounts Surplus, see next page.

The Budget-Appendix
TABLE 9-Concluded

[Stage Direction]
1952	1953	1954	Prelim. 1955
		(Millions of Dollars)		
Government Expenditure-				
Goods and Services		4,245	4,359	4,361	4,614
Federal-				
Defence	1,800	1,907	1,727	1,760Non-defence	669	618	686	738Provincial and Municipal	1,776	1,834	1,948	2,116Transfer Payments	1,827	1,952	2,141	2,236Federal	1,400	1,487	1,645	1,696Provincial and Municipal	427	465	496	540Subsidies	100	110	87	77Federal	96	106	84	75Provincial and Municipal	4	4	3	2Transfers to Other Governments-	Federal	368	412	430	450Total Expenditure	6,540	6,833	7,019	7,377Federal	4,333	4,530	4,572	4,719Provincial and Municipal	2,207	2,303	2,447	2,658Reconciliation with Public Accounts Surplus: Federal Government calendar year surplus for	1952	1953 1954 (Millions of Dollars)	Prelim. 1955national accounts purposes	
Adjustments:	+256	+175	-5	+245Difference between calendar and fiscal year	
Difference between corporation tax accruals and	+367	+24	+195	-11government receipts	-45	+87	-43	-291Revenue items omitted	
Reserves, write-offs and similar items omitted from	+49	+92	+79	+45expenditure	
Change in inventories of government commodity	-195	-139	-142	-107agencies	
Shipment of military equipment to NATO countries,	+72	-24	-4	+5less replacement	
Extra-budgetary funds for pensions and social insur-	-95	-55	-5	+2ance (net)	
Adjustment to place debt interest on a "due date"	+27	-27	+51	+46basis	-90	-14	+23	+7Other adjustments	-98	-95	-103	-93Federal surplus for fiscal year as per public accounts	+248	+24	+46	-152(1951-52)	(1952-53)	(1953-54)	(1954-55)
The Budget-Appendix the accrual of corporation taxes mentioned above, receipts and expenditures both increased by about 3 per cent and expenditures exceeded receipts by $48 million in the calendar year 1954 and $46 million in the calendar year 1955.
The economic effects of fiscal operations are not solely determined by revenues and expenditures. The expansionary or restrictive effects of governmental operations depend also on changes in loans, advances and investments. In this sphere the overall effect of federal government operations was mildly restraining.
Expenditure on goods and services by all levels of government combined increased in 1955 by 6 per cent and reached a total of $4,614 million. As indicate in the section on gross national expenditure, federal defence expenditures increased by about 2 per cent from the reduced level of 1954 and non-defence outlays rose by 8 per cent. Defence expenditures have remained relatively stable since the great expansion of $643 million in calendar year 1952 and federal non-defence outlays on goods and services have risen only moderately. Since gross national expenditure has increased by 14 per cent in the same period, the federal government's share in the overall use of goods and services has declined from about 11 per cent in 1952 to about 9 per cent in 1955.
Provincial and municipal expenditure on goods and services rose by 9 per cent or $168 million and this increase was about twice as great as the increase in expenditure on goods and services by the federal government. Most of the increase is attributable to higher wages and salaries and the expansion in outlays on capital facilities.
Transfer payments rose by $95 million or 4 per cent in 1955 compared with an increase of $189 million in 1954 when payments under unemployment insurance rose rapidly. A large element in the $51 million increase in federal government transfers in calendar year 1955 was the increase of $31 million in the payment of claims under the Prairie Farm Assistance Act as a result of the poor western


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1949	1950
1947
1946

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grain crop of 1954. Only slightly smaller was the increase in federal transfer payments which resulted from the growth in the numbers receiving old age pensions and family allowances. Some offset to these increases was provided by the decline of $12 million in unemployment insurance benefits as the labour market improved. Transfer payments of provincial and municipal governments increased by $44 million mainly because of larger grants to private non-commercial institutions.
Of the $609 million increase in revenues shown in Table 9, $248 million is due to an increase in the adjustment of federal corporation tax receipts to an accrual basis and can be excluded from consideration. While corporate incomes rose sharply in 1955, this was not reflected in increased federal government receipts since most corporations were paying throughout 1955 on the basis of 1954 incomes. In fact, federal government receipts from this source were somewhat lower in 1955 than in 1954 because of the 2 per cent reduction in the rate of corporation tax announced in the budget speech of April 5, 1955. Direct personal taxes were $55 million higher. Revenue from the federal personal income tax remained practically constant, although there was a substantial rise in personal incomes. The stability ia yield was to a large extent due to tax reductions, which went into effect on July 1, 1955. The greater part of the increase in personal direct tax revenue was the result of a rise in provincial collections from succession duties. There was also an increase in yield from the Quebec income tax which for the first time operated for a full calendar year.
In absolute terms, the largest increase in revenues came from indirect taxes which rose by $253 million or 8 per cent. Slightly more than one-half of this increase was in federal tax receipts. Receipts from customs duties rose by $65 million or 17 per cent for the calendar year 1955 reflecting the sharp increase in imports of dutiable goods such as automobile parts and capital investment goods. The yield from the federal sales and excise taxes rose by $54 million or 5 per cent in the calendar year 1955 despite the lower excise tax on automobiles and the repeal of the excise tax on tires and tubes, and this reflects the growth in consumer spending. There were also higher receipts from excise duties. Provincial revenues from indirect taxes rose by 13 per cent. There were increases in receipts from the gasoline tax of $26 million and from the retail sales tax of $19 million. Receipts from natural resources were also substantially higher. In the municipal sphere, revenues from the real property tax rose by $29 million.

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The most striking feature of Canada's international transactions in 1955 was a remarkable increase in merchandise trade in response to the prosperous economic conditions which prevailed at home and abroad. Exports increased by 10 per cent over 1954 with the result that their value in 1955 was pnly $4 million below the peak level of 1952. The increase in total value between 1954 and 1955 resulted from the combination of a 2 per cent rise in export prices and an 8 per cent increase in volume. Imports showed a gain of 15 per cent when compared with 1954 and were some 7 per cent above 1953 when the value of imports reached their previous record. Since import prices remained about the same as in 1954, the increase in 1955 was almost wholly the result of volume increases. While the terms of trade, or the ratio of export prices to import prices, moved slightly in Canada's favour, the much larger increase in the volume of imports resulted in a deficit of $185 million on commodity trade in 1955 compared with a surplus of $13 million in 1954. This deficit on commodity trade was the largest factor in the $234 million increase in the total current account deficit which rose from $431 million in 1954 to $665 million in 1955.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Estimated Current Account Between Canada and all Countries (Millions of Canadian Dollars)
-	1952	1953	1954	Prelim. 1955
Current Credits-				
Merchandise exports (adjusted)1	4,339	4,152	3,929	4,335Gold available for export	150	144	155	155Travel expenditures	275	302	302	329Interest and dividends	145	165	143	160Freight and shipping	383	318	309	359Inheritances and immigrants' funds	85	91	89	86Other current receipts	281	319	298	358Total Credits	5,658	5,491	5,225	5,782Current Debits-	Merchandise imports (adjusted)	, 3,850	4,210	3,916	4,520Travel expenditures	341	365	382	441Interest and dividends	413	404	431	467Freight and shipping	375	374	355	395Inheritances and emigrants' funds	94	91	94	100Other current payments	421	490	478	524Total Debits	5,494	5,934	5,656	6,447Net Balance on Current Account	+164	-443	-431	-665
1 Aid to NATO countries under Defence Appropriation Act has been excluded.
Estimated Geographical Distribution of the Net Balance on Current Account (Millions of Canadian Dollars)
-	1952	1953	1954	Prelim. 1955Between Canada and-	-849	-904	-810	-1,030+388 +114 +332	+133	+232	+348+83	+44	+54+173	+98	+53+179	+72	+5	-90
+164	-443	-431	- 665
				
The total value of merchandise exports increased from $3,929 million in 1954 to $4,335 million in 1955, up $406 million. The increase was mainly concentrated in exports of base metals, forest products, and iron and its products. Of special significance was a $60 million increase in the export of iron ore and a $30 million increase in the export of crude petroleum. These gains are a reflection of increased productive capacity in Canada as well as buoyant markets for these products in the United States and overseas countries. The only notable decline occurred in the export of grains, particularly wheat.
Merchandise imports amounted to $4,520 million in 1955 compared with $3,916 million in 1954, an increase of $604 million. This spectacular rise in imports was in response to the sharp upward swing in business activity in Canada during 1955 with a high level of consumer spending and capital investment. The increase in imports was widespread throughout the various categories.

The Budget-Appendix
The largest single increase occurred in the import of automobile parts as a result of the large output of automobiles in Canada during 1955. Other sizeable increases occurred in textiles, steel products and machinery.
The customary deficit on non-merchandise account showed a slight widening from $444 million in 1954 to an estimated $480 million in 1955, an increase of $36 million. The deficit, that is the excess of payments over receipts, on the travel and the interest and dividends accounts widened, while there was a slightly lower deficit on freight and shipping account. Total non-merchandise receipts rose from $1,296 million in 1954 to $1,447 million in 1955, an increase of $151 million. Payments rose by $187 million to $1,927 million compared with $1,740 million in 1954.
A notable feature of Canadian trade in 1955 was the marked increase in exports to the United Kingdom, other Commonwealth countries and to the countries of continental western Europe. While over half of the increase in the value of exports resulted from greater sales to the United States, this represented a gain of about 10 per cent over 1954. On the other hand, exports to the United Kingdom and to other Commonwealth countries increased by nearly 20 per cent while those to western Europe showed a rise of 11 per cent. The increase in sales to overseas markets is the result of two factors. A rising level of production in overseas countries in general has created a strong demand for Canadian products. In addition, the improvement in the economic and financial position of these countries which has taken place in recent years has permitted an extensive relaxation of restrictions against dollar imports. In contrast to exports, more than three-quarters of the increase in imports came from the United States. The remainder of the increase was largely drawn from western Europe, Latin America and Japan. Imports from the United Kingdom and other Commonwealth countries showed only a moderate increase. As a consequence of these developments and taking into account non-merchandise transactions, Canada

[Stage Direction]
The Budget-Appendix

[Stage Direction]
(Millions of U.S. Dollars)
-	1952	1953	1954	1955Exchange Fund Account and Bank of Canada- Gold	885-0 961-8 13-4	986-1 802-0 30-4	1,072-7 833-4 36-5	1,133-9 692-0 74-9
Other Government of Canada Accounts					
				
	1,860-2	1,818-5	1,942-6	1,900-8
				
incurred a larger deficit with the United States, a larger surplus with the United Kingdom and other Commonwealth countries, and a deficit with the rest of the world.
The net inflow of capital into Canada in 1955 was considerably larger than in 1954. There were, moreover, large changes in the movements of some components of the capital account between the two years. Direct investment remained at a, relatively high level though it was somewhat smaller than in 1954. Net transactions in Canadian securities resulted in 1955 in a small outflow of capital from Canada, the first time this has occurred since 1949. This followed from a combination of net disinvestment in outstanding Canadian securities, a much smaller volume of new security issues abroad and large repatriations through redemptions. These movements were a response to the narrowing of the differential between interest rates in the United States and Canada which occurred prior to mid-summer 1955. This made it less attractive to borrow in the United States market. It also encouraged United States investors to liquidate their holdings of outstanding Canadian securities. The decline in portfolio investment was offset by a substantial inflow of "other" capital, mostly of a

[Stage Direction]
SUMMARY OF CAPITAL MOVEMENTS (Millions of Canadian Dollars)
			Prelim.	
1952	1953	1954	1955Direct investment in Canada	+346	+426	+376	+350Direct investment abroad	- 77	- 63	- 74	- 70Canadian securities-	Trade in outstanding issues	- 94	- 31	+ 55	- 19New issues	+316	+335	+326	+148Retirements	- 89	-146	-202	-190Foreign securities	- 8	- 24	- 12Official Loan Repayments	+ 56	+ 87	+ 72	+ 69Canadian dollar holdings of foreigners	- 66	- 18	+ 22	+ 91Official holdings of gold and foreign exchange (increase, -)	- 37	+ 38	-124	+ 44Other capital movements	-511	-185	+ 4	+254Net capital movement financing current account balances	-164	+443	+431	+665
The Budget-Appendix
short-term nature. Official reserves of gold and United States dollars, expressed in U.S. funds, were reduced by $42 million to $1,900 million at December 31, 1955, compared with $1,942 million at December 31, 1953.
During 1955 the exchange rate differential between the Canadian and United States dollar narrowed considerably. At December 31, 1954, the United States dollar was $.96 19/32 in terms of the Canadian dollar, and at December 31, 1955, the exchange rate was $.99 29/32. In October of 1955, the Canadian dollar was quoted at par with the United States dollar for the first time since March, 1952, and from mid-November until early December the Canadian dollar was at times at a slight discount. Subsequently the Canadian dollar has remained stable at a premium of less than 1/4 of a cent.

[Stage Direction]
The increase in production during 1955 led to a substantial improvement in employment. In 1954, the average number of persons employed declined by 52,000. In 1955, during each month except January, employment was higher than in 1954. Beginning in May, 1955, the level of employment was also higher each month when compared to the corresponding period in 1953 and the average number of persons employed for the year 1955 as a whole rose by 82,000 above the average for 1953. From the seasonal low in the beginning of 1955 to the peak in employment in the late summer, employment rose by 13 per cent and there were 642,000 more persons at work. This compares with an increase of 416,000 persons with jobs, or a gain of 8 per cent in employment during the same period in 1953. The drop in employment from the summer peak to December was, of course, less severe in 1955 compared to 1953 since the recession began to make itself felt towards the end of that year.


[Stage Direction]
n
PERCENT1946	1947	1948	1949	1950	1951	1952	1953	1954	1955	PERCENT
5
1946	1947	1948	1949	1950	1951	1952	1953	1954	1955

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The increase in employment in 1955 took place in non-agricultural occupations. Agricultural employment actually declined and this marks the return to the trend of recent years when, except for 1954, there has been a shift from rural to urban occupations. Thus, while total employment rose on the average by 2J per cent in 1955, the increase in non-agricultural employment was more pronounced with the number of employed persons up by about 4| per cent. The seasonally adjusted index of non-agricultural employment indicates that the number of persons with jobs reached a peak in September 1955 at a level about 5 per cent above January. For the remainder of the year, only minor changes occurred, and in overall terms stability prevailed. All major industrial groups showed gains in employment during 1955. In durable goods manufacturing, employment, on a seasonally adjusted basis, increased steadily during the year in contrast to the decline throughout 1954. In non-durable goods production, employment had remained fairly stable during 1954 and this continued during the first few months of 1955. In the second half of 1955, however, employment rose considerably.
The increase in employment in 1955 was accompanied by an almost equal growth in the labour force and consequently unemployment was largely unchanged when comparing the annual average for 1954 and 1955. The average number of persons without jobs and seeking work in 1955 was 230,000; this compares with 232,000 unemployed persons in the preceding year. However, a comparison of annual averages obscures the improvement which occurred in the course of 1955. Beginning in May, 1955, unemployment was lower each month than during the corresponding period in the preceding year. This improvement became more pronounced as the year went on and in December, 1955, the number of persons without jobs and seeking work was 48,000 below the level of the same month in 1954.

[Stage Direction]
THE CIVILIAN LABOUR FORCE Annual Averages1 (Thousands of Persons)
-	1952	1953	1954	1955Civilian Labour Force	5,315	5,383	5,426	5,558Male	4,136	4,197	4,207	4,299Female	1,179	1,186	1,219	1,259Non-Agricultural	4,420	4,521	4,547	4,734Agricultural	895	862	879	824Persons without jobs seeking work	129	137	232	230Persons with jobs	5,186	5,246	5,194	5,328In Non-Agricultural Industries	4,295	4,388	4,321	4,510Paid Workers	
Employers, own account workers and	3,773	3,853	3,802	3,996unpaid family workers	522	535	519	514In Agriculture	891	858	873	818Paid Workers	
Employers, own account workers and	111	113	120	106unpaid family workers	780	745	753	712
1955.
1 Average of the quarterly labour force surveys in 1952 and of the monthly surveys in 1953, 1954 and

The Budget-Appendix
The number of persons without jobs and seeking work averaged 4.1 per cent of the labour force in 1955 compared with 4.3 per cent in 1954. The highest unemployment was reached in March, 1955, when there were 401,000 persons without jobs and seeking work or 80,000 more than the number for the same month in 1954. The point of lowest unemployment was reached in August, 1955, with 131,000 jobless persons looking for work. In 1954, unemployment was lowest in September when 168,000 persons were looking for work. In other words a comparison of the seasonal low for unemployment in the two years indicates that in 1955 there were 37,000 fewer persons looking for work than in the previous year. In January, 1956, the number of persons without jobs and seeking work was 286,000 or 77,000 below the level of the comparable month in 1955.
The rise in employment in 1955 was reflected in labour income. The greater number of employed persons worked on the average more hours per week and received more pay during 1955. For example, in manufacturing, average hours worked per week increased by 1 per cent and average hourly earnings rose by almost 3 per cent over the 1954 level. For the economy as a whole, a combination of these factors brought about an increase in labour income of $872 million in 1955. The average annual earnings per paid worker rose from $3,057 in 1954 to $3,136 in 1955, an increase of 2§ per cent. Most of this increase represents a gain in real income, for prices, as indicated by the consumer price index, showed no significant change.
Labour income rose steadily throughout 1955. The seasonally adjusted figures indicate that following a moderate rise in the first quarter, the growth in labour income was most pronounced in the second quarter. For the remainder of the year further substantial increases took place but in each succeeding quarter the expansion continued at a reduced pace.
All major industrial groups in 1955 paid out more in wages and salaries than in the preceding year. The largest increase took place in construction and amounted to 14 per cent. This was followed by finance and other services with a wage and salary bill up by 10 per cent. The increases in all other groups were less than for labour income as a whole. In manufacturing, labour income rose by about 6 per cent;a similar increase in income accrued to persons employed in the utilities, transportation, storage and trade. A more moderate expansion in labour compensation occurred in the primary industries with the total 3 per cent above 1954.
The civilian labour force, which includes both the employed and the unemployed, averaged 5,558,000 for 1955 and accounted for about 53 per cent of the (non-institutional) civilian population over 14 years of age. A similar relationship prevailed in 1954. The agricultural labour force declined by 55,000 persons to 824,000 in 1955.

[Stage Direction]
During 1955 there was a marked expansion of bank loans and money supply as the demand for credit grew with the recovery of business activity. The very rapid expansion in the demand for credit and in bank lending brought increasing tightness to the money market as the year progressed and resulted in an upward movement in interest rates in contrast to the downward movement which had continued since the last quarter of 1953.
At the beginning of 1955 the demand for business loans was relatively slow, and the banks continued to purchase substantial quantities of government securities as they had done in 1954. Although the expansion in bank holdings of
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The Budget-Appendix government securities had slowed down noticeably by the end of the first quarter, the chartered banks were able to add moderately to their holdings in the second quarter, despite the fact that bank loans were also increasing. Although the chartered banks were in a position to add to their holdings of government securities and later to expand bank loans as well, these changes were accompanied by a noticeable decline in the reserve ratio of chartered banks from about 8 [DOT] 9 per cent at the beginning of the year to 8 [DOT] 3 per cent by June. Shortly after the middle of the year, the banks ceased to be net buyers of government securities and from the latter part of August to the end of the year were substantial sellers. Thus one effect of the expansion of bank credit during the year was to reduce reserve ratios and as the year progressed the expansion rested increasingly on the conversion of the chartered banks' liquid assets and bonds to cash. From the end of July until the end of December, chartered bank holdings of government securities fell by $639 million.

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-	Long-Term Bonds0)	3-5 year Bonds (2)	3 Month Treasury Bills(s)	Bank Rate	Canada U.S. Spread	Canada U.S. Spread	Canada U.S. Spread	Canada U.S.	1953-	June	3-72	3-07	*65	3-46	2-88	[DOT]58	1-69	2-23 -	[DOT]54	2-00	2-00September	3-75	2-99	[DOT]76	3-58	2-73	[DOT]85	1-91	1-96 -	[DOT]05	2-00	2-00December	3-61	2-78	*83	3-53	2-21	1-32	1-88	1-68	[DOT]20	2-00	2-001954-	March	3-27	2-48	[DOT]79	2-95	1-77	1-18	1-62	1-06	[DOT]56	2-00	1-753-11	2-52	59	2-62	1-78	[DOT]84	1-57	[DOT]63	94	2-no	1 -5 nSeptember	3-01	2-51	50	2-32	1-79	[DOT]53	1-21	102	19	2-00	1-50December	3-05	2-57	48	2-36	1-94	[DOT]42	1-08	1-25 -	17	2-00	1-501955-	March	2-96	2-67	29	2-21	2-26	-[DOT]05	113	1-29 -	16	1-50	1-50June	2-94	2-75	19	2-24	2-38	-[DOT]14	1-36	1-51 -	15	1-50	1-75September	3-14	2-88	26	2-71	2-76	-[DOT]05	1-77	2-10 -	33	2-25	2-2_December	3-41	2-88	53	3-43	2-83	[DOT]60	2-59	2-59	00	2-75	2-501956-	February	3-28	2-80	48	313	2-63	[DOT]50	2-51	2-39	12	2-75	2-50
0) Canada-15 year theoretical 15th of each month. U.S. 2|'s of 67-72, Wednesday nearest 15th.
(2)	Canada-Average of 3-5 year theoreticals, 15th of each month. U.S.-Federal Reserve average of 3-5 year bonds, nearest mid-month.
(3)	Average tender nearest 15th of month.
In the early weeks of the year the chartered banks were buying substantial quantities of government securities and interest rates declined. However, short-term rates turned up in mid-February. Yields on middle and long-term government securities reached their low points before the end of the first quarter and the general decline of interest rates was terminated. Interest rates rose throughout the remainder of the year except for the last two or three w^eeks of December when there was a slight decline. The rise in interest rates was particularly marked in the latter part of the year when the banks were selling government securities on a large scale to finance loan expansion.
The bank rate was lowered from 2 per cent to per cent on February 1st to bring it more in line with the short-term market rate. This was in keeping with the adoption of a more flexible bank rate policy which could be effective

The Budget-Appendix
through the newly developed short-term money market. As bank credit continued to expand rapidly in the third quarter, interest rates rose further and the bank rate was raised on August 5th from 1| to 2 per cent. It became increasingly evident that the rate of loan expansion might outrun the growth in productive capacity and the objective of monetary policy was one of offering increasing resistance. The bank rate was subsequently raised from 2 to 2\ per cent on October 12th, and from 2f to 2f per cent on November 18th. With the rapid and continued expansion of bank loans the chartered banks were pressed for cash in the third and fourth quarters and sold substantial amounts of government securities. Because of these developments, recourse to the Bank of Canada, by the chartered banks and the dealers in the short-term money market, was quite frequent in the third and fourth quarters.

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As at end of 1954	Increase in 1955	As at end of 1955IQ	2 Q	3Q	4 Q	Total	(millions of dollars)	Assets	Bank of Canada deposits and notes	791	- 21	5	20	45	49	840Day-to-day loans	68	1	26	- 50	36	13	81Treasury bills	360	75	- 59	- 7	58	67	427Sub-total	1,219	55	- 28	- 37	139	129	1,348Government Bonds	2,953	211	80	- 68	-544	-321	2,632Insured mortgages	74	36	35	64	85	220	294Provincial and municipal securities	441	37	35	37	- 10	99	540Corporate securities	353	32	44	20	33	129	482Special categories of loans!1)	859	-114	- 57	- 12	234	51	910General loans	3,238	21	248	245	229	743	3,981Sub-total	4,965	12	305	354	571	1,242	6,207Total of above Canadian assets	9,137	278	357	249	166	1,050	10,187Liabilities	Personal savings deposits	5,218	208	147	184	-124	415	5,633Government of Canada deposits	176	- 30	- 39	27	383	341	517All other (less total float)	3,462	115	234	42	-156	235	3,697Total Canadian deposits (less float)	8,856	293	342	253	103	991	9,847
(>) See Table 16.
In the early part of the year, the yields on Canadian Government long-term bonds were falling relative to rates in the United States. The United States market was, therefore, less attractive to Canadian borrowers, and Canadian Government securities were less attractive to American investors. After midyear, the spread between interest rates in Canada and the United States again widened and towards the end of the year Canadian borrowers were again resorting to the New York market in larger volume.
For the year as a whole, the increase in bank loans amounted to $794 million or 19 per cent, and in absolute terms was the largest on record. In addition to the increase in bank loans, there was a marked expansion in lending on insured mortgages on residential real estate and in bank holdings of provincial, municipal and corporate securities.
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The Budget-Appendix

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CHARTERED BANK LOANS IN CANADA (>)
As at Dec. 31, 1955	Increase during	Per cent Increase in 19551955	1954	1953	General	(millions of dollars)	
Personal (i) Fully secured by marketable bonds and					
stocks	339	86	-17	11	34%(ii) Other	465	113	43	66	32Instalment finance companies	297	116	-45	21	64Other financial institutions (2)	144	19	13	8	16Merchandisers	635	73	-22	101	13Farmers	366	28	5	25	8Construction contractors	278	91	25	22	49Public utilities, transportation and communication	companies	141	73	8	- 5	108Industrial concerns	976	77	-47	151	9Other	340	67	34	48	25Total general loans	3,981	743	- 3	448	23%Special Categories	Provincial and municipal governments	207	43	7	-13	26Investment dealers and brokers(')	179	36	-10	- 1	25Grain dealers	361	-43	13	134	-11For purchase of Canada Savings Bonds	163	15	-18	19	11Total special categories	910	51	- 8	139	6%Total loans in Canada	4,891	794	-11	587	19%
(') Excluding day-to-day loans.
(2) Includes trust, loan, mortgage, investment and insurance companies.
It is estimated that consumer credit outstanding rose by about $350 million in 1955 compared with an increase of $114 million in 1954 and $326 million in
1953.	A considerable part of the increase in bank lending was associated with this increase in consumer credit. For example, loans to instalment finance companies rose by $116 million or 64 per cent, and personal loans other than those fully secured by marketable bonds and stocks increased by $113 million or 32 per cent. Loans to merchandisers were $73 million or 13 per cent higher than in 1954. The high level of construction activity brought with it a large increase of $91 million or 49 per cent in loans to contractors.
The public's holdings of currency, bank deposits and Government of Canada securities increased in 1955 by $1,115 million. The total increase is accounted for by chartered bank activity since the Federal Government had a moderate excess of receipts over outlays which amounted to $112 million-the increase in debt outstanding being more than offset by increases in government cash balances and in bonds held in government accounts. This excess of receipts over outlays takes into account both budgetary and extra-budgetary activities, changes in government loans and advances, and the operation of government accounts such as the Unemployment Insurance Fund. In 1954 the government excess of outlays over receipts amounted to $227 million and accounted for almost all of the $232 million expansion in the public's holdings of currency, bank deposits and Government of Canada securities.
In 1954 substantial amounts of the public's holdings of government bonds were converted to cash. In 1955 there was an increase of $370 million in the public's holdings of government securities but this increase was confined for

The Budget-Appendix
the most part to Canada Savings Bonds which are non-market issues. There was some liquidation of market securities in the first half of the year but this was a little more than offset by buying in the last few months. It will be noted that the amount of Government of Canada securities held by the general public at the end of 1955 was about the same as the amount held at the end of 1952, with the increase of $1 -2 billion in holdings of Canada Savings Bonds being offset by a decline of about the same amount in holdings of market securities.

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(Millions of Dollars)
-	1952	1953	1954	1955Currency-notes and coin	1,377	1,429	1,458	1,550Bank deposits-	3,705	3,998	4,241Active deposits	3,796	Inactive notice deposits	4,129	4,211	4,712	5,122Total bank deposits	7,925	7,916	8,710	9,363Government Securities-	6,623	6,650Market securities	7,812	7,651	Non-market securities	1,250	1,632	2,090	2,433Total government securities	9,062	9,283	8,713	9,083Total liquid assets	18,364	18,628	18,881	19,996
1 Includes all holdings other than those of the banking system and the federal government and government accounts.
An important new working arrangement in the operations of the banking system was introduced in the latter part of 1955 when the Bank of Canada suggested that the chartered banks adopt a standard practice regarding the maintenance of a minimum ratio of liquid assets (cash, day-to-day loans and treasury bills) to deposits. The chartered banks agreed to work to achieve by May 31st, 1956, a minimum liquid asset ratio of 15 per cent which they will endeavour to maintain on a daily average basis from June on. With the adoption of this convention it is expected that the lending policies of banks, interest rates and securities markets generally will respond more quickly and smoothly to measures of monetary restraint when these are required in the future.

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Although there was no discernible trend in the consumer price index during 1955, the general index of wholesale prices showed a definite upward movement, rising from 215.7 in January to 221.4 in December. The increase in wholesale prices amounted to just over 2 per cent in 1955 in contrast to a decline of somewhat the same magnitude in 1954. In addition, this apparently moderate upward trend concealed very large increases in some of the components. On the other hand, the consumer price index exhibited comparative stability and was 116.9 in December of 1955 compared with 116.6 a year earlier.
Starting in January at 116.4, the consumer price index reached a low of 115.9 in June, and in the last three months of the year remained unchanged at 116.9. Thus, the increase over 1954 as well as variations from the average were no more than one-half per cent. While there were no marked movements in the
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The Budget-Appendix

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1949- IOO

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-	Canada	United States	Total	Food	Total	Food1949	= 100	1947-49=100	1939	63-2	50-2	59-4	47-11940	65-7	52-6	59-9	47-81941	69-6	57-9	62-9	52-21942	72-9	63-4	69-7	61-31943	74-2	65-2	74-0	68-31944	74-6	65-5	75-2	67-41945	75-0	66-3	76-9	68-91946	77-5	70-0	83-4	79-01947	84-8	79-5	95-5	95-91948	97-0	97-5	102-8	104-11949	100-0	100-0	101-8	100-01950	102-9	102-6	102-8	101-21951	113-7	117-0	111-0	112-61952	116-5	116-8	113-5	114-61953	115-5	112-6	114-4	112-81954	116-2	112-2	114-8	112-61955	116-4	112-1	114-5	110-91955-January	116-4	112-1	114-3	110-6February	116-3	111-5	114-3	110-8March	116-0	110-7	114-3	110-8April	116-1	111-0	114-2	111-2May	116-4	112-3	114-2	111-1June	115-9	111-0	114-4	111-3July	116-0	111-5	114-7	112-1August	116-4	112-4	114-5	111-2September	116-8	113-7	114-9	111-6October	116-9	113-5	114-9	110-8November	116-9	113-0	115-0	109-8December	116-9	112-4	114-7	109-51956-January	116-8	111-5	114-6	109-2
The Budget-Appendix
components, there appeared to be a tendency for costs of shelter and some other services to rise slowly. The largest increase occurred in the shelter index which was some 2 per cent higher in 1955 than in 1954.
The United States consumer price index experienced somewhat the same degree of stability as the Canadian index. In contrast to the Canadian index, however, that of the United States averaged a little less for 1955 than for 1954. Nevertheless, the trend in the United States over the year paralleled the Canadian pattern and the total index was slightly higher in December than in January. The index of food prices in the United States showed a small decline in 1955, whereas there was no significant movement in Canadian food prices.
The Canadian index of wholesale prices moved slowly but steadily upward throughout 1955. This upward movement was a reversal of the downward trend which had continued from the post-Korean peak in 1951 to late 1954. With the important exception of a further decline of 5 per cent in the price of farm products over the year, most other wholesale prices followed the upward movement of the general index. The index of industrial materials showed an increase of 8 per cent during 1955 while building materials rose between 3 and 4 per cent. The greatest increase occurred in non-ferrous metals which advanced almost 18 per cent over the year. Other significant increases took place in the prices of wood and iron products which showed a rise of 5 and 7 per cent, respectively.

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WHOLESALE PRICE INDEXES (1935-39 = 100)
-	General Wholesale Prices	Fully and Chiefly Manufactured Goods	Canadian Farm Products99-2	101-9	92-6108-0	109-9	96-1116-4	118-8	106-6123-0	123-7	127-1127-9	126-9	145-4130-6	129-1	155-3132-1	129-8	166-4138-9	138-0	179-5163-3	162-4	192-2193-4	192-4	232-1198-3	199-2	228-7211-2	211-0	236-7240-2	242-4	268-6226-0	230-7	250-2220-7	228-8	221-6217-0	224-2	211-8218-9	224-5	207-2215-7	222-1	210-3217-4	223-2	210-0217-4	224-1	207-0218-5	223-5	216-1vr^v	217-8	223-1	216-7J ne	218-7	224-1	215-5J,]ly 	218-4	223-7	213-1219-6	225-3	204-8220-9	226-4	202-7220-0	225-7	196-8220-7	226-5	196-9221-4	226-6	197-1222-0	227-3	196-7
Note: 1955 Indexes are preliminary. The Canadian Farm Produets index is fully revised only up to July 1954 and does not reflect final payments on all grains for subsequent months.
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The Budget-Appendix
Part II

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Table of Contents
Page
1.	Introduction	
23922.	Highlights of Governmental Financial Operations during 1955-56	
23923.	Budgetary Accounts	
2394A.	Revenues	
2394B.	Expenditures	
24034.	Summary of Assets and Liabilities at March 31, 1956	
2422A. Changes in Principal Liability Classifications during 1955-56	
2424B. Changes in Principal Asset Classifications during 1955-56	
2427C.	Increase in Net Debt	
24335.	The Cash Position	
24336.	The Public Debt	
24357.	Supplementary Detailed Tables	
2443
The Budget-Appendix
Part II

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The figures which are presented in this Part for the fiscal year ending March 31, 1956 are preliminary and subject to revision. The Government's fiscal year ends on March 31 and after that date the books must remain open for several weeks to record various adjusting entries and to take into account all payments up to and including April 30 made on account of expenditures originating in and properly chargeable to the fiscal year 1955-56. Final results for each year's operations are not available before some time in August. The figures used in this White Paper are based on ten months actual and two months estimated. The final figures when they become available next August may vary to some extent from those given in the following pages.
2. HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

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Budgetary transactions
Budgetary revenues of the government for the fiscal year ending March 31, 1956 are now estimated at $4,385 million. This is $183 million or about 4 per cent more than last year's budget forecast of $4,202 million and approximately $262 million more than the total collected in 1954-55.
. Budgetary expenditures are estimated at $4,437 million. This is $75 million or 2 per cent more than the budget forecast and about $162 million more than the total spent in 1954-55.
On the basis of these figures the indicated deficit for the fiscal year is about $52 million compared with a budget forecast of a deficit of $160 million and a deficit of $152 million for 1954-55.
On the revenue side of the government's budgetary operations the most noteworthy feature has been the buoyancy of the revenues reflecting the general level of activity and production which has been considerably above that which was the basis for the budgetary forecast of $4,202 million last April. Collections from all sources except personal income tax are higher than those of the previous year and when the books for the year are closed it is expected that all categories of revenue except corporation income tax will have equalled or exceeded the budget forecast.
. On the expenditure side the most significant feature has been the continued importance of defence in the government's expenditure programme. Defence expenditures are expected to amount to $1,760 million in 1955-56, an increase of $72 million or 4 per cent over the preceding year representing 40 per cent of the government's total budgetary outlay. In 1954-55 defence expenditures amounted to $1,688 million and constituted 40 per cent of the total.

The Budget-Appendix
Non-budgetary transactions
Although the budgetary deficit is $52 million the cash balances at the year end will be about $297 million greater than a year ago. This is the result of receipts of $385 million from annuity, insurance and pension accounts and other non-budgetary sources plus an increase of $247 million in the outstanding debt less $283 million paid out in loans, advances, investments and other non-budgetary disbursements.
The following table summarizes the budgetary and non-budgetary transactions for the fiscal year 1955-56 and indicates how they affect the Government's debt and cash position. For purposes of comparison the corresponding figures for 1954-55 are also shown. An explanation of these transactions in greater detail is given in the section on "The Cash Position".

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(In millions of dollars)
Summary of Budgetary and Non-Budgetary Transactions and Changes in Cash Position
Fiscal Y ear Ended March 31
Budgetary revenues	
Budgetary expenditures	
Budgetary deficit	
Non-budgetary receipts and credits (excluding unmatured debt transactions)-	_
Repayments of loans, investments and working capital advances...
Net government annuities account receipts	
Net insurance and pension account receipts	
Other non-budgetary receipts	
Non-budgetary disbursements and charges (excluding unmatured debt transactions)-
Loans, investments and working capital advances	
Other non-budgetary disbursements	
1956	195
(Estimated)	
4,385	4,123
-4,437	-4,275
-52	
118	232
67	66
141	139
59	43
S85	480
-253	-122
-30	-139
-28$	-261
Net amount available from non-budgetary transactions	
Overall cash available from budgetary and non-budgetary transactions..
Net increase or decrease (-) in unmatured debt outstanding in the hands of the public..		
Net increase or decrease (-) in cash balances on deposit to the credit of the Receiver General	
50
297
219
-196
Old age security fund
Pension payments from the old age security fund are estimated at $366 million in 1955-56 and tax receipts credited to the fund at $316 million resulting in a deficit of $50 million for the year covered by a temporary loan by the Minister of Finance to the fund. During 1954-55 pension payments amounted to $353 million and tax receipts credited to the fund to $290 million, resulting in an excess of pension payments over tax receipts of $63 million. Under the authority of a vote of parliament, $63 million representing the deficit of the fund sustained during 1954-55 was charged as a budgetary expenditure in 195556. The 1955-56 deficit of $50 million is carried in the accounts as a temporary loan to the fund.
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The Budget-Appendix Debt transactions
During 1955-56 it is estimated that the government will have issued securities amounting to $3,229 million (excluding treasury bills issued to refund maturing bills) and redeemed maturing issues to a total of $2,331 million, resulting in an increase of $898 million in unmatured debt. However, as other liabilities are expected to increase by $205 million the government's gross public debt will have increased by $1,103 million to $19,055 million at March 31, 1956. During the same period the net assets are expected to increase by $1,052 million to $7,740 million. As a result the government's net debt is expected to be $11,315 million at March 31, 1956, the increase of $52 million being equivalent to the budgetary deficit for the fiscal year.
Cash 'position
Cash balances on deposit to the credit of the Receiver General are expected to increase by $297 million during the fiscal year reflecting the increase of $247 million in unmatured debt outstanding in the hands of the public (after taking into account sinking fund purchases and transactions in the securities investment account) and the net amount of $50 million available from budgetary and non-budgetary transactions ($102 million available from non-budgetary transactions offset by the amount of $52 million required to cover the estimated budgetary deficit for the fiscal year).
3.	BUDGETARY ACCOUNTS
Total revenues, estimated at $4,385 million for 1955-56, are $262 million more than the total for the previous fiscal year. Total expenditures are estimated at $4,437 million, an increase of $162 million over 1954-55. The deficit for the fiscal year is estimated at $52 million or $100 million less than the deficit of $152 million for the year ended March 31, 1955.
A summarized statement of the estimated revenues and expenditures and deficit for the fiscal year ending March 31, 1956, with the actual figures for the fiscal years ended March 31, 1949 to 1955, inclusive, is given in the following table.

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Budgetary Revenues, Expenditures and Surplus or Deficit (In millions of dollars)
Fiscal Year Ended March 31	Budgetary Revenues	Budgetary Expenditures	Surplus or Deficit (-)1949	2,771-4 2,580-1 3,112-5 3,980-9 4,360-8 4,396-3 4,123-5 4,385-4	2,175-9 2,448-6	595-51950	131-51951	2,901-2 3,732-9 4,337-3 4,350-5	211-31952	248-01953	23-51954	45-81955	4)275 - 3 4,437-1	-151-8-51-7

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Budgetary revenues are expected to amount to $4,385 million in the fiscal year 1955-56. This is $262 million, or 6 per cent, higher than in the previous year. It is estimated that of the total revenues for the year, $3,993 million, or 91 per cent, will have been derived from taxes and $392 million, or 9 per cent, from non-tax revenues.
A statement of estimated revenues for 1955-56 classified by major categories, and the corresponding figures for the actual receipts in 1954-55 is given in Table III.

The Budget-Appendix

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'949	1950	1951	1952	1953	1954	1955	1950*
[DOT]estimated

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2396
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The Budget-Appendix

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Budgetary Revenues by Major Classifications
(In millions of dollars)
	Fiscal Year Ended March 31				Increase or Decrease (-)	
Source	1956 (Estimated)	1955	Amount	Per cent	Amount	Per cent	Amount	Per centTax revenues- Income tax- Personal*	1,180 0	26-9	1,183-4	28-7	-3-4	-0-3Corporation* 	1,035-0	23-5	1,020-6	24-7	14-4	1-4On dividends, interest, etc., going abroad 	67-0	1-5	61-3	1-5	5-7	9-3Excise taxes- Sales* 	640-0	14-6	572-2	13-9	67-8	11-8Other 	260-0	5-9	252-0	6-1	8-0	3-2Customs import duties	475-0	10-8	397-2	9-6	77-8	19-6Excise duties 	245-0	5-6	226-5	5-5	18-5	8-1Succession duties 	75-0	1-7	44-8	1-1	30-2	67-4Other taxes	16-0	0-4	15-5	0-4	0-5	3-25,993-0	91-0	5,775-5	91 -5	519-5	5-SNon-tax revenues- Return on investments	147-0	3-4	134-0	3-2	13-0	9-7Post office	136-8	3-1	131-3	3-2	5*5	4-2Other non-tax revenue	108-6	2-5	84-7	2-1	23-9	28-2595-4	9-0	550-0	8-5	42-4	12-1Total revenues	4,385-4	100-0	4,123-5	100-0	261-9	6-41955-56	1954-55
Excluding tax credited to the old age security fund-
2% personal income tax	
2% corporation income tax	
2% sales tax	
102-5	100-9
53-2	46-0
160-0	143-1
315-7	290-0
(1) Tax Revenues
Tax on personal incomes
The personal income tax in 1955-56 will again be the largest source of government revenue. The yield for the year (excluding the old age security tax) is estimated at $1,180 million. This is almost the same as the revenue from this source in the previous year although the rates of tax were reduced with effect from July 1, 1955, by amounts which average about 10 per cent. The continuing high level of revenue from lower rates of tax is due to the increase in the total of personal incomes that took place in 1955.
In addition the 2 per cent tax on personal incomes levied under the Old Age Security Act is expected to yield an estimated amount of $103 million during 1955-56 compared with $101 million in 1954-55. The maximum tax is $60 per person. This revenue is credited to the old age security fund
Corporation income tax
Corporation income tax will be the second largest class of government revenue in 1955-56. The yield (excluding the old age security tax) is estimated at $1,035 million, an increase of $14 million over the previous year. This increase, which occurred despite the fact that the rate of tax on income in excess of $20,000 was reduced from 47 per cent to 45 per cent commencing January 1, 1955, is due to the increase in corporation profits in 1955.

The Budget-Appendix
In addition the 2 per cent tax levied on income of corporations under the Old Age Security Act is expected to yield $53 million during 1955-56 compared with $46 million collected from this source in 1954-55. These collections are credited to the old age security fund.


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«__TOTAL REVENUE ______
FROM TAXES 91 °/o


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1956*

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Taxes on interest, dividends, rents and royalties going abroad
Revenue under this heading is derived from taxes withheld on payments of interest, dividends, rents, royalties, etc. made to non-residents. The estimated total of $67 million in 1955-56 is $6 million greater than that in the previous year reflecting increased dividend payments from higher corporate profits and larger investment in 1955.
Excise taxes
Included under this heading are the revenues from the general sales tax and the special excise taxes levied on a wide range of manufactured products. Total net collections for the year are estimated at $900 million, an increase of $76 million, or 9 per cent, over 1954-55.
# If is estimated that the sales tax, which from the standpoint of revenue is the most important tax levied under the Excise Tax Act, will have yielded a net revenue of $640 million in the year (excluding the 2 .per cent old age security sales tax). This is $68 million, or 12 per cent, more than the amount of $572 million received from this source in 1954-55. Since there has been no substantial change in the general price level during the year this increase in revenue is due to increased production and imports of taxable goods during the year.
Excise taxes other than the general sales tax will yield approximately $260 million, or $8 million more than in 1954-55. This increase occurs despite the fact that with effect from April 6, 1955, the tax on passenger automobiles was reduced from 15 per cent to 10 per cent and the tax on tires and tubes for automotive vehicles was repealed.
67509-152J
[Stage Direction]
The Budget-Appendix
Because of the very high level of passenger automobile sales in 1955-56 the revenue from the excise tax on this item will exceed that of the previous year by approximately $8 million despite the fact that the rate of tax is lower by one-third. This continuing high level of revenue from the tax on automobiles plus an increase of $8 million in the revenue from the taxes on tobacco products largely accounts for the revenue from excise taxes in 1955-56 exceeding that of the previous year.
Other items showing an increase in excise tax revenue in 1955-56 are television sets, radios and tubes, soft drinks, jewellery, toilet preparations and wines. On the other hand the taxes on candy and chewing gum and some sundry commodities will have produced less revenue in 1955-56 than in the previous year.
In addition the 2 per cent tax on sales levied under the Old Age Security Act is expected to yield $160 million during 1955-56 compared with $143 million in the previous year. This revenue is credited to the old age security lund.
Customs import duties
Revenue from customs import duties is expected to amount to $475 million, an increase of $78 million, or 20 per cent, from 1954-55. This increase in revenue reflects the increase in the volume and value of imports during the year.
Excise duties
Excise duties are levied exclusively on alcoholic beverages and tobacco products. (Additional taxes on tobacco products are levied under the Excise Tax Act). The revenue from excise duties for the year is estimated at $245 million, an increase of $18 million over the previous year. Estimated receipts from the taxes on alcoholic beverages, before deducting refunds, amount to $140 million, an increase of $10 million from the previous year. The gross receipts from the taxes on tobacco products are estimated at $109 million, an increase of $8 million.


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1949	50	51	52	53	54	55	56*
[DOT]estimateo

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1949	50	51	52	53	54	55	56*

The Budget-Appendix
Succession duties
Revenue from succession duties is estimated at $75 million in 1955-56 an increase of $30 million, or 67 per cent over the previous year. Two-thirds of the increase came from payments in respect of one unusually large estate.
Other taxes
The principal source of revenue under this heading is the tax on the premium income of insurance companies which will produce approximately $15 million in 1955-56 compared with $14 million in the previous year. Small amounts of revenue are also received from special taxes on the export of electrical energy from Canada and the tax on the export of furs from the Northwest Territories.
(2) Non-Tax Revenues
Non-tax revenues for 1955-56 are estimated at $392 million, an increase of $42 million over the total of $350 million for the previous fiscal year. It is to be noted that the classification "special receipts and credits" has been eliminated and items which in previous years were shown under this heading have been reclassified and appear under the appropriate heading in the nontax revenue category. The following table presents a comparative summary of non-tax revenues for the current and the previous year.
TABLE IV (In millions of dollars)
Non-Tax Revenues	Fiscal Year Ended March 31	Increase or Decrease (-)	1956 (Estimated)	1955	Amount	Per cent136-8	131-3	5-5	4-2147-0	134-0	13-0	9-71-6	1-6	2-8	1-8	1-0	55-616-1	14-1	2-0	14-222-4	31-6	-9-2	-29-117-3	18-0	-0-7	-3-945-4	14-6	30-8	211-030	4-6	-1-6	34-8
392-4	350-0	42-4	12-1
				
Post Office
Gross post office receipts for 1955-56 are estimated at $157 million. After making authorized disbursements from revenue of $20 million for salaries and rent allowances at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through or delivered in foreign countries, etc., net post office receipts credited to budgetary revenues are estimated at $137 million. Gross receipts for 1955-56 are expected to exceed those of the previous year by $6 million. As estimated payments from revenue are the same as the payments in 1954-55, the net increase in post office receipts credited to budgetary revenues is $6 million.
As costs of operating the Post Office during 1955-56 (excluding the $20 million charged to revenue) are expected to total $127 million, net revenue will exceed net costs by $10 million. However, in making this comparison it is to be noted that the total shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government
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The Budget-Appendix departments and agencies, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.
Return on investments
Return on investments is expected to yield $147 million, an increase of $13 million over the total of $134 million received in the previous year.
Payments from Crown corporations are estimated at $83 million. This is $5 million more than the total received during the previous year and is due mainly to increases of $8 million in receipts from the Canadian National Railways, $2 million from Central Mortgage and Housing Corporation and $2 million from Polymer Corporation Limited offset in part by decreases of $3 million in profits received from the Bank of Canada and $4 million in the surplus earnings of Canadian Arsenals Limited. The increase of $8 million in the amount expected to be received from the Canadian National Railways reflects a dividend of $11 million paid on the 4 per cent preferred stock of the company held by the government offset in part by a decrease of $3 million in interest on loans.
Receipts from other loans and investments are estimated at $64 million an increase of $8 million over the previous year due mainly to increases of $5 million in the earnings of the securities investment account and $4 million on sinking funds and other investments held for the retirement of unmatured debt.
A comparative summary of the estimated receipts for 1955-56 and the amounts received in the previous year is given in the following table.

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(In millions o( dollars)
Return on Investments	Fiscal Year Ended March 31	Increase1956 (Estimated)	1955	Decrease (-)Loans to, and investments in, Crown corporations-	38-3	41-5	-3-22-2	6-2	-4-011-9	41	7-818-5	16-2	2-340	4-3	-0-350	3-3	1-72-9	2-5	0-483-8	78-1	4-7Other loans and investments-	22-5	22-8	-0-3110	12-0	-1-010	10	Soldiers and general land settlement loans and Veterans	4-9	4-9	10-8	10-9	-0-15-2	0-2	5-0Sinking fund and other investments held for retirement	6-3	2-7	3-62-5	1-4	1-164-8	56-9	8-3147-0	134-0	13-0
Premium, discount and exchange
Premium, discount and exchange transactions in the current fiscal year are expected to result in a net credit of $2 million to revenues compared with a net charge of $4 million to expenditures in the previous fiscal year.﻿MARCH 20. 1956
The Budget-Appendix
Bullion and coinage
Revenue under this heading arises out of the operations of the Royal Canadian Mint and includes assaying, refining and handling charges and the net gain on coinage and refining operations. The estimated amount credited to bullion and coinage revenue for 1955-56 is S3 million, an increase of SI million over the previous year.
Privileges, licences and permits
It is estimated that revenues of $16 million will be received during the fiscal year on account of privileges, licences and permits compared with $14 million received during 1954-55. Approximately $7 million of this total is collected by the Department of Transport, mainly on account of aircraft landing fees, rentals of hangar accommodation, office, shop and garage space and living quarters and land and water power rentals.
Proceeds from sales
An amount of $22 million is expected to be received during the current fiscal year as proceeds from sales, a decrease of $9 million from the total received in 1954-55. This amount includes $7 million from Crown Assets Disposal Corporation representing amounts realized from the disposal of surplus Crown assets (after deducting certain agency fees and transfers), $6 million under agreements of sale, and $5 million from Central Mortgage and Housing Corporation representing the proceeds from the sale of wartime housing properties, including depreciation provisions set aside by the Corporation in previous years on properties that have now been sold.
Services and service fees
It is estimated that $17 million will have been received during the fiscal year for services and service fees by the various departments of the government, a decrease of $1 million from the previous year. Approximately 75 per cent of these fees are collected by three departments-$6 million by Department of Trade and Commerce mainly for services for the inspection, weighing, storage and elevation of grain and for electricity, gas and weights and measures inspection service; $5 million by the Royal Canadian Mounted Police mainly for police services to provinces and municipalities; and $3 million by the Department of Transport chiefly for wharfage and other canal and marine service fees, steamship inspection service, air-ground radio service at airports, and government telegraph and telephone service.
Refunds of previous years' expenditure
Revenues in this category consist of amounts received during the current fiscal year representing refunds of expenditures in previous years. The estimated amount of $45 million received during 1955-56 compares with a total of $14 million received during the previous year. The increase of $31 million is due almost entirely to a repayment of $30 million received from the Government of the United States of advances by Canada on contracts for the supply of aircraft, engines and equipment. The arrangement is that when Canada places contracts with the Government of the United States, payments of the estimated costs are made to the United States treasury. If these estimated costs are revised or if there are reductions in the contracts the Government of the United States makes refunds of the overpayments.
Miscellaneous
Miscellaneous revenue is expected to amount to $3 million for the year 1955-56 compared with $5 million in the previous fiscal year. The decrease is due mainly to the fact that there is no comparable amount in the current year
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The Budget-Appendix to the $1 million, representing abnormal royalties and licence fees due to war production disallowed to owners and licensers of patents, which was transferred from a suspense account to revenue in the previous year.
(3) COMPAHISON OF ACTUAL REVENUE WITH BUDGET FORECAST
Total budgetary revenues for 1955-56, excluding revenues from the old age security taxes, as now estimated are expected to be $183 million, or about 4 per cent more than the forecast made in the budget speech of April 5, 1955. It is expected that when the books for the year are closed revenue from all sources except the tax on corporation profits and miscellaneous taxes will have exceeded expectations. This excess of revenues over the amounts forecast reflects the fact that the general level of economic activity and production throughout the year has been considerably above the level which formed the basis for the budget forecast.
The following table shows the extent to which actual revenues for 1955-56, as now estimated, differ from the budget forecast.

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Comparison of Budget Forecast with Actual Revenues for Fiscal Year Ended March 31. 1956
(In millions of dollars)
Source of Revenues	Budget Forecast of Revenues	Actual Revenues (Estimated)	Increase or Decrease (-) compared with Budget Forecast1,150-0	1,180-0 67-0	30-065-0	2-01,057-0 45-0	1,035-0 75-0	-22-030-0410-0	475-0	65-0238 0	245-0	7-0599-0	640-0	41-0231-0	260-0	29-017-0	16-0	-1-0
3,812-0 390-0	3,993-0 392-4	181-0
			2-4
			
	4,202-0	4,385-4	183-4
			
The estimated revenue from the personal income tax is $30 million, or 3 per cent, above the budget forecast. This is because the total of personal incomes for the year reached a level above what was anticipated a year ago.
The revenue from corporation income tax as now estimated is $22 million less than forecast despite the fact that corporate profits in 1955 exceeded expectations. This contradictory result is due to the fact that corporations are entitled under the Income Tax Act to base their monthly tax remittances for the first nine months of a payment period upon either their actual profits in the preceding year or the estimated profits of the current year and the option had a somewhat greater effect than anticipated.

The Budget-Appendix
The extent to which the estimated revenue from customs import duties has exceeded expectations is a reflection of the upsurge in imports which accompanied the rapid rise in production and economic activity.
The estimated revenue from both sales and other excise taxes is well ahead of expectations as the level of consumption rose to new highs. The extent to which new car sales has exceeded expectations is one of the main reasons why revenue from other excise taxes passed the budget forecast.
B.	EXPENDITURES
Budgetary expenditures for 1955-56 are estimated at $4,437 million, an increase of $162 million over the 1954-55 total of $4,275 million.

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1200

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_________________FISCAL YEARS ENDED MARCH 31	MILLIONS OF DOLLARS

1049	50	51	52	53	54	55	5«*
[DOT]00

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1949	50	51	52	53
[DOT]estimated

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I * I I I
Lilli 1111
300
50 SI AS S3 54	55	55*
HEALTH .WELFARE & SOCIAL SECURITY	1*200
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|Ti
iiinni
600
1049	50	51	52	53	54	55	55*
SUBSIDIES & TAX RENTAL PAYMENTS TO PROVINCES
1940	50	51	52	53	54	55	55*
Note: The lightly shaded area in the chart for Health, Welfare and Social Security represents pension payments out of the old age security fund.
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The Budget-Appendix
A comparative summary of estimated expenditures by departments and principal purposes for the fiscal year 1955-56 and actual expenditures for the preceding year is given in the following table:

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Statement of Budgetary Expenditures by Departments and Major Classifications
(In millions of dollars)
	Fiscal Year Ended March 31				Increase	
-	1956 (Estimated)	1955	or Decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centNational Defence	1,740-3	39-2	1,666-0	39-0	74-3	4-5Defence Production	16-3	0-4	18-9	0-4	-2-6	-13-8Civil defence	3-8	0-1	3-1	0-1	0-7	22-8Public debt charges-	1,760-J,	39-7	1,688-0	39-5	72-i	4-3Interest on public debt	490-9	11-0	477-9	11-2	13-0	2*7Other debt charges	22-0	0-5	24-4	0-6	-2-4	-9-8Provincial subsidies and tax rental payments (including transitional grant to	612-9	11-6	602-3	11-8	10-6	8-1Newfoundland)	352-1	7-9	359-0	8-4	-6-9	-1-9Family allowances	
Unemployment Insurance Act-Administration and Government's contribu-	382-4	8-6	366-5	8-6	15-9	4-3tion	
Government contributions with respect	61-0	1-4	59-9	1-4	1-1	1-8to the superannuation account	31-5	0-7	37-4	0-9	-5-9	- 15*8Agriculture	88-1	2-0	81-8	1-9	6-3	7-7Atomic Energy	19-5	0-4	15-0	0-3	4-5	30-0Canadian Broadcasting Corporation....	31-2	0-7	29-2	0-7	2-0	6-8Citizenship and Immigration	32-7	0-7	28-0	0-7	4-7	16-8External Affairs	45-4	1-0	43-8	1-0	1-6	3-7Finance	36-4	0-8	35-3	0-8	i-i	3-1Mines and Technical Surveys	39-5	0-9	43-7	1-0	-4-2	-9-6National Health and Welfare	153-8	3-5	127-1	2-9	26-7	21-0National Research Council	16-3	0-4	15-7	0-4	0-6	3-8National Revenue	
Northern Affairs and National Re-	56-7	1-3	55-0	1-3	1-7	3-1sources	25-8	0-6	20-2	0-5	5-6	27-7Post Office	126-5	2-9	123-6	2-9	2-9	2-3Public Works	140-0	3-2	130-8	3-1	9-2	7-0Royal Canadian Mounted Police	37-0	0-8	35-5	0-8	1-5	4-2Trade and Commerce	37-3	0-8	17-5	0-4	19-8	113-1Transport	135-7	3-1	159-2	3-7	-23-5	-14-8Veterans Affairs	249-1	5-6	240-1	5-6	9-0	3-7Other departments	65-8	1-5	60-7	1-4	5-1	8-4Grand total	4,437-1	100-0	4,275-3	100-0	161-8	3-8
Defence expenditures
Defence expenditures consisting of expenditures of the Departments of National Defence and Defence Production and outlay for the civil defence programme are again the largest category of government expenditure. The total of $1,760 million for the fiscal year is approximately 40 per cent of the aggregate budgetary expenditures of the government. This is an increase of $72 million or 4 per cent over the 1954-55 total of $1,688 million when defence expenditures were 40 per cent of aggregate budgetary expenditures.

The Budget-Appendix
^ Expenditures of the Department of National Defence are estimated at $1,740 million and those of the Department of Defence Production at $16 million, while outlays in connection with the civil defence programme are expected to total $4 million. In 1954-55 expenditures were $1,666 million, $19 million and $3 million respectively.
A comparative summary of defence expenditures for 1955-56 and 1954-55 is shown in the following table:

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(In millions of dollars)
Defence Expenditures	Fiscal Year Ended March 31	Increase or1956 (Estimated)	1955	Decrease (-)Department of National Defence-	Army services	413-6	378-7	34-9Naval services	342-9	279-2	63-7Air services	682-4	641-4	41-01,488-9	1,299-8	189-6Defence research and development	
Mutual aid to NATO countries including contributions	65-9	49-9	16-0to military costs of NATO	
Government's contribution to the permanent services	175-0	260-0	- 85-0pension account	40-1	36-7	3-4Administration and general	20-4	20-1	0-31,740-3	1,666-0	74-3Department of Defence Production-	Capital assistance	6-5	9-7	-3-2Administration and general	9-8	9-2	0-616-8	18-9	-2-6Civil defence programme	3-8	3-1	0-71,760-4	1,688-0	72-4
Estimated expenditures for army, naval and air services amount in the aggregate to $1,439 million, $140 million more than the total for 1954-55. Outlay for army services is $35 million more than in the previous year, that for naval services $64 million more and that for air services $41 million more. Expenditures for defence research and development are expected to amount to $66 million an increase of $16 million over the 1954-55 programme.
Estimated expenditures of $175 million under the mutual aid programme and contributions to the military costs of NATO are $85 million less than the total of $260 million in the previous fiscal year. Under the provisions of section 3 of the Defence Appropriation Act, defence equipment and supplies may be transferred from Canadian stocks to other parties to the North Atlantic Treaty. The estimated replacement value of such equipment and supplies acquired by the Canadian services prior to March 31, 1950 and transferred to NATO countries is charged to this appropriation and credited to a special national defence equipment account. These credits may be used subsequently to purchase equipment or supplies for the army, naval or air services of the Canadian forces. In accordance with Vote 236 of Appropriation Act, No. 5, 1955, the estimated replacement value of equipment and supplies, acquired by the Canadian forces since March 31, 1950 and transferred as mutual aid, is credited to the appropriate service allotment instead of being credited to the special defence equipment account and may be expended during the fiscal year for purposes of the Canadian forces.
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The Budget-Appendix
The estimated expenditures of $175 million for 1955-56 include $54 million for transfer of equipment and supplies acquired prior to March 31, 1950, which is credited to the special national defence equipment account, and $109 million in outlays for costs incurred in acquiring and supplying military equipment for and in the training in Canada of aircrews from countries which are parties to the North Atlantic Treaty. The contribution of $12 million on account of Canada's share of the NATO military budgets and infrastructure costs which is also included in this total is unchanged from the total of the corresponding outlay in 1954-55. The percentage share of these costs borne by each nation is established in the North Atlantic Council and is subject to ratification by the respective member governments.
The government's contribution to the permanent services pension account during 1955-56 of an amount equal to If times the contributions by permanent services personnel is estimated to be $40 million consisting of $36 million relating to current contributions and $4 million to contributions for arrears. This is $3 million more than the 1954-55 contribution of $37 million of which $34 million related to current contributions and $3 million to contributions for arrears.
The estimated expenditures of $16 million for 1955-56 for the Department of Defence Production reflect a reduction of $3 million in the programme under which capital assistance is given to private contractors, Crown plants operated on a management fee basis, and Crown corporations undertaking contracts essential to the defence programme. For 1955-56 this capital assistance is estimated at $7 million compared with $10 million in 1954-55.
Civil defence expenditures, estimated at $4 million, reflect an increase of $1 million over the 1954-55 expenditures.
In addition to these budgetary expenditures for defence, there are certain other cash outlays which must be considered in assessing the full effect of the defence programme on the economy of Canada.
The Department of Defence Production makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment, which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are billed to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. It is estimated that as a result of the transactions during 1955-56 the fund will be reduced by $3 million leaving an estimated balance in the account of $70 million at March 31, 1956.
The national defence equipment account, to which is credited the estimated replacement values of equipment and supplies acquired by the Department of National Defence prior to March 31,1950 and subsequently transferred to NATO countries, and to which is charged the cost of replacement equipment, also involves cash outlays which are not reflected as budgetary expenditures. Transfers to the account during the fiscal year are estimated at $54 million while disbursements are expected to total $49 million. The balance available at March 31, 1956 for disbursement in subsequent years is estimated at $279 million compared with $274 million at March 31, 1955.
Under section 11 of the National Defence Act there is provision for the sale of materiel, not immediately required for the use of the Canadian defence forces or the Defence Research Board, to such countries and upon such terms as the Governor in Council may determine. The proceeds of such sales are credited to a special account to be used for the procurement of materiel. Credits to the account during 1955-56 are estimated at $5 million and disbursements are expected to amount to $3 million.

The Budget-Appendix
The following table summarizes the cash disbursements for defence for the past two fiscal years.
TABLE IX (In millions of dollars)
Cash Outlays foe Defence
Budgetary expenditures-
Department of National Defence... Department of Defence Production. Civil defence programme	
Less: value of military equipment and supplies transferred from existing Canadian stocks to NATO countries (included in budgetary expenditures)	
Disbursements from-
National defence equipment account	
Replacement of materiel account-sec. 11, National
Defence Act (net)	
Defence production revolving fund (net)	
Net cash outlay for defence
Fiscal Year Ended March 31		Increase or Decrease (-)
1956 (Estimated)	1955	
1,740-3	1,666-0	74-316-3	18-9	-2-63-8	3-1	0-71,760-4	1,688-0	72-4-54-7	-42-5	-12-21,705-7	1,645-5	60-249-2	74-3	-251-1-5	16-2	-17-7-2-8	-7-4	4-6U-9	83-1	-38-31,750-6	1,728-6	22-0
Public debt charges
Public debt charges in 1955-56 are estimated at $513 million or 11 per cent of the aggregate budgetary expenditures, compared with a total of $502 million or 12 per cent in 1954-55. They are again the second largest item of budgetary expenditure.
Interest on public debt is estimated at $491 million or $13 million more than the total expenditure of $478 million in 1954-55. Interest on unmatured debt is expected to amount to $410 million compared with $406 million in 1954-55; the increase is attributable in part to interest accrued on Canada savings bonds series 10 which was issued in November 1955, and in part tc an increase in the amount of treasury bills outstanding and to higher rates of interest. Interest on annuity, insurance and pension accounts is estimated at $77 million. The increase of $8 million over the total of $69 million in 1954-55 is due to increases of $3 million in respect of the superannuation account, $2 million in respect of the permanent services pension account and $3 million on government annuities account.
Other public debt charges, which include the cost of issuing new loans, the annual amortization of bond discounts and commissions, fees for the services of fiscal agents and registrars, commission for the payment of coupon and fully registered interest, and other costs of servicing public debt are estimated at $22 million for 1955-56 compared with the 1954-55 total of $24 million. The decrease of $2 million is attributable mainly to a decrease in the annual amortization of bond discounts and commissions.
[Stage Direction]
The Budget-Appendix
The table which follows gives a comparative summary of public debt charges for 1955-56 and the previous year:

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(In millions of dollars)
Interest and Other Public Debt Charges	Fiscal Year Ended March 31	Increase1956 (Estimated)	1955	or Decrease (-)Interest on public debt- Unmatured debt and treasury bills- Payable in Canada	399-1	394-3	4-81-5	1-5	Payable in New York	9-8	9-9	-0-1410-4	405-7	4-730	3-0	Annuity, insurance, and pension accounts	77-5	69-2	8-380-5	71-S	8-8Total interest on public debt	490-9	477-9	13-0Annual amortization of bond discounts and commissions.. ..	20-2	22-4	-2-2Servicing of public debt	0-6	0-8	-0-21-2	1-2	Total public debt charges	512-9	502-3	10-6
When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore, in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1955-56 this income is estimated at $147 million as shown in Table V. This sum deducted from the gross total of $491 million for interest shown in the preceding table leaves a net amount of $344 million, the same as for the previous year.
Subsidies and tax rental payments to provinces
Payments to the provinces during 1955-56 for statutory subsidies, rentals under the tax rental agreements, the transitional grant to Newfoundland and the transfer of a portion of income tax receipts from certain public utility companies are estimated at $352 million compared with $359 million in 1954-55.
A comparative summary of the payments for the two years is given in the following table:

[Stage Direction]
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
'Subsidies and Tax Rental Payments to Provinces	1956 (Estimated)	1955	Rentals under tax rental agreements, c. 49, Statutes of 1952..	319-7	327-4	-7-7Statutory subsidies	20-4	20-4	-0-8Transitional grant to Newfoundland	3-1	3-9	Transfer of certain public utility tax receipts- Sec. 6, c. 49, Statutes of 1952	8-9	7-3	1-6352-1	359-0	-6-9
The Budget-Appendix
Payments under the tax rental agreements in 1955-56 are $8 million less than in the previous year reflecting a decrease in gross national product per capita in 1954.
Statutory subsidies at $20 million in 1955-56 are unchanged from the previous year.
The amount of public utility tax receipts transferred to the provinces in 1955-56 is expected to be $2 million more than in the previous year. Section 6 of the Tax Rental Agreements Act, 1952 authorizes the payment to the provinces, whether participating in the agreements or not, of a portion of the income tax collected from corporations whose main business is the distribution to, or the generation for distribution to, the public of electrical energy, gas or steam.
A summary of estimated payments, by provinces, during 1955-56 is given in the following table:

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(In millions of dollars)
Fiscal Year Ending March 31, 1956 (Estimated)
Subsidies and Tax Rental Payments to Provinces	Statutory subsidies	Payments under tax rental agreements	Transitional grant	TotalNewfoundland	1-6	12-5	31	17-22-1	19-9	22-00-7	3-7	4-41-7	16-6	18-33-3	3-33-6	138-3	141-91-8	25-7	27-52-1	26-0	28-12-2	31-6	33-813	45-4	46-7
20-4	319-7	31	343-2
Transfer of certain public utility tax receipts					8-9
				352-1
Family allowances
Family allowances are payable in respect of all children under sixteen resident in Canada, with minor exceptions such as in the case of children of immigrants who must reside in Canada a year before an allowance is payable. The monthly allowance is $5 if the child is under 6 years; $6 in the age group 6 to 9; $7 in the age group 10 to 12; and $8 in the age group 13 to 15.
Payments for family allowances are estimated at $382 million for 1955-56 representing 8J per cent of total expenditures for the fiscal year. The increase of $16 million over the corresponding 1954-55 outlay reflects the increase in the number of children in the eligible age groups.
[Stage Direction]
The Budget-Appendix
The following table presents a comparative summary of payments by provinces:

[Stage Direction]
(In millions of dollars)
Family Allowance Payments	Fiscal Year Ended March 31		* Increase
	1956 (Estimated)	1955	
Newfoundland	12-5	12-0	0-5Nova Scotia	17-6	17-1	0-52-6	2*6	New Brunswick	15-4	15-1	0-3Quebec	120-4	116-1	4-3Ontario	116-6	110-5	6-1Manitoba	19-5	18-7	0-8Saskatchewan	21-4	20-9	0-5Alberta	26-7	25-4	1-3British Columbia	29-0	27-4	1-6Northwest and Yukon Territories	0-7	0-7	382-4	366-5	15-9
Unemployment Insurance Act administration and government's contribution
Expenditures in 1955-56 relating to the Unemployment Insurance Act (excluding the government's payment as an employer) are estimated at $61 million compared with $60 million spent in 1954-55.
Unemployment insurance benefit payments are not charged directly to budgetary expenditures but are paid from the unemployment insurance fund. This fund is financed by contributions from employees and employers, by interest earned on investments, and by the government's contribution of an amount equal to one-fifth of combined employer-employee contributions.
The government's contribution to the fund for 1955-56 is estimated at $34 million and administration costs are expected to total $27 million; the corresponding figures for 1954-55 were $32 million and $28 million.
Government contribution with respect to superannuation account
The Government's contribution to the superannuation account is an amount equal to the estimated payments by individuals in the previous fiscal year for both current and prior service, and transfers from the retirement fund. For 1955-56 the contribution will be $31 million compared with $37 million in 1954-55.
Provision for reserve for losses on realization of assets
No charge to expenditures for an addition to the general reserve for losses on the realization of assets has been included in the Government's accounts for 1955-56. The balance of the reserve which was $496 million at March 31, 1955 remains unchanged.
Agriculture
Expenditures of the Department of Agriculture are estimated at $88 million for 1955-56 compared with $82 million spent in 1954-55.
The net increase of $6 million is due chiefly to the deficit of $8 million in the prairie farm emergency fund (for which there was no corresponding charge in 1954-55) and to increases of $3 million in the operating losses of the agricultural prices support board, $1 million in the costs of experimental farm services and

The Budget-Appendix
$1 million in payment of premiums on hog carcasses, offset by decreases of S3 million in freight assistance on western feed grains and S2 million in outlay for marketing services.
The estimated expenditure of $8 million to cover the deficit in the prairie farm emergency fund is the first charged to budgetary expenditures for this purpose since the fiscal year 1950-51 when $4 million was required. The decrease in expenditures for marketing services is due mainly to a reduction in the payments under the Agricultural Products Co-operative Marketing Act, c. 5, R.S. 1952, the purpose of which is to assist and encourage the co-operative marketing of agricultural products by primary producers.
A comparative summary of estimated expenditures for 1955-56 and actual expenditures for 1954-55 is presented in the following table:

[Stage Direction]
(In millions of dollars)
Agriculture	Fiscal Year Ended March 31	Increase1956 (Estimated)	1955	Decrease (-)Experimental farms service	10-9	9-6	1-3Freight assistance on western feed grains	15-5	19-0	-3-5Marketing service	6-9	9-3	-2-4Operating losses of the agricultural prices support board	5-8	31	2-7Premium on hog carcasses including administrative costs...	5-8	5* 1	0-7Prairie farm emergency fund-deficit	8-0	80Production service	10-4	10-0	0-4Rehabilitation and reclamation projects	12-5	12-7	-0-29-3	9-3	Administration and general	30	3-7	-0-788-1	81-8	63
Atomic energy
Expenditures of the Atomic Energy Control Board and payments to Atomic Energy of Canada Limited are estimated at 820 million for 1955-56 compared with $15 million in 1954-55, an increase of $5 million.
Administration expenses of the Atomic Energy Control Board and grants for research and investigations with respect to atomic energy are estimated at $0-3 million, the same as the 1954-55 expenditure.
Payments to Atomic Energy of Canada Limited, for its research programme, are estimated at $19 million compared with $15 million in 1954-55. Of the total $11 million is for current operations and maintenance and $8 million for the construction and acquisition of buildings, land, works and equipment.
In addition advances to Atomic Energy of Canada Limited to be covered by obligations or shares of the company are estimated at $12 million, of which $2 million is for working capital and $10 million for the construction or acquisition of buildings and equipment at Chalk River and Deep River and for the commercial products division at Ottawa. This brings the total of loans to the company to $44 million.
Canadian Broadcasting Corporation
Payments by the Government of Canada to the Canadian Broadcasting Corporation are estimated at $31 million for 1955-56 compared with $29 million in 1954-55. Payments to the corporation of an amount equivalent to the collections of the 15 per cent special tax imposed on radio and television sets and tubes are expected to amount to $23 million in 1955-56 compared with $21 million
2412	HOUSE OF COMMONS
The Budget-Appendix
in 1954-55. For the current year it is estimated that $18 million is in respect of television and $5 million in respect of radio. In 1954-55 payments were $17 million for television and $4 million for radio.
A comparative summary of the estimated payments for 1955-56 and actual payments for 1954-55 is shown in the following table.

[Stage Direction]
(In millions of dollars)
Payments to Canadian Broadcasting Corporation	Fiscal Year Ended March 31	Increase1956 (Estimated)	1955	or Decrease (-)6-3	6-3	19	21	-0-2Payments to the corporation of amounts equal to tax collected under the Excise Tax Act in respect of radio and tele-	230	20-8	2-2
31-2	29'2	20
In addition to these expenditures, loans of $9 million will have been made in 1955-56 to cover the cost of television installations and to support the development of the service. This will bring the total loans to the corporation to $28 million at March 31, 1956. Interest at various rates is being paid semi-annually and is included in non-tax revenues under "Return on investments".
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration are estimated at $33 million for 1955-56 compared with $28 million in 1954-55. The increase of $5 million is due mainly to an increase in the expenditures of the Indian Affairs branch of the department reflecting for the most part increased outlay for education.
The following table presents a comparative summary of estimated expenditures for 1955-56 with actual expenditures for 1954-55.

[Stage Direction]
(In millions of dollars)
Citizenship and Immigration	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Indian Affairs	21-6	18-0	3-6Citizenship and citizenship registration	ii	0-9	0-2Immigration	8-3	8-3	Administration and general	1-7	0-8	6-9
32-7	28-0	4-7
External Affairs
Expenditures of the Department of External Affairs are estimated at $45 million, an increase of $2 million over the 1954-55 expenditures. This increase is mainly attributable to the costs of representation abroad which includes con-

The Budget-Appendix
struction, acquisition or improvement of buildings, works and land. Assistance to other countries is slightly less than the expenditure for 1954-55 although the grant to the Colombo Plan fund has been increased from $25 million for 1954-55 to $26 million for 1955-56.
The following table presents a comparative summary of expenditures for the current and previous fiscal years.
TABLE XVII (In millions of dollars)
External Affairs	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Assistance to other countries	28-5	28-9	-0-4Canada's assessment for membership in international or commonwealth organizations	30	2-9	0-1Representation abroad	8-3	7-1	1-2Administration and general	5-6	4-9	0-745-4	43-8	1-6
Finance
The major items of expenditure for the Department of Finance have been dealt with in previous paragraphs under the headings "Public debt charges", "Subsidies and tax rental payments to provinces" and "Government contribution with respect to the superannuation account".
Other expenditures of the department are estimated at $36 million for 1955-56, an increase of $1 million over the expenditures for 1954-55. An increase of $4 million in grants to municipalities in lieu of taxes on federal property is offset by the decrease of $4 million on account of premium, discount and exchange transactions which are expected to result in a net revenue item of $2 million.
The following table shows a comparative summary of expenditures for 1955-56 and 1954-55.
TABLE XVIII (In millions of dollars)
Finance	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Office of the Comptroller of the Treasury-administration expenses	151	14-9	0-2Grants to universities	5-6	5-4	0-2Grants to municipalities in lieu of taxes on federal property..	6-9	3-0	3-9Government contribution as an employer to the unemployment insurance fund	1-1	10	01Implementation of guarantees-Ming Sung Industrial Co. Ltd.	1-5	1-5	Premium, discount and exchange	3-8	-3-8Administration and general	6-2	5-7	0-536-4	35-3	1-1
The Budget-Appendix Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys are estimated at $40 million for 1955-56, a decrease of $4 million from the expenditures of $44 million in 1954-55. Decreases of $5 million in emergency gold mining assistance payments and $1 million in expenses in connection with the movement of coal under the Dominion Coal Board are partially offset by an increase of $1 million in the costs of surveys and mapping services.
The following table presents a comparative summary of expenditures for 1955-56 and 1954-55.
TABLE XIX (In millions of dollars)
Mines and Technical Surveys	Fiscal Year Ended March 31		Increase or Decrease (- }
	1956 (Estimated)	1955	
10-5	15-5	-5-0Dominion Coal Board	11-2	11*8	-0-6Surveys and mapping including aerial photography	10-8	9-7	1-13-1	3-0	0-1 0-2Geological survey of Canada	2-4	2-2	Administration and general	1-5	1-5	
39-5	43-7	-4-2
National Health and Welfare
Family allowance payments, estimated at $382 million for 1955-56 constitute the main item of expenditure for the Department of National Health and Welfare and have been dealt with under a separate heading in preceding paragraphs. Civil defence expenditures, estimated at $4 million, are dealt with under the heading "Defence expenditures".
Other expenditures of the department in 1955-56 are estimated at $154 million, an increase of $27 million compared with expenditures of $127 million in 1954-55. The following table presents a comparative summary of these expenditures for 1955-56 and 1954-55:
TABLE XX (In millions of dollars)
National Health and Welfare	Fiscal Year Ended March 31		Increase or Decrease (->
1956 (Estimated)	1955	
Blind persons allowances	3-0	2-9	0-1Disabled persons allowances	5-5	0-4	5-1General health grants	33-5	31-6	1*9Indians and Eskimos health service	16-3	15-5	0-8Old age assistance	21-3	20-9	0-4Other health services	6-8	5-8	1-0Reduction in the amount owing by the old age security fund. Administration and general	63-3 4-1	45-8 4-2	17-5 -0-1
153-8	127-1	26-7

The Budget-Appendix
In Vote 689 of Appropriation Act No. 5, 1955, Parliament granted authority to charge the 1954-55 deficit of $63 million in the old age security fund to budgetary expenditures in 1955-56. Under the same authority, the 1953-54 deficit in the fund amounting to $46 million was charged to budgetary expenditures in 1954-55.
Expenditures for Indians and Eskimos health services are estimated at $16 million for 1955-56 compared with $15 million for 1954-55. ^ Expenditures for other health services are expected to be $7 million in 1955-56 compared with $6 million in 1954-55.
General health grants to the provinces for assistance in hospital construction, general health services and the control of diseases are estimated at $34 million for 1955-56 compared with expenditures of $32 million in 1954-55.
Under the Old Age Assistance Act, the federal government reimburses the provinces by paying 50 per cent of the lesser of $40 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who are in the age group 65 to 69. (Under the Old Age Security Act, all persons 70 years and over who satisfy the residence requirements of the Act may receive a pension of $40 per month from the federal government out of the old age security fund). Similarly, the federal government reimburses the provinces under the Blind Persons Act for allowances to blind persons in need over the age of 21 by paying 75 per cent of the total payments, and under the Disabled Persons Act by paying 50 per cent of not more than $40 per month for allowances to disabled persons in need over the age of 18 years. The estimated increase of $5 million in payments under the Disabled Persons Act is due mainly to the fact that in 1954-55 the expenditure did not represent a full year's payments as the Act was not effective until January 1, 1955. The following table presents an estimated distribution of these payments by provinces for 1955-56.

[Stage Direction]
(In millions of dollars)
General Health Grants and Federal Share or Old Age Assistance, Disabled Persons Allowances and Blind Persons Allowances	Fiscal Year Ending March 31, 1956 (Estimated)			
General health grants	Old age assistance	Disabled persons allowances	Blind persons allowances0-8	0-8	(*)	0-11*5	11	0-2	0-30-3	01	(>)	(*)1-3	1-3	0-2	0-310-4	7-5	2-7	1-191	50	1-7	0-72-1	11	01	0-12-7	1-2	0-1	012-5	1-3	0-3	0-12-8	1-9	0-2	0-20)	(>)	0)	(')
33-5	21-3	5-5	3-0
0) Less than S50.000.
National Research Council
Expenditures of the National Research Council are estimated at $16 million for 1955-56, slightly higher than the expenditures for 1954-55. Salaries and other expenses amounting to $14 million and the costs of construction or acquisition of buildings, works, land and new equipment totalling $2 million are approximately the same as the corresponding outlay in 1954-55.
[Stage Direction]
The Budget-Appendix	*
National Revenue
Expenditures for the Department of National Revenue are estimated at $57 million for 1955-56 compared with $55 million in 1954-55. The following table presents a comparative summary of expenditures for the two years.
TABLE XXII (In millions of dollars)
National Revenue	Fiscal Year Ended March 31		Increase or Decrease (- >
1956 (Estimated)	1955	
Customs and excise division		30-1 26-5 0-1	29-3 256 0-1	0-8 0-9
Taxation division				
Income tax appeal board				
			
	56-7	55 0	1-7
Northern Affairs and National Resources
Expenditures of the Department of Northern Affairs in 1955-56 are estimated at $26 million, compared with expenditures of $20 million in 1954-55, an increase of $6 million.
Of this increase, $2 million is attributable to expenditures by the national parks branch for construction or acquisition of buildings, works, land and new equipment and $3 million is due to an increase in expenditures for the northern administration and lands branch of which approximately $2 million is for the construction or acquisition of buildings, works, land and new equipment, and $1 million for operation and maintenance.
The following table presents a comparative summary of expenditures for 1955-56 and 1954-55:
TABLE XXIII (In millions of dollars)
Northern Affairs and National Resources	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
National parks branch	10-7	8-4	2-3Engineering and water resources branch	21	1-6	0-5Northern administration and lands branch	7-1	4-1	3-0Forestry branch	3-7	41	-0-4Canadian government travel bureau	1-5	1-5	Administration and general	0-7	0-5	6-225-8	20-2	5-6
Post Office
Gross expenditures of the Post Office Department for 1955-56 are estimated at $147 million, an increase of $3 million over the 1954-55 expenditures of $144 million.

The Budget-Appendix
Remuneration of postmasters and staffs at revenue and semi-staff offices, commissions at sub-offices and certain other authorized disbursements are paid from revenue. These payments, included in the total of $147 million, are estimated at $20 million for 1955-56, unchanged from the previous year.
Disbursements charged to budgetary expenditures are estimated at $127 million, an increase of $3 million over expenditures in 1954-55.
The following table presents a comparative summary of expenditures for 1955-56 and 1954-55:

[Stage Direction]
(In millions of dollars)
Post Office	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Charged to budgetary expenditure- Operations-salaries and other expenses to staff post offices, district offices and railway mail services and supplies and equipment and other items for revenue	77-5	74-0	3-5Transportation-movement of mail by land, air and	45-2	45-8	-0-62-4	2-5	-0-11-4	1-3	0-1126-5	123-6	2-9Charged to revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at sub-offices	20-4	20-4	
146-9	144-0	2-9
Public Works
Expenditures of the Department of Public Works for 1955-56 are estimated at $140 million compared with expenditures of $131 million for 1954-55. This increase of $9 million is attributable mainly to increases of $4 million in the expenditures of the building construction branch and $3 million in administration and general expenses.
The following table presents a comparative summary of estimated expenditures for 1955-56 and expenditures for 1954-55.
[Stage Direction]
The Budget-Appendix
TABLE XXV (In millions of dollars)
Public Works	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Property and building management branch-			
Maintenance and operation-			
Ottawa	12-7	13-8	-l-iOther centres	22-8	20-6	2-2Administration and general	0-2	0-6	-0-4SB-7	S5-0	0-7Building construction branch-	Acquisition, construction and improvements of public	buildings-	Ottawa	7-9	14-0	-6-1Other centres in Canada	34-0	27-7	6-3Outside Canada	2-6	2-6Administration and general	2-4	0-9	1-546-9	42-6	4-sHarbours and rivers engineering branch-	Acquisition, construction and improvements of harbour	and river works	16-6	17-8	-1-2Harbours and rivers-generally	3-3	3-2	0-1Dredging	4-7	4-2	0-5Administration and general	3-7	3-6	0-128-S	28-8	-0-6Development engineering branch	1-5	1-5Trans-Canada Highway Division-	Contributions to the provinces under the terms of the	Trans-Canada Highway Act	150	18-1	-3-1Trans-Canada highway through National parks	4-9	1-5	3-4Administration and general	0-7	0-4	0-320-6	20-0	0-6Housing	1-6	1-8	-0-2Administration and general	5-4	2-6	2-8140-0	130-8	9-2
Royal Canadian Mounted Police
Expenditures for the Royal Canadian Mounted Police are estimated at $37 million for 1955-56, an increase of $2 million over the total spent in 1954-55. These amounts represent gross expenditures; payments received from the provinces and municipalities for police services estimated at $5 million are credited to revenue.
The following table presents a comparative summary of estimated expenditures for 1955-56 and actual expenditures for the previous year.
TABLE XXVI (In millions of dollars)
Royal Canadian Mounted Police	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Land and air services	25-2	24-7	0-5Marine services	1-9	1-3	0-6Government contribution to the Royal Canadian Mounted	Police pension account	0-8	0-7	0-1Pensions and other benefits	2-2	1-9	0-3Headquarters administration and general	6-9	6-9	37-0	35-5	1-5
The Budget-Appendix
Trade and Commerce
Expenditures for the Department of Trade and Commerce are estimated at $37 million for 1955-56 compared with $17 million for 1954-55. The increase of $20 million is almost entirely accounted for by an estimated expenditure of $19 million for assistance in respect of grain storage costs.
The following table presents a comparative summary of expenditures for 1955-56 and 1954-55.

[Stage Direction]
(In millions of dollars)
Trade and Commerce	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
	19-2		19-2
5-2	4-9	0-36-2	5-5	0-71-7	1-6	012-7	2-5	0-22-3	30	-0-7
37-3	17-5	19-8
Transport
Expenditures of the Department of Transport in 1955-56 are estimated at $136 million, a decrease of $23 million from the expenditures of $159 million in 1954-55.
Estimated expenditures for air services at $58 million are $14 million higher than expenditures in the previous year. Of this increase the civil aviation division is responsible for $10 million, of which $9 million is attributable to construction or acquisition of buildings, works, lands and new equipment including construction work on municipal airports.
Estimated expenditures for marine services at $21 million are the same as the previous year.
Railway and steamship services expenditures are estimated at $21 million for 1955-56 compared with expenditures of $30 million for 1954-55. Decreases of $6 million in expenditures on account of the Strait of Canso causeway and $4 million in outlay for the construction and acquisition of auto ferriesare partially offset by an increase of $1 million in payments under the Maritime Freight Rates Act.
Expenditures for the Board of Transport Commissioners are estimated at $13 million; the increase of approximately $2 million over the previous year's outlay is due mainly to an increase in the government contribution to the railway grade crossing fund.
Payments to cover the net operating deficits of certain Crown corporations are estimated at $8 million for 1955-56, compared with expenditures of $37 million in 1954-55. The decrease is due to Canadian National Railways operations which in the calendar year 1955 resulted in a surplus of $11 million compared with a deficit of $29 million in 1954. Consequently there is no charge in the government's accounts for 1955-56 comparable to that in the 1954-55 accounts to cover the Railway's 1954 deficit.
2420	HOUSE OF COMMONS
The Budget-Appendix
The following table presents a comparative summary of estimated expenditures for 1955-56 and expenditures for 1954-55.

[Stage Direction]
(In millions of dollars)
Transpoet	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Air services-			
Telecommunications division	14-8	13-9	0-9Meteorological division	8-4	7-4	1-0Civil aviation division	33-4	23-1	10-3Administration	1-6	0-2	1-458-2	U-6	1S-6Canal services	8-4	7-8	0-6Marine services	210	21-3	-0-3Railway and steamship services- Maritime Freight Rates Act- Difference between tariff and normal tolls	11-2	10-5	0-7Strait of Canso causeway	2-9	9-2	-6-3Construction and acquisition of auto ferries	2-9	6-8	-3-9Other	3-7	3-7	20-7	SO-2	-9-5Board of Transport Commissioners-	Maintenance of trackage	70	70	Railway grade crossing fund	5-0	3-4	1-6Administration and general	10	10	1S-0	tl-4	1-6Canadian Maritime Commission	4-3	4-2	0-1Crown Corporations- Net income deficits- Canadian National Railways	28-8	-28-8 0-4Other	4-8	4-4	Non-active advances	3-1	3-9	-0-87-9	S7-1	-29-2Administration and general	2-2	2-6	-0-4135-7	159-2	-23-5
Veterans Affairs
Expenditures for the Department of Veterans Affairs are estimated at $249 million in 1955-56 compared with expenditures of $240 million in 1954-55. The estimated net increase of $9 million is due mainly to increases of $11 million in war veterans allowances and other benefits and $2 million in pensions for disability or death, offset in part by a decrease of $2 million in war service gratuities and re-establishment credits.
Expenditures relating to the administration of the Soldier Settlement and Veterans Land Acts are expected to amount to $5 million while the provision for the reserve for conditional benefits under the Veterans Land Act is estimated at $9 million. These conditional benefits are made to veterans who enter into agreements with the director for purchases of land and chattels provided they fulfil the terms of the agreements for ten years. The estimated amount charged to expenditures under this heading covers one-tenth of the conditional benefits included in sales to veterans.

The Budget-Appendix
The following table presents a comparative summary of expenditures for 1955-56 and 1954-55.

[Stage Direction]
(In millions of dollars)
Veterans Affairs	Fiscal Year Ended March 31	Increase1956 (Estimated)	1955	Decrease (-)130-6	128-8	1-8430	43-2	-0-242-3	31-6	10-71-8	2-6	-0-83-7	6-0	-2-3Soldier Settlement and Veterans' Land Acts-	5-5	5-4	0-1Provision for reserve for conditional benefits, Veterans	8-9	8-9	Departmental, district and pensions administration and miscellaneous payments	13-3	13-6	-0-3249-1	240-1	9-0
All other departments
Expenditures of the departments not dealt with in preceding sections are estimated at $66 million for 1955-56 compared with expenditures of $61 million in 1954-55, an increase of $5 million.
The following table presents a comparative summary of expenditures for 1955-56 and 1954-55.
TABLE XXX (In millions of dollars)
All Other Departments	Fiscal Year Ended March 31	Increase1956 (Estimated)	1955	Decrease (-)0-7	0-7	0-5	0-3	0-22-5	2-3	0-212-6	11-1	1-50-4	0-4	0-5	0-5	6-7	5-9	0-8111	10-5	0-610-0	9-9	0-16-9	6-7	0-24-1	3-4	0-74-0	3-8	0-20-5	0-4	0-12-3	2-1	0-23-0	2-7	0-3
65-8	60-7	5-1
[Stage Direction]
The Budget-Appendix
4.	SUMMARY OF ASSETS AND LIABILITIES OF CANADA AT

The estimated balances of the asset and liability accounts as at March 31, 1956, the comparable balances at March 31, 1955 and the changes in each category during 1955-56 are shown in the following table.

[Stage Direction]
Summary of the Assets and Liabilities of Canada
(In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Liabilities			
Current and demand liabilities	928-7	944-0	-15-3Deposit and trust accounts	156-8	154-0	2-8Annuity, insurance and pension accounts	2,185-0	1,977-4	207-6Undisbursed balances of appropriations to special accounts.	339-8	332-2	7-6Suspense accounts	38-4	35-5	2-9Province debt accounts arising out of confederation settle-	ments	11-9	11-9	Unmatured debt	15,394-3	14,496-5	897-819,054-9	17,951-5	1,103-4Assets	Current assets	1,538-8	565-6	973-2Advances to the exchange fund account	1,955-0	1,980-0	-25-0Sinking fund and other investments held for retirement of	unmatured debt	215-9	190-9	25-0Loans to, and investments in, Crown corporations	2,007-9	1,793-5	214-4Loans to national governments	1,549-9	1,620-8	-70-9Other loans and investments	641-2	631-1	10-1Province debt accounts arising out of confederation settle-	ments	2-3	2-3	Deferred charges	55-6	67-5	-11-9Unamortized portion of actuarial deficiency in the super-	annuation account	189-0	189-0	Suspense accounts	0-5	63-7	-63-2Capital assets	*	*	Inactive loans and investments	80-4	80-4	Total Assets	8,236-5	7,184-8	1,051-7Less: Reserve for losses on realization of assets	496-4	496-4	Net Assets	7,740-1	6,688-4	1,051-7Net Debt (excess of liabilities over net assets)	11,314-8	11,263-1	51-7
'Shown at nominal value of $1.
Liabilities
The gross liabilities of the government as at March 31, 1956, are estimated at $19,055 million, an increase of $1,103 million over the total of $17,952 million at the close of the previous year.
Unmatured debt outstanding, including bonds and treasury bills, is estimated at $15,394 million at March 31,1956, or approximately 81 per cent of all liabilities. Of the total outstanding unmatured debt, $15,042 million, or 98 per cent, is

The Budget-Appendix
payable in Canada and $352 million, or 2 per cent in foreign currencies-$300 million in United States dollars and $52 million in pounds sterling. A complete statement in tab lar form of the government's unmatured debt as at March 31, 1956, with details of interest rates, dates of maturity, annual interest charges and amounts of principal outstanding for each loan, is presented at the end of this Part.
The government's liability as at March 31, 1956 in respect of annuity, insurance and pension accounts is estimated at $2,185 million. Current and demand liabilities, including outstanding cheques, accounts payable (consisting of cheques to be issued in April, 1956 in payment of accounts relating to the fiscal year 1955-56) and notes and other obligations payable on demand, are expected to total $929 million.
The other liability items are: deposit and trust accounts (consisting of moneys deposited with or held by the Receiver General for various purposes), $157 million; undisbursed balances of appropriations to special accounts (consisting of undisbursed balances of appropriations to special accounts for which moneys have been appropriated by Parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made), $340 million; suspense accounts (consisting of balances where some uncertainty as to disposition exists and balances whose ultimate accounting treatment is known but which are held until certain conditions are fulfilled), $38 million; and province debt accounts (representing settlements arising out of agreements at the time of Confederation), $12 million.
Assess
Offsetting the liabilities, and to some extent explaining their existence-as a large part of the total debt has been incurred on account of them-are the government's assets. For the most part these consist of assets which yield interest, profits or dividends, liquid assets such as cash and departmental working funds together with certain prepaid expenses and suspense accounts.
The total assets at March 31, 1956, are estimated at $8,236 million, an increase of $1,052 million from the total at March 31, 1955. The asset categories are: current assets (including cash, departmental working capital advances and working funds and securities held in the securities investment account), $1,539 million; advances to the exchange fund account to finance the purchase of gold and foreign exchange, $1,955 million; sinking fund and other investments held for the retirement of unmatured debt, $216 million; loans to, and investments in, Crown corporations, $2,008 million; loans to national governments, $1,550 million other loans and investments (consisting of Canada's subscription to the capital of the International Monetary Fund and the International Bank for Reconstruction and Development, advances to international organizations, loans to provinces and municipalities, veterans and miscellaneous loans and balances receivable), $641 million; province debt accounts, $2 million; deferred charges (consisting of loan flotation costs in the process of being amortized), $56 million; the unamortized portion of the actuarial deficiency in the superannuation account, $189 million; suspense accounts, $1 million; capital assets (assets of the government such as land, buildings, works and equipment, etc., which are charged to budgetary expenditures at the time of acquisition or construction, are shown on the statement of assets and liabilities at a nominal value of $1); and inactive loans and investments (including loans and advances which are not currently revenue-producing or realizable), $80 million.
A reserve of $496 million for losses on realization of assets is shown on the statement of assets and liabilities as a deduction from the total assets, bringing the net assets total to $7,740 million.
2424	HOUSE OF COMMONS
The Budget-Appendix
A.	Changes in Principal Liability Classifications During 1955-56
The gross liabilities of the government are expected to show an increase of $1,103 million over the total at the close of 1954-55. Increases of $898 million in unmatured debt, $3 million in deposit and trust accounts, $208 million in annuity, insurance and pension accounts, $8 million in undisbursed balances of appropriations to special accounts and $3 million in suspense accounts are only partially offset by a decrease of $15 million in current and demand liabilities.
Current and demand liabilities
It is estimated that current and demand liabilities will have decreased by $15 million during the fiscal year. Decreases of $25 million in matured debt outstanding, $5 million in outstanding treasury cheques and $1 million in noninterest bearing notes payable to the International Monetary Fund and the International Bank for Reconstruction and Development are partially offset by increases of $10 million in interest accrued, $2 million in accounts payable, $2 million in interest due and outstanding and $1 million in post office account. The estimated changes in the various accounts are shown in the following table:
table xxxii
(In millions of dollars)
Current and Demand Liabilities	Balance at March 31		Increase or Decrease (-}
	1956 (Estimated)	1955	
	260-9	265-6	-4-7 2-2 -0-8
	204-1	201-9	
Non-interest bearing notes payable to the International Monetary Fund and the International Bank for Recon-	223-8	224-6	Matured debt outstanding	29-0	53-7	-24-7Interest due and outstanding	56-0	54-2	1-8Interest accrued	130-6	120-2	10-422-9	22-4	0-51-4	1-4	
928'7	944-0	-15-3
Deposit and trust accounts
Deposit and trust accounts are expected to increase by $3 million during the year. The major changes in this category are increases of $7 million in the Korean operations pool, $3 million in contractors securities cash deposits and $2 million in Indian trust funds and decreases of $5 million in the prairie farm emergency fund, $1 million in the post office savings bank and $2 million in contractors holdbacks. The balance of $5 million in the prairie farm emergency fund at March 31, 1955, together with $4 million collected during the year as levies and $8 million charged to expenditure was used to finance award payments of $17 million.
Annuity, insurance and pension accounts
It is estimated that the annuity, insurance and pension accounts will have increased by $208 million during the fiscal year. The changes in the various accounts for the fiscal year are shown in the following table:

The Budget-Appendix

[Stage Direction]
(In millions of dollars)
Annuity, Insurance and Pension Accounts	Balance at March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
	865-5 852-5	852-7 839-3	12-8 13-2
			
			
	13-0 932-0 804-8 343-0 92-2	13-4 864-5 733-6 277-6 88-3	-0-4 67-5 71-2 65-4 3-9
			
			
			
			
	2,185-0	1,977-4	207-6
The unemployment insurance fund is expected to increase by $13 million during the fiscal year bringing the balance at March 31, 1956 to $866 million. Of this amount it is estimated that $853 million will be invested in bonds and accrued interest and $13 million will be held by the Receiver General in the Consolidated Revenue Fund. The increase of $13 million in the fund represents the amount by which contributions by employers, employees and the government, income from investments and other miscellaneous revenue credited to the fund exceed benefit payments totalling $213 million during 1955-56.
The increase of $71 million in the superannuation account is attributable mainly to the government's contribution of $31 million equal to the estimated current and prior service payments of individuals in 1954-55 and $31 million interest credited to the account. The remainder of the increase is due to the excess of employees' current and prior service contributions over benefit payments.
The government annuities account is expected to show an increase of $67 million, reflecting the amount by which premium receipts, interest credited to the account by the government and the amount required to maintain the reserve exceed payments to annuitants and beneficiaries.
It is expected that the permanent services pension account will show an increase of $65 million, reflecting the government's contribution of $40 million which is made at the rate of one and two-thirds times the current contributions and contributions for arrears, interest on the account which is estimated at $12 million and contributions by permanent services personnel for current service and arrears less payments from the account.
Other annuity, insurance and pension accounts will show an increase of $4 million for the fiscal year.
Old age security fund
Under the Old Age Security Act pensions of $40 per month are paid from the old age security fund to all eligible persons seventy years of age and over without a means test. Payments from the fund during the fiscal year are estimated at $366 million while credits to the fund from the proceeds of the 2 per cent tax on personal incomes (maximum tax $60), the 2 per cent tax on corporation profits and the 2 per cent sales tax are expected to total $316 million. Temporary loans amounting to $50 million will be required to cover the deficit resulting from these transactions during 1955-56. Under the authority of Vote 689 of Appropriation Act, No. 5, 1955 the 1954-55 deficit of $63 million was charged to expenditure in 1955-56.
[Stage Direction]
The Budget-Appendix
The following table shows the transactions in the old age security fund for the last two years:
TABLE XXXIV (In millions of dollars)
Old Age Security Fund	Fiscal Year Ended March 31	
	1956 (Estimated)	1955
Pension payments	366-1	353 [DOT] 2Tax receipts- 2 per cent sales tax	1600	143-12 per cent individual income tax	102-5	100-92 per cent corporation income tax	53-2 315-7	460 2900Excess of pension payments over tax receipts covered by temporary loan from the Minister of Finance	50-4	63 * 2Carried forward from the previous year	63-2	45-8Charged to parliamentary appropriation	
-63-2	-45-8Temporary loan outstanding at end of fiscal year	
50-4	63-2
A distribution by provinces of pension payments from the old age security fund for the last two years is shown in the following table.

[Stage Direction]
(In millions of dollars)
Old Age Security Payments by Provinces	Fiscal Year Ended March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Newfoundland	7-6	7-5	0-1Nova Scotia	18-4	18-1	0-3Prince Edward Island	3-3	3-3	New Brunswick	13-2	12-9	6-3Quebec	77-0	74-7	2-3Ontario	134-7	130-3	4-4Manitoba	22-0	21-1	0-9Saskatchewan	22-3	21-2	1-1Alberta	22-7	21-4	1-3British Columbia	44-6	42-5	2-1Northwest and Yukon Territories	0-3	0-2	0-1366-1	353-2	12-9
Undisbursed balances of appropriations to special accounts
This category is set up to record the undisbursed balances of appropriations to special accounts for which moneys have been appropriated by parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made. It is estimated that there will be a net increase of $8 million during the year in these accounts, due chiefly to increases of $5 million in the national defence equipment account and $5 million in the railway grade crossing fund and a decrease of $3 million in the national capital fund.

The Budget-Appendix
The railway grade crossing fund is expected to show an increase of approximately $5 million for the year, representing the amount credited to this account and charged to expenditure less disbursements from the account.
. The transactions in the national defence equipment account reflect an increase in the undisbursed balance in the account which was established under section 3 of the Defence Appropriation Act, 1950, and continued by subsequent votes of parliament for the same purpose. Under the terms of the Act, the value of defence materials and supplies acquired prior to March 31, 1950, and transferred to members of the North Atlantic Treaty Organization may be credited to the account and these credits may be used in subsequent years to purchase equipment or supplies for the naval, army or air services of the Canadian forces. Disbursements from the account during the fiscal year are estimated at $49 million and credits for equipment transferred at $54 million.
Suspense accounts
Suspense accounts are expected to show a net increase of $3 million. The major changes in the accounts of this category are increases of $4 million in balances receivable under agreements of sale of Crown assets and $2 million in the replacement of materiel account and decreases of $1 million in military relief and currency credits and $1 million in emergency gold mining assistance holdbacks.
The replacement of materiel account established by section 11 of the National Defence Act is credited with amounts realized from the sale of materiel that has not been declared surplus to requirements but has been authorized by the Governor in Council to be sold to other countries. The account is debited with disbursements representing amounts paid for the procurement of replacement materiel. It is estimated that during 1955-56 credits to the account will exceed disbursements by $2 million.
The increase in balances receivable under agreements of sale of Crown assets reflects certain new agreements of sale, including $2 million with Canadian Pratt and Whitney Aircraft Limited and $2 million with English Electric Company Limited.
Unmatured debt
The outstanding unmatured debt at the close of 1955-56 is estimated at $15,394 million. An increase of $946 million reflected in debt payable in Canada will be only partly offset by a decrease of $48 million in debt payable in New York, leaving a net increase for the year in unmatured debt of $898 million.
B.	Changes in the Principal Asset Classifications during 1955-56
It is estimated that assets will have increased by $1,052 million during the fiscal year ending March 31, 1956. Increases of $973 million in current assets, $214 million in loans to, and investments in, Crown corporations, $25 million in sinking funds and J510 million in other loans and investments are offset in part by decreases of $71 million in loans to national governments, $25 million in advances to the exchange fund account, $12 million in deferred charges and $63 million in suspense accounts. No change is expected in the reserve for losses on the realization of assets which stood at $496 million at March 31, 1955.
Current Assets
1 he changes during the fiscal year in the various accounts in this category are shown in the following table:
2428
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(In millions of dollars)
	Balance at March 31		Increase or Decrease (-)
Current Assets	1956 (Estimated)	1955	Cash in current and special deposits (including blocked currency of $0*4 million at March 31, 19o6 and SI [DOT] 2 million	528-1	231-1	297-0124-3	126-2	-1-9Departmental working capital advances and revolving funds-	360	31-6	4-470-0	72-8	-2-850-4	50-4Miscellaneous departmental imprest and advance	19-3	21-5	-2-220-7	19-7	1-0Other current assets-	671-6	45-6	626-0Moneys received after March 31 but applicable to the current year	18-4	17-1	1-31,538-8	565-6	973-2
The estimated increase of $973 million in current assets is due to increases of $626 million in the securities investment account (which records the government's temporary holdings of its own securities including those held for the government employees purchase plan), $297 million in cash in curient and special deposits and $51 million in departmental working capital advances and revolving funds.
Of the net increase of $51 million in departmental working capital advances and revolving funds, $50 million is due to temporary loans during 1955-56 to the old age security fund and $4 million to a net increase in the agricultural prices support account offset by decreases of $3 million in the defence production revolving fund and $2 million in miscellaneous imprest and advance accounts.
The amount of $50 million advanced as a temporary loan to the old age security fund is the amount by which pension payments during 1955-o6 exceeded tax receipts credited to the fund. The deficit in the fund for 19o4-55 was earned in suspense accounts at March 31, 1955 as parliament by "V ote 689 of Appropriation Act No. 5, 1955, had authorized the deficit resulting from 1954-55 transactions to be charged to budgetary expenditures in 1955-56.
The estimated increase of $4 million in the agricultural prices support account reflects an increase in inventory holdings during the year estimated at $10 million and a reduction of $6 million in respect of the loss on 1955-56 operations included in the year's expenditures.
The decrease of $3 million in the defence production revolving fund reflects the amount by which credits to the account from the sale of essential materials and defence supplies exceed the cost of acquiring, storing, maintaining and transporting such materials.
Miscellaneous departmental imprest and advance accounts record accountable advances to departments held on deposit in various banks in the name of the department concerned, certain travelling and imprest advances to public officers and advance payments to contractors. During the fiscal year these advances are carried as charges to the relevant appropriations; if they are not repaid or accounted for at the year-end, they are cleared from the appropriation and debited to this account and at the beginning of the new fiscal year are cleared from the account and charged to the appropriation concerned until such time as an accounting is made.

The Budget-Appendix
Advances to the exchange fund account
Advances to the exchange fund are estimated at 840 million and repayments at $65 million, resulting in a net repayment of 825 million during the fiscal year.
Sinking fund and other investments held for retirement of unmatured debt
It is expected that there will be an increase of 825 million in this account during the fiscal year 1955-56, due mainly to an increase in the holdings of bonds of various Government of Canada issues payable in United States dollars.
Loans to, and investments in, Crown corporations
It is estimated that loans to, and investments in, Crown corporations will increase by 8214 million during the year. The most important changes are net increases of $178 million in loans and advances to the Canadian National Railways, $20 million in advances to the St. Lawrence Seaway Authority, $12 million in advances to Atomic Energy of Canada, Limited and $9 million in loans to the Canadian Broadcasting Corporation and a net decrease of $9 million in loans to Central Mortgage and Housing Corporation.
The changes in this category are shown in the following table:

[Stage Direction]
(In millions of dollars)
Loans to, and Investments in, Crown Corporations
Atomic Energy of Canada Limited	
Bank of Canada	
Canadian Arsenals Limited	
Canadian Broadcasting Corporation	
Canadian Commercial Corporation	
Canadian Farm Loan Board	
Central Mortgage and Housing Corporation	
Canadian National Railways	
Canadian National (West Indies) Steamships Limited Canadian Overseas Telecommunication Corporation..
Eldorado Mining and Refining Limited	
Export Credits Insurance Corporation	
National Harbours Board	
Northwest Territories Power Commission	
Polymer Corporation Limited	
St. Lawrence Seaway Authority	
Other Crown Corporations	
Balance at March 31		Increase or Decrease (-)
1956 (Estimated)	1955	
44-0	32-0	12-0
5-9	5-9	
7-5	7-5	
27-5	19-0	8-5G-0	10-0	-4-041-9	37-0	4-9565-9	575-0	-9-11,111-8	934-0	177-83-7	3-8	-0-17-6	4-1	3-58-2	8-2	10-0	10-0	107-5	107-2	0-37-8	7-8	30-0	30-0	21-5	1-3	20-21-1	0-7	0-42,007-9	1,793-5	214-4
Advances to Atomic Energy of Canada Limited arc estimated at $12 million for the fiscal year, resulting in an increase of $12 million and bringing advances to §44 million at March 31, 1956. The advances are to be covered by obligations or shares of the company in the same amount. Of the total for the year $2 million is for working capital and $10 million for the construction or acquisition of buildings and equipment at Chalk River and Deep River and for the commercial products division at Ottawa.
Loans amounting to $9 million are expected to be made during the year to the Canadian Broadcasting Corporation to cover the capital costs of television installations and to support the development of the service. The total loans to the Corporation outstanding at March 31, 1956 are expected to amount to $28 million.
It is estimated that in the fiscal year ending March 31, 1956, the Government willjmye made net advances to the Canadian National Railway Company of $157 million for capital purposes and retirement of funded debt in the hands of the public.
67509-154J
[Stage Direction]
The Budget-Appendix
In addition, to assist the Company to finance additional expenditures, the Government will have purchased an estimated amount of $21 million of the 4 per cent preferred stock of the Canadian National Railway Company. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952 in an amount equal to three per cent of the gross revenues of the Company.
Loans to Central Mortgage and Housing Corporation during the fiscal year are expected to amount to $4 million, of which $3 million is for federal-provincial housing projects and $1 million for house construction. Repayments are estimated at $13 million, of which $9 million is in respect to direct loans by the corporation and joint loans with lending institutions, $3 million on account of advances for house construction and $1 million in respect of loans for federal-provincial projects. The net decrease for the fiscal year in loans to the corporation is thus $9 million.
The net increase in advances to the St. Lawrence Seaway Authority during the year is estimated at $20 million, bringing total loans at the close of the fiscal year to $21 million.
Other increases in loans and advances to Crown corporations include $5 million to the Canadian Farm Loan Board and $4 million to the Canadian Overseas Telecommunication Corporation. It is also expected that there will be a decrease of $4 million in loans and advances to the Canadian Commercial Corporation.
Loans to national governments
It is estimated that loans to national governments will total $1,550 million at the end of the fiscal year, a decrease of $71 million from the total at the close of the previous year. The estimated changes in these loans are shown in the following table:

[Stage Direction]
(In millions of dollars)
Loans to National Governments	Balance at March 31		Increase or Decrease (-)
	1956 (Estimated)	1955	
Loans to United Kingdom- . The War Appropriation (United Kingdom Financing) A of. 1Q49 	82-5	112-5	-30-0The United Kingdom Financial Agreement Act, 1946..	1,112-1 1,194-6	1,127-3 1,239-8	-15-2 -45-2Loans under the Export Credits Insurance Act, Part 11-	48-5	50-8	-2-30-0	9-9	-3-9184-1	192-5	-8-43-1	-3-196-4	101-0	-4-610-5	10-5	345-5	367-8	-22-3Miscellaneous loans and advances-	2-0	3-0	-1-01-8	1-9	-0-1Netherlands-Military relief and currency credit settle-	3-4	4-0	-0-61-8	3-6	-1-80-8	0-7	0-19-8	13-2	-s-41,549-9	1,620-8	-70-9
The Budget-Appendix
During the year the Government of the United Kingdom will have reduced the balance of the $700 million interest free loan granted under the provisions of the War Appropriation (United Kingdom Financing) Act, 1942 by $30 million as arranged under the terms of an agreement entered into on August 13, 1953, between the Governments of the United Kingdom and Canada. The balance outstanding at March 31, 1956 is estimated at $83 million. Under the terms of the agreement the loan is to continue to be free of interest until December 1958.
The Government of the United Kingdom has repaid $15 million on account of the $1,185 million loan made under the $1,250 million credit authorized by the United Kingdom Financial Agreement Act, 1946, reducing the unpaid balance to $1,112 million at the close of the fiscal year.
Repayments of advances under Part II of the Export Credits Insurance Act to certain foreign countries to assist them in purchasing goods and services in Canada are estimated at $22 million for the year, as shown in the preceding table. The payment on the loan to Norway, due on June 30, 1955, was received in September 1954, which accounts for no decrease being shown on this loan for the current year. There has been no payment received during the year on account of the $49 million loan to China which now is included in "inactive loans and investments".
Other loans and investments
Other loans and investments are estimated to increase by $10 million during the year. The balances of the main accounts in this category together with the changes during the year are shown in the following table:

[Stage Direction]
(In millions of dollars)
	Balance at March 31		Increase or Decrease (-)
Other Loans and Investments	1956 (Estimated)	1955	Subscriptions to capital of, and working capital advances to, international organizations- Canada's subscription to capital of- International monetary fund	299-0	293-4	5-6International bank for reconstruction and development	70-9	70-9 1-7	Working capital advances to international organizations..	1-6	-0-1371-5	366-0	5-5Loans to provincial governments- Alberta	100	10-4	-0-4British Columbia	19-4	20-1	-0-7Manitoba	16-2	16-8	-0-6Nova Scotia	01	01 0-1	Prince Edward Island	01	Saskatchewan	27-3	29-2	-1-973-1	76-7	-S-6Soldiers Settlement and Veterans Land Acts advances	162-8	162-5	0-3M iscellaneous- Balances receivable under agreements of sale of Crown assets	11-0	6-8	4-2Municipal Improvements Assistance Act, 1938	2-9	3-1	-0-2Dominion Coal Company Limited	4-4	4-4	Acquisition of land to control properties in the vicinity of main terminal airports	3-4	2-0	1-4Construction of dock and rail facilities for Steep Rock Iron Mines Limited	2-5	2-6	-0-1Other	9-6	7-0	2-633-8	35-9	7-9641-2	631-1	10-1
The Budget-Appendix
The increase of $6 million during the year in Canada's subscription to the capital of the International Monetary Fund is due to the adjustment of the government's Canadian dollar equity in the fund.
Loans to provincial governments are expected to be reduced by the amount of $4 million reflecting repayments by the governments concerned.
Advances under the Soldier Settlement and Veterans Land Acts are expected to increase by $7 million during the year. However, as approximately $7 million will have been added to the reserve for conditional benefits under the Veterans Land Act, there is no net change.
Miscellaneous loans and investments are expected to increase by $8 million during the year due mainly to increases of $4 million in balances receivable under agreements of sale of Crown assets, $1 million in the acquisition of land to control properties in the vicinity of main terminal airports and $3 million in other accounts.
Deferred charges
Unamortized loan flotation costs are expected to decrease by $12 million during the year to $56 million at March 31, 1956. Payments of $8 million for commissions and discounts on new loans are more than offset by the annual amortization charges of $20 million applicable to 1955-56 included in the year's expenditures.
Unamortized 'portion of actuarial deficiency in the superannuation account
No change is expected during the fiscal year in the unamortized portion of the actuarial deficiency in the superannuation account, the balance at March 31, 1956 remaining at $189 million.
Suspense accounts
The decrease of $63 million in this category is in respect of the 1954-55 deficit in the old age security fund which was included as a charge in budgetary expenditures for 1955-56 under the authority of Vote 689 of Appropriation Act No. 5, 1955. The temporary loan to cover the 1955-56 deficit, estimated at $50 million, is shown under current assets.
Capital assets
This asset category records on the government's statement of assets and liabilities, at a nominal value of $1, the capital assets that are charged to net debt at the time of acquisition or construction.
Inactive loans and advances
This category records those loans and advances which are not currently revenue-producing or realizable. The balance at March 31, 1956 is estimated at $80 million and includes the loan of $49 million to China under the Export Credits Insurance Act, and loans of $24 million to Roumania and $7 million to Greece, made in 1919-20 and 1920-21.
Reserve for losses on realization of assets
There is no change in the reserve for losses on realization of assets during the year, the balance at March 31, 1956 being $496 million, unchanged from the end of the previous year.

The Budget-Appendix C. Increase in Net Debt
The estimated deficit for the fiscal year of $52 million will result in a corresponding increase in the net debt of Canada from $11,263 million at March 31, 1955 to $11,315 million at March 31, 1956.
5.	THE CASH POSITION
Although most of the government's financial transactions are reflected in the budgetary accounts it is to be noted that the government also receives and disburses substantial amounts of cash that are not recorded as budgetary revenues and expenditures. These other receipts and disbursements relate to transactions which result in increases or decreases in the government's assets and liabilities and they do not therefore appear in what might be called the government's income account for the fiscal year nor do they enter into the calculation of the annual budgetary surplus or deficit.
As previously indicated it is expected that when the books for the year are closed the budgetary transactions for 1955-56 will have resulted in a deficit of $52 million. However, during the same period it is estimated that unmatured debt in the hands of the public (that is the outstanding unmatured debt less the government's holdings of that debt in the securities investment and sinking fund accounts) will have increased by $247 million while cash balances will have risen by $297 million. It is apparent that in considering the full scope of the government's financial operations and in measuring their effect on the government's cash position and their impact upon the economy, non-budgetary as well as budgetary transactions must be taken into account.
On the assets side the non-budgetary transactions consist, for the most part, of loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age security fund), national, provincial and municipal governments, international organizations, veterans and other borrowers.
On the liabilities side the non-budgetary transactions relate mainly to receipts and payments in connection with the many deposit and trust, and annuity, insurance and pension funds held or administered by the government.
The following statement summarizes these non-budgetary transactions for 1955-56 and indicates how they, together with the budgetary transactions, affect the government's unmatured debt and cash position. For purposes of comparison the corresponding figures for 1954-55 are also shown:
[Stage Direction]
The Budget-Appendix
TABLE XL (In millions of dollars)
Changes in Cash Position	Fiscal year ended March 31	
	1956 (Estimated)	1955
Non-Btjdgetary Receipts and Credits (excluding unmatured debt transactions) Repayments of loans, investments and working capital advances-		
Loans to Canadian Commercial Corporation		40	
Advances to defence production revolving fund	2-8	7-4Loans to Central Mortgage and Housing Corporation	9-1	-43-7Advances to exchange fund	25-0	-25-01942 loan to United Kingdom	30-0	30-01946 loan to United Kingdom	15-2	14-8Loans to other national governments	25-7	26-5Loans to provincial governments	3-6	3-4Other loans, investments and working capital advances	2-6	27-01180	7,0-7,Net government annuities account receipts-	32-8	34-0Premium receipts less payments to beneficiaries	Government contribution to maintain reserve	0-4	0-4Interest paid by government	34-3	31-667-5	66-0Net insurance and pension account receipts-	24-9	27-0Employee contributions less payments to beneficiaries	Government contributions	72-4	74-9Interest paid by government	43-2	37-517,0-5	139-7,Temporary loans to old age security fund	12-8	-17-4Net increase in special defence accounts	7-0	-48-1Net reduction in unamortized loan flotation costs	11-9	3-4Net increase in reserve for conditional benefits-Veterans Land Act....	6-7	8-7Net receipts in sundry other accounts	20-8	31-7385'2	224-1Non-Budgetary Disbursements and Charges (excluding unmatured debt transactions) Loans, investments and working capital advances-	9-3Advances to agricultural prices support account	4-4	Loans to Atomic Energy of Canada Limited	12-0	16-0Loan to Canadian Broadcasting Corporation	8-5	3-0Loans to Canadian Farm Loan Board	4-9	4-4Loans to, and investments in, Canadian National Railways	177-8	-93-4Subscription to capital of International Monetary Fund	5-6	-29-1Loans to St. Lawrence Seaway Authority	20-2	1-3Loans under Soldier Settlement and Veterans Land Acts	7-0	9-3Other loans, investments and working capital advances	13-2	10-4253-6	-68-8Net decrease in prairie farm emergency fund	4-7	11-9Net decrease in matured debt and other demand liabilities	15-3	50-0Net disbursements from sundry other accounts	9-7	11-7283-3	4-8Net amount available from non-budgetary transactions	101-9	219-3Deduct Budgetary Deficit	-51-7	-151-8Overall cash available for debt reduction	50-2	67-5Net increase or decrease (-) in unmatured debt outstanding in the hands of the public-	Securities investment account	-626-0	-27-6-25-0	-89-0897-8	-79-727,6-8	-196-3Net increase or decrease (-) in cash balances on deposit to the credit of the	Receiver General	297-0	-128-8
The Budget-Appendix
Non-budgetary receipts and credits (excluding unmatured debt transactions) are estimated at $385 million while non-budgetary disbursements and charges (also excluding unmatured debt transactions) are expected to total $283 million resulting in a net amount of $102 million available from non-budgetary transactions. As the budgetary deficit is estimated at $52 million, $50 million will be available for debt reduction or increase in cash balances. In 1954-55 the excess of receipts over disbursements was $219 million which after deducting the budgetary deficit of $152 million left $67 million available for debt reduction.
Non-budgetary receipts and credits are estimated at $385 million. Repayments of loans, investments and working capital advances are expected to amount to $118 million, including $25 million from the exchange fund, $45 million from the Government of the United Kingdom and $26 million from other national governments. Net government annuity account receipts are estimated at $67 million and net insurance and pension account receipts at $141 million. The net repayment of $13 million in temporary loans to the old age security fund reflects loans of $50 million during the fiscal year and the charge to budgetary expenditures during 1955-56 of the 1954-55 deficit of $63 million. Net receipts in various other accounts are estimated at $46 million.
Non-budgetary disbursements and charges are expected to amount to $283 million in 1955-56. Loans, investments and working capital advances, estimated at $254 million, include $12 million to Atomic Energy of Canada Limited for working capital and to finance the construction of the new reactor and other buildings and works at Chalk River and Deep River, $9 million to the Canadian Broadcasting Corporation to cover capital costs of television installations and to support the development of the service, $178 million to the Canadian National Railways for additions and betterments, the acquisition of equipment and new rolling stock, additional working capital and the redemption of maturing Canadian National Railways.bond issues, $20 million for loans to The St. Lawrence Seaway Authority for construction purposes, $7 million for loans to veterans and $28 million for other loans, investments and working capital advances. Other non-budgetary disbursements are expected to total $30 million.
In summary, unmatured debt in the hands of the public after taking into account transactions in the securities investment account and sinking fund is expected to increase by $247 million and this amount with the $50 million available from budgetary and non-budgetary transactions will increase cash balances on deposit with banks by an estimated $297 million.
6.	THE PUBLIC DEBT
Gross and net debt
It is estimated that the unmatured debt of Canada will increase by $898 million and other liabilities by $205 million during the fiscal year. Consequently it is expected that the gross public debt of Canada will increase by $1,103 million from $17,952 million at March 31, 1955 to an estimated total of $19,055 million at March 31, 1956. As the government's assets as shown on the statement of assets and liabilities are expected to increase by $1,052 million during the same period, the net debt is expected to increase by $52 million.
2436
[Stage Direction]
The Budget-Appendix
1949	50	51	52	53	54	55	56*
estimated


[Stage Direction]
The following table shows the relationship between the gross public debt* the unmatured debt and the net debt at the end of each fiscal year, March 31>
1949 to 1956 inclusive, the 1956 amounts being estimated.

[Stage Direction]
Statement of Public Debt, Unmatched Debt, Recorded Assets and Net Debt of Canada
(In million of dollars)
As at March 31	Gross Public Debt	Less Recorded Assets	Net Debt	Increase or Decrease (-) in Net Debt during Fiscal YearUnmatured Debt	Other Liabilities	Total	1949	15,585-0	1,365-4	16,950-4	5,174-3	11,776-1	-595-51950	15,188-1	1,562-7	16,750-8	5,106-1	11,644-6	-131-51951	15,026-8	1,896-5	16,923-3	5,490-0	11,433-3	-211-31952	14,695-4	2,562-3	17,257-7	6,072-4	11,185-3	-248-01953	14,810-5	3,108-0	17,918-5	6,756-8	11,161-7	-23-51954	14,576-2	3,347-0	17,923-2	6,807-3	11,115-9	-45-81955	14,496-5	3,455-0	17,951-5	6,688-4	11,263-1	147-21956 (Estimated)	15,394-3	3,660-6	19,054-9	7,740-1	11,314-8	51-7
Unmatured debt
It is estimated that the unmatured debt of Canada will total $15,394 million at March 31, 1956, an increase of $898 million over March 31, 1955. However, it is to be noted that during the same period the holdings of securities in the sinking fund and the securities investment accounts are expected to increase by $651 million, resulting in an increase of $247 million in the unmatured debt outstanding in the hands of the public. Of the increase of $651 million, $445 million represents the repurchase of treasury notes originally purchased and held by the Bank of Canada.

The Budget-Appendix
Summary of security issues and redemptions during the fiscal year
It is estimated that during the fiscal year 1955-56 the government will have issued securities payable in Canadian dollars in the principal amount of $3,229 million (excluding the refunding of treasury bills which mature periodically) and redeemed maturing issues in the amount of $2,331 million, $48 million of which was payable in United States dollars and the balance in Canadian dollars.
The financing of redemptions was effected as follows:
(in millions of dollars)
By proceeds of new issues:
Canada savings bonds, series 10 (net)	 644-1
Two year ten month loan	 100-0
Increase in treasury bills	 710-0
[Stage Direction]
 1,454-1
By refunding or conversion into new issues	 1,775-0
3,229 [DOT] 1
As a result of these transactions the net increase in unmatured debt is estimated at $898 million.
The amount of treasury bills outstanding at the end of the fiscal year is estimated at $1,600 million or $710 million more than at March 31, 1955. Of this amount $1,340 million is in three month bills and $260 million in nine month bills. The increase of $710 million reflects the government's desire to meet a growing demand for short-term securities.
Details of redemptions and new issues of securities during the fiscal year are set out in the following tables:

[Stage Direction]
Redemption of Debt During Fiscal Yeah Ending March 31, 1956
			
Maturity Date	Interest Rate	Where Payable	AmountMay 2, 1955	% u it 2J	Canada Canada Canada Canada Canada New York Canada	$ 500.000.	000 200.000.	000 200,000,000 400.000.	000 675.000.	000 48,000,000 308,247,000May 2, 1955	July 1, 1955	July 1, 1955	21 If 31 2 U3f	November 1, 1955	January 15, 1961 (1)	Canada Savings Bonds Series 1-9	Total Redemption of Debt	2,331,247,000
(') Called for redemption January 15, 1956.
67509-155J

[Stage Direction]
New Security Issues During Fiscal Year Ending March 31, 1956
Issued to Bank of Canada
Six Months Treasury Notes. Six Months Treasury Notes.
Issued to General Public
Loan, Two Years, Ten Months	
Canada Savings Bonds Series 10 (net). Increase in Treasury Bills	
Grand Total.
Issue Date	Maturity Date	Interest Rate	Price to Govern- ment	Yield at Price to Government	Total Amount Issued	Renewals or Reconversion Included in Amount Issued	Amount Issued lor Cash%	%	$	$	$May 2, 1955 Nov. 1, 1955	Nov. 1, 1955 May 1, 1956	it 21	100 100	1-	375 2-	25	675.000.	000 500.000.	000	675.000.	000 500.000.	000	1,175,000,000	1,175,000,000	July 1, 1955 Nov. 1, 1955 Various	May 1, 1958 Nov. 1, 1967 Various	2 31 Various	99-85 99-25 Various	2-06 3-33 Various	700.000.	000 644,100,000 710.000.	000	600,000,000	100,000,000 644,100,000 710,000,0002,054,100,000	600,000,000	1,454,100,0003,229,100,000	1,775,000,000	1,454,100,000
2438	HOUSE OF COMMONS
The Budget-Appendix

The Budget-Appendix
Interest rates
Interest rates rose sharply during the year, particularly on short-term securities. The average interest rate on the government's outstanding unmatured debt at March 31, 1956 is estimated at 2 [DOT] 86 per cent compared with 2 [DOT] 74 per cent at the end of the previous fiscal year and 2 * 60 per cent at March 31, 1951.

[Stage Direction]
PERCENT____________________________________________________________________ PERCENT
	AS AT MARCH 31	
		
		
		
		
1. 1 1 1 1 1 1 1 1	. 1 1 1 1 1 1 1 1 1	1 I 1 1 11930	1935	1940	1945	1950	I9S6*

[Stage Direction]
There has also been a rise in treasury bill yields during 1955-56. The yield on the issue of three month bills sold on March 9, 1956 was 2-60 per cent compared with 1 [DOT] 13 per cent for the last issue sold in 1954-55.
The following table shows the high and low yields together with the yield on the last issue for the fiscal years 1946-47 to 1955-56 inclusive on three month and nine month bills.

[Stage Direction]
Treasury Bill Yields
Fiscal Year	Three-month bills	Nine-month bills	High	Low	Last issue	High	Low	Last issueper cent	per cent	per cent	per cent	per cent	per cent1946-47	[DOT]404	[DOT]373	[DOT]404	1947-48	[DOT]411	[DOT]406	[DOT]411	1948-49	[DOT]451	[DOT]410	[DOT]451	1949-50	[DOT]513	[DOT]489	[DOT]512	1950-51	[DOT]754	[DOT]512	[DOT]754	1951-52	[DOT]943	*754	[DOT]943	1952-53	1-521	*956	1-521	2-380	2-249	2-3801953-54	1-965	1-513	1-585	2-756	1-903	1-9031954-55	1-615	[DOT]782	1-130	1-908	1-095	1-3421955-560	2-636	1-084	02-604	2-900	1-285	02-900(1)	For the period from April 1, 1955 to March 9, 1956(2)	Sold March 9, 1956.
(®) Sold November 25, 1955.
[Stage Direction]
The Budget-Appendix Indirect debt or contingent liabilities
In addition to the direct debt set out in the statement of assets and liabilities the Government has assumed certain indirect or contingent obligations. These consist of securities of the Canadian National Railways, guaranteed as to principal and interest, or as to interest only, and a number of miscellaneous guarantees, the chief of which are the guarantee of insured loans made by chartered banks and other approved lending institutions under the National Housing Act, 1954, deposits maintained by the chartered banks in the Bank of Canada, bank advances to the Canadian Wheat Board, advances under the Export Credits Insurance Act and bank loans under the Farm Improvement Loans Act.
There is a large increase during the year in the government's liability under its guarantee of insured loans under the National Housing Act, 1954. This liability is estimated at $529 million at December 31, 1955 compared with about $121 -6 million at December 31, 1954 and $185-8 million at March 31, 1955.
The following tables give details of the bonds and debenture stocks guaranteed by the Government, and also indicate the nature and approximate extent of the government's other guarantees and contingent liabilities.

[Stage Direction]
Bonds and Debenture Stocks Guaranteed by the Government as at March 31, 1956
Date of Maturity	Issue	Interest Rate	Estimated Amount Outstanding
		%	$
July 1, 1957 .	41	64,136,000July 20 1958 .	31	5,500,208Jan. 15 1959	3	35,000,000May 4 1960 .	31	316,856May 19 1961	31	2,069,805Jan 1 1962	3	26,465,130Jan. l \ 1962 ..	4	7,999,074Feb. 1 1963 ..	23	250,000,0003	35,000,00023	50,000,000Sept. 15, 1969 ..	2J	70,000,000Jan. 16, 1971 ..	21	40,000,000Feb. 1 1974 ..	3|	200,000,000June 15 1975 .	23	6,000,0005	56,7904	11,068792,554,931
The Budget-Appendix

[Stage Direction]
Other Outstanding Guarantees and Contingent Liabilities
Estimated
Amount
Outstanding
Province of Manitoba Treasury Bill (March 31, 1956).	$	500,000
Deposits maintained by the chartered banks in the
Bank of Canada (March 7, 1956)	 546,628,871
Loans maintained by approved lending institutions under National Housing Acts prior to 1954 Act (December 31, 1955)	 Indeterminate
Loans made by approved lending institutions under the Home Improvement Loans Guarantee Act,
1937 (December 31, 1955)	 43
Loans made by approved lending institutions under Part IV of the National Housing Act, 1944, for home extensions and improvements (December 31,
1955)	 4,285
Loans made by lenders under Part IV of the National Housing Act, 1954, for home extensions and improvements (December 31, 1955)	 21,336,699
Guarantees to approved lending institutions in respect of land assembly projects under the National Housing Acts, 1944 and 1954 (December 31, 1955) Nil
Insured loans made by approved lenders under the
National Housing Act, 1954 (December 31, 1955)	529,000,000
Guarantees under the Export Credits Insurance Act
Part I (March 31, 1956)	 36,000,000
Guarantees under the Export Credits Insurance Act
Part II (March 31, 1956)	 6,375,000
Loans made by chartered banks under the Farm
Improvement Loans Act (December 31, 1955).. . .	35,712,360
Loans made by chartered banks under The Veterans'
Business and Professional Loans Act (December
31, 1955)	 2,502,822
Loans made by chartered banks under the Prairie
Grain Producers' Loans Act (December 31, 1955)	673,107
Loans made by chartered banks under the Prairie Grain Producers' Interim Financing Act, 1951 (February 28, 1956)	 600
Loans made by chartered banks to Canadian Wheat
Board (February 29, 1956)	 86,209,001
[Stage Direction]
The Budget-Appendix
7. SUPPLEMENTARY DETAILED TABLES
Revenues
Expenditures
Loans and Advances and Investments Unmatured Debt
[Stage Direction]
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (in millions of dollars)
-	1951-52	1952-53	1953-54	1954-55	Estimated 1955-56Tax Revenues-	8	$	$	$	$Income tax-	Personal (*)	975-7	1,180-0	1,187-7	1,183-4	1,180-0Corporation 0)	1,130-7	1,240-1	1,191-2	1,020-6	1,035-0On dividends, interets, etc. going	abroad	55-0	53-7	53-8	61-3	67-0Excess profits tax	2-4	Excise taxes-	Sales taxes(') (2)	587-2	566-2	587-3	572-2	640-0Other excise taxes-	Automobiles, tires and tubes	100-9	89-9	106-1	81-8	81-0Beverages (soft drinks)	19-2	12-5	11-7	8-2	8-7Candy and chewing gum	11-5	12-4	12-8	9-9	9-2Cigarettes, cigars and tobacco...	106-3	102-6	113-2	114-5	122-5Cigarette papers and tubes	0-4	Electrical appliances	4-9	4-3	5-1	0-4	Furs	4-8	5-7	3-7	0-1	Jewellery, watches, ornaments, etc.	9-7	7-5	7-2	4-8	5-0Matches and lighters	1-9	1-4	1-4	0-9	0-9Stamps on cheques, money orders,	etc	11-3	10-6	Stoves, washing machines and	refrigerators	10-9	1-5	Television sets, radios, tubes and	phonographs	8-2	10-7	16-8	21-5	23-0Toilet preparations	8-5	7-2	7-1	5-2	5-6Trunks, bags, luggage, etc	4-0	3-6	3-5	0-4	Wines	2-2	2-2	2-2	2-4	2 5Sundry commodities	7-2	6-0	6-4	2-3	2-1Licences, interest and miscellaneous	0-5	0-5	0-4	0-4	0-4Less refunds	-13-7	-2-9	-1-6	-0-8	-0-9m- 7	275-7	296-0	252-0	260-0Customs duties	346-4	389-4	407-3	397-2	475-0Excise duties-	Spirits, malt and beer	120-9	127-7	133-0	130-1	140-2Cigarettes, cigars and tobacco	100-7	116-9	97-0	100-8	108-6Less refunds	-3-7	-3-3	-3-3	-4-4	-3-8217-9	241-3	226-7	226-5	245-0Succession duties	38-2	38-1	39-1	44-8	75-0Tax on insurance premiums	4-8	12-4	13-8	14-5	15-0Miscellaneous tax revenue	0-8	0-7	0-7	1-0	1-03,657-8	3,997-6	4,003-6	3,773-5	3,993-0Non-Tax Revenues-	Bullion and coinage	4-8	4-4	4-2	1-8	2-8Post Office-net postal revenue	104-6	111-9	111-0	131-3	136-8Premium, discount and exchange	17-7	1-5	0-8	1-6Return on investments	123-0	125-5	152-1	134-0	147-0Other	73-0	119-9	124-6	82-9	104-2323-1	363-2	392-7	350-0	392-4Total Revenue	3,980-9	4,360-8	4,396-3	4,123-5	4,385-4
(') Excluding tax credited to the old age security fund-[DOT]
Estimated
1951-52	1952-53	1953-54	1954-55	1955-562% personal income tax	
0-1	45-3	90-7	100-9	102-52% corporation income tax	2-0	36-8	55-6	46-0	53-22% sales tax	
24-3	141-6	146-8	143-1	160-0
(!) The total for 1951-52 represents gross collections less transfer to the old age security fund, and in subsequent years the totals are net after deduction of refunds and drawbacks as well as transfers to the old age security fund.

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
Agriculture-
Administration and general.
Science service	
Experimental farms service.
Production service	
Marketing service	
export to United Kingdom.
support account	
Deficit-Prairie farm emergency fund Other expenditure	
Atomic Energy	
Auditor General's Office	
Canadian Broadcasting Corporation.
fund of amounts equal to taxes coland equipment.
Office of the Chief Electoral Officer. Citizenship and Immigration-
Administration and general....
Immigration branch	
Indian Affairs branch	
Civil Service Commission. ... Defence Production- Administration and general.
and
External Affairs	
Membership in commonwealth
international organizations...
Assistance to other countries and international organizations...
Financeeral	
Office of the Comptroller of
Treasury	
Interest on public debt	
interest on basis	
public debt on
commissions	
Servicing of public debt	
Subsidies to provinces	
Compensation to provinces-
Tax rental agreements, 1947 Act. Tax rental agreements, 1952 Act.
receipts, ments..
under tax rental
to the superannuation account-
General	-	
Special	
Grants to universities	
Implementation of guarantees ( Sung Industrial Co. Ltd.)	
1951-52	1952-53	1953-54	1954-55	Estimated 1955-56$	S	$	S	$0-7	0-8	0-9	1-0	i-i7-0	81	9-0	9-3	9-37-7	8-3	8-6	9-0	10-99-3	9-3	9-5	10-0	10-440	4-8	4-2	9-3	6-911-8	13-9	14-7	12-6	12-3150	20-7	17-0	19-0	15-55-4	6-4	4-7	5-1	5-81-7	32-5	37-7	3-1	5-8 8-03-9	1-9	2-1	2-8	2-167-1	106-7	108-4	81-8	88-112-3	12-9	12-7	15-0	19-50-6	0-6	0-6	0-7	0-78-3	8-2	8-3	8-4	8-216-7	20-8	23-08-3	8-2	25-0	29-2	81-20-4	0-5	5-5	0-3	0-51-2	1-4	1-7	1-7	2-88-1	7-1	7-3	8-3	8-3140	15-2	16-5	18-0	21-623-8	US-7	25-5	28-0	82-71-7	1-9	2-1	2-3	2-58-3	9-7	10-1	9-2	9-822-7	79-1	37-8	9-7	6-5Si-0	88-8	47-9	18-9	16-88-2	9-2	10-3	11-9	13-72-7	3-5	3-5	4-4	4-426-7	26-6	31-9	27-5	27-387-6	89-8	45-7	43-8	48-48-3	9-4	9-4	9-3	13-83 12-6	13-3	13-7	14-9	15-1432-4 B I 87-5 1	451-3	476-1	477-9	490-910-7	13-1	19-1	23-6	21-4. 0-4	0-5	0-6	0-8	0-6. 20-1	20-1	20-1	20-4	20-4Qfi.Q	23-8 284-8	309-2	327-4	319-7X	. 3-7	4-4	6-8	7-3	8-9. 6-5 t	5-6	4-8	3-9	3-1. 12-9	13-8	16-4	37-4	31-5QK-0	25-0 5-1	38-0 5-2	7-0	5-4	5-6B 1-3	1-7	1-6	1-5	1-5
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued (in millions of dollars)
1952-53
1954-55
Estimated
Finance-concluded
Premium, discount and exchange	
Wartime Prices and Trade Board-
Administration	
Commodity Prices Stabilization Corporation Limited	
Relief re Hurricane Hazel	
Provision for reserve for losses on realization of assets	
Fisheries	
Governor General and Lieutenant-Governors	
Insurance	
Justice	
Office of the Commissioner of Penitentiaries	
Labour	
Government annuities-amount required to maintain reserve	
Unemployment Insurance Act, 1940-
Administration and general	
Government contribution	
Legislation-
House of Commons	
Library of Parliament	
Senate	,	
General	
01
873-6
750

[Stage Direction]
8-	9
[Stage Direction]
9-	5
n-9
0-9	0-7
23-9 30-0
25-1 31-1 67-0
4-3	4-5
0-	1	0-31-	2	M0-3	0-30-3	0-1	....	0-3	0-4
971-8
0-4
5-8
15-0
0-1
11-2
0-5
10-5
9-4
982-9
0-4
6-7
17-8
0-4
31-8
28-3
69-8
33-9
4 0	4-8	5-00-	3	0-3	0-31-	0	1-3	1-30-3	0-3	0-3Mines and Technical Surveys	Dominion Coal Board	
Emergency gold mining assistance....
National Defence-
General	
Defence forces, Army, Navy and Air
services	
Mutual aid to NATO countries	
Defence research and development....
Pensions-
10-8
11-8
0-3
1,217-6
35-4
12-0
11-2
0-3
1,557-7
43-0
13-0
15-2
0-3
1,424-3
40-8
16-4
15-5
0-3
1,313-8
50-0
17-8
10-5
0-5
1,453-5
65-9
Payments under defence services
pension act	
Government contribution to permanent services pension account	
National Film Board	
National Health and Welfare	
General health grants	
Family allowances	
Old age pensions including pensions to
blind persons	
Old age assistance, blind and disabled
persons allowances	
Deficit-Old age security fund	
National Research Council	
National Revenue including taxation
division	
Northern Affairs and National Resources
Post Office	
Privy Council including Prime Minister's
Office	
Public Archives and National Library...
Public Printing and Stationery	
Public Works	
Trans-Canada highway contributions..
30-7
1,415-5
2-	7 21 -1 24-3
80-2
3-	0 49-7
12-8
17-4
4-	1
0-	3
1-	1 79-1 12-8 91-9
30-0
1,882-4
23-0
334-2
406-6
47-3
105-6
0-	3
1-	6 83-9 14-0 97-9
35-2
1,805-9
28-0
350-1
480-5
49-9
113-6
0-4
101-5
5-2
1,666-0
28-6
366-5
45-8
15-7
20-2
3-8
2-1
18-1
5-3
1,740-3
30-9
382-4
63-3
16-3
25-8
4-0
2-3
15-0

The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Concluded
(in millions of dollars)
-	1951-52	1952-53	1953-54	1954-55	Estimated 1955-56$	S	$	S	$Royal Canadian Mounted Police	27-3	31-1	33-9	35-5	37-0Secretary of State	2-4	2-2	3-3	2-7	3-0Trade and Commerce	21-8	16-5	1G-5	17-5	18-119-221-8	16-5	16-5	17-5	87-STransport-	Administration and general	3-2	3-2	4-2	70	8-2Canal services	8-0	9-9	8-4	7-8	8-4Marine services	17-5	21-7	20-3	21-3	21-0Railway and steamship services	2-3	10-5	20-4	26-7	16*5Maritime freight rates act. 	10-0	10-1	10-5	10-5	11-2Air services	36-3	39-2	41-4	44-7	58-2Canadian Maritime Commission	4-4	4-0	4-2	4-2	4-3Deficits-	15-0	28-8	Canadian National (West Indies)	0-5	0-6	0-6	0-1Prince Edward Island car ferry and	terminals	1-4	1-5	1-6	1-5	1-6North Sydney-Port-aux-Basques	1-8	2-2	2-2	3-101	01	Non-Active assets-	National Harbours Board	1-2	1-9	4-2	3-9	3*199-9	108-9	118-0	159-2	185-7Veterans Affairs-	Administration and general	2-5	3-6	2-3	2-3	2-2Pensions	103-7	127-1	127-6	128-8	130-6Treatment and after-care of returned	soldiers and allowances to depend-	ents	76-1	78-5	79-5	82-2	93-1Hospital accommodation, additions,	alterations and improvements	3-8	4-0	4-1	3-9	3-3Post-discharge rehabilitation benefits..	6-6	3-8	2-5	2-6	1-8War service gratuities and re-estab-	lishment credits	9-8	10-7	8-9	6-0	3-7Soldier settlement and veterans land	acts	5-9	5-7	5-3	5-4	5-5Provision for reserve for conditional	benefits under veterans land act	7-6	8-0	8-5	8-9	8-9216-0	Ul- 4	238-7	240-1	249-1Total Expenditure	3,732-9	4,337-3	4,350-5	4,275-4	4,437-1
The Budget-Appendix

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(in millions of dollars)
-	1951-52	1952-53	1953-54	1954-55	Estimated 1955-56Loans to, and Investments in, Crown Corporations	$	$ 8-8 2-0	$ 7-2 4-7	$ 16-0 3-0	$ 12-0 8-5 Cr. 4-0 4-9 177-8 Cr. 0-1Canadian Broadcasting Corporation	
Canadian Commercial Corporation	0-	9 6-5 1-	3 140-0 Cr. 0-2 Cr. 0-3 73-6	1-6 141-8	3-7 Cr. 18-1	4-4 Cr. 93-4 3-6	
Canadian National (West Indies) Steam-					
Canadian Patents and Development Limited						
Central Mortgage and Housing Corpora-		72-6	98-8 Cr. 1-2 Cr. 0-6 Cr. 3-0	43-7	Cr. 9-1
Commodity Prices Stabilization Corpor-					
	0-2 Cr. 3-0	Cr. 0-1 Cr. 1-0		1-0 Cr. 4-0 1-3 0-3	0-3
Polymer Corporation Limited						
					20-2 3-9
	2-6	6-8	Cr. 2-8		
Loans to National Governments United Kingdom- The War Appropriation (U.K. Financ-					
221-6	232-5	88-7	Cr. 24-1	214-4Cr. 31-1 Cr. 14-0 Cr. 20-7 5-5	Cr. 24-3 Cr. 14-3 Cr. 20-6 Cr. 1-6	Cr. 53-6 Cr. 14-6 Cr. 19-4 Cr. 4-9	Cr. 30-0 Cr. 14-8 Cr. 23-6 Cr. 2-9	Cr. 30-0 Cr. 15-2 Cr. 22-3 Cr. 3-4The United Kingdom Financial Agree-	
Other Loans and Investments Subscriptions to capital of, and working capital advances to, international organizations- Canada's subscription to capital of-					
	Cr. 60-3	Cr. 60-8	Cr. 92-5	Cr. 71-3	Cr. 70-9
				Cr. 29-1	5-6
International bank for reconstruction and development		0-2				
Working capital advances to inter-	1-7 Cr. 3-4 Cr. 8-0 0-6 3-9	Cr. 0-1 Cr. 3-6 4-2 0-3 3-7Cr. 3-9 Cr. 0-9 1-	5 2-	7	Cr. 3-5 0-9 Cr. , 1-3 Cr. 0-5	Cr. 3-4 8-5 Cr. 0-7 Cr. 0-1	Miscellaneous- Balances receivable under agreements	Soldier settlement and veterans land	Other	Sinking fund and other investments held for retirement of unmatured debt	
Net total of changes in loans and invest-	Cr. 0-4	Cr. 4-4	4-3	Cr. 34-3	10-13-2	1-7	74-2	89-0	25-0164-1	169-0	74-7	Cr. 40-7	178-6
The Budget-Appendix

[Stage Direction]
Date of maturity	Rate per cent	Where payable	Amount of loan	Annual interest charge2} 21 2|	$ 500,000,000	$ 11,250,000400,000,000	9,000,000*56,500,000	1,553,75021 2	550,000,000	12,375,000700,000,000	14,000,0002f 3	*30,100,000	827,750Canada	300,000,000	9,000,0002	Canada	700,000,000	14,000,0002f	*27,700,000	761,7503	1,197,324,750	35,919,74221 3	*40,900,000	1,124,7501,165,300,350	34,959,01121 3	*37,500,000	1,031,2501,315,639,200	39,469,17631 3	Canada	*137,500,000	4,812,5001963, July 1	(>) 49,833,091	1,494,9933i 3! 3	(>) 1,978,362	64,297*152,300,000	5,711,250New York	(2) 150,000,000	4,500,0003	1,295,819,350	38,874,58131	*632,800,000	23,730,0003i	54,703,000	1,777,8483	1,691,796,700	50,753,90131	Canada	*607,500,000	19,743,75031 21	*644,100,000	20,933,2501968, June 15	350,000,000	9,625,00021	(*) 100,000,000	2,750,00021 31 31 31 3	(2) 50,000,000 300,000,000	1,375,000Canada	9,750,000Canada	100,000,000	3,750,000400,000,000	13,000,000Canada	55,000,000	1,650,000Various, three months treasury bills.. Various, nine months treasury bills...	(a)2-604 2	Canada Canada	1,340,000,000 260,000,000	34,893,600 5,200,00015,394,294,803	439,662,14915,042,483,350	429,477,85951,811,453	1,559,290300,000,000	8,625,000
15,394,294,803	439,662,149
* Estimated.
(1)	Conversion rate $2.80 to the pound sterling.
(2)	Conversion rate $1.00 Can. to the U.S. dollar. (a) Rate of discount on bills sold March 9, 1956.
[Stage Direction]

Wednesday, March 21, 1956