Hon. F. B. CARVELL (Minister of Public Works) moved:: That Messrs. R. F. Green, J. E Armstrong (Lambton), J A. Robb and W. C. Kennedy be appointed a committee from this House to meet a like committee from the Senate for the purpose of assisting the Joint Parliamentary Committee for Parliament Building on the allocation of space, etc.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Bill No. 139 (from the Senate) for the relief of James Frederick Neild.-Mr. Ross.
Bill No. 140 (from the Senate) for the relief of Mable Anna Ferguson.-Mr. Douglas (Strathcona).
Bill No. 141 (from the Senate) respecting Chartered Trust and Executor Company.- Mr. Nesbitt.

[Stage Direction]
(Questions answered orally are indicated by asterisks.).
FORT LAWRENCE, NjS,-PUBLIC WORKS EXPENDITURES.
Mr. Sinclair (Antigonish and Guysbor-ough):
*1. What amounts have been spent by the Public Works Department since September, 1911, at Fort Lawrence, Nova Scotia, and how much has been spent for dredging?
2.	Did the Government purchase certain dredging equipment (including tug, scows, etc.), at Fort Lawrence? If so, at what price?
3.	What has become of said equipment? If sold, what amount was received for same?

Mr. BURNHAM:: Is it a fact that positions1 announced as open for application in the Government Outside Service are held open so long that returned soldier applicants get no satisfaction and have to give it up?


Hon. Mr. BURRELL:: All vacancies reported to the Civil Service Commission by 'the departments and all requisitions filed in connection therewith are dealt with as promptly as pos, sible.
Ordinary requisitions which can be filled from the eligible lists of clerks, typists, stenographers, etc., are seldom held more than two or three days as when the lists of those who have qualified by passing prescribed examinations are exhausted there are usually applications on file from which temporary assignments can be made. .
When a minor position has to be filled by local advertising said advertising is authorized by return mail and ten days to two weeks is usually sufficient time in which to deal with the matter and make the appointment.
When more important positions have to be advertised in the Gazette and through the press1 a longer period, generally about thirty days, is allowed and time added to enable British Columbia points to reply. It sometimes occurs that so many applications are received that longer time is required to make full investigation into the merits of all applicants, but the cases where final decision is delayed longer than a few days after competitions close are few and far between.


STEAMERS &quot; LADY .EVELYN &quot; AND &quot; PRINCESS.&quot;
Mr. PARENT:: 1.	Are the steamers Lady Evelyn and Princess still the property of the Government? If not, when were they disposed of, and to whom?
[DOT] 2. At what price and1 on what terms of payment?
3.	Were they disposed of for cash? If so, has the Government been paid?
4.	What is the gross tonnage of each?
5.	Was said sale authorized by Order in Council?


Martin Burrell: Re Lady Evelyn-
1.	Soldi to the Gulf of St. Lawrence Shipping and Trading Company on the 24th April, 1919.
2.	$40,000 subject to arrangement.
3.	$30,000 has been paid. Balance $10,000 held pending the settlement of a claim that complete equipment was not delivered with the ship.

5.	Yes.
Re Princess-
1.	Princess disposed of in January, 1919, to Mr. J. A. Farquhar, Halifax, N.S.
2.	$46,555 cash.
3.	Yes.
4.	542 tons.
5.	Yes.


QUESTION PASSED AS ORDER FOR RETURN.
Mr. MICHAUD:: 1.	How many commissions have been appointed by the Governor in Council and by Parliament since the year 1911?
2.	What are the names of the various commissions and what art the names of the members of the said commissions?
3.	What was the amount of salary and travelling expenses paid to each commission and the sum drawn by each commissioner?



COMMITTEE OF WAYS AND MEANS.- THE BUDGET.

[Stage Direction]
The House again in Committee of Ways and Means, Mr. Boivin in the Chair.
Customs.
Tariff item 61a-Wheat flour and semolina when imported from a country which imposes a customs duty on wheat flour or semolina manufactured in Canada	per barrel, 30 cents.
['To-morrow we will take up the resolution respecting Vancouver Harbour Cbmmissioners standing in the name of the Minister of Marine and Fisheries; also Bill No. 39, to amend the Fisheries Act; Bill No. 131, for the Promotion of Technical Education; the resolution in the name of the Minister of Marine and Fisheries concerning the Canada Shipping Act. We shall also ask that public Bills and orders be taken up, and that the second reading of Bill No. 77, respecting divorce, be proceeded with.\nOn the motion of Sir Robert Borden the House adjourned at 10.40 p.m.\n\nFriday, June 20, 1919.']
Mr. BUREAU:: Why are these two items repeated? Item No. 61 is: "wheat flour, n.o.p.; semolina, n.o.p. . . . Free." This applies to countries which reciprocate the advantages that Canada gives. I understand that articles are not free except when there is a reciprocity in their exchange.


Sir THOMAS WHITE:: The two items are necessary in order to give effect to the intention.
Item 61a.
Wheat flour and semolina when imported from a country which imposes a customs duty on wheat flour or semolina manufactured in Canada.
provides the rates of duty there mentioned. Then it is necessary to provide for what is not otherwise provided for, that is ito say, not embraced in that item; so that wheat flour and semolina imported from a country which does not impose a customs duty on wheat flour or semolina manufactured in Canada come in free.
384a. Rolled iron or steel hoops, band, scroll or strip, No. 14 gauge and thinner, and rolled iron or steel sheet, when imported1 by manufacturers for use only in their own factories in the manufacture of galvanized iron or steel hoop, band, or scroll, strip or sheet. Free. Free. Free.


Richard Smeaton White: I desiie to propose a new resolution immediately following 384a in order that the items placed in it shall conform to 384a. I move that the following resolution be inserted as 386:
386. Rolled iron or steel, and cast steel, in bars, bands, hoo.p, scroll, strip, sheet or plate, of any size, thickness or width, and steel blanks for the manufacture of milling cutters when of greater value than three and one-half cents per pound, 71 p.c. 12iJ p.c. 121 p.c.


Mr. M. CLARK:: Would the minister tell us in a word or two what principle has guided him in making these particular preparations of iron and steel mentioned in 384a free?


Richard Smeaton White: In making
changes in the tariff it is necessary to enact two items where one item existed before. For example, there may be one item embracing a number of articles subject to a certain duty. When changes are made in. respect'to some of these articles it is necessary to re-enact the item as it stood,, leaving out the articles which are otherwise dealt with, and then to enact another item. It is on that account that this has -been done. The free item is inserted in order to continue in force an Order in Council under which
rolled iron or steel hoop, band, scroll or strip. No. 14 gauge and thinner, andi rolled iron or steel sheet, when imported by manufacturers for use only in their own factories in the manufacture of galvanized iron or steel hoop, band, scroll, strip or sheet
were placed on the free list. Now we are placing this item in the customs tariff.


Mr. W. F. MACLEAN:: Might we revert to item 356?:
Nickel in bars and rods, sheets or
plates	Free. Free. Free.
I would like to ask the minister whether it is the intention of the Government to pass a non-ferrous Bill similar to that which I understand has been passed in England, and, if such a Bill is not to be passed, why?


Richard Smeaton White: I would ask my hon. friend to explain what he has in mind in mentioning the Order in Council in England?


William Findlay Maclean: It is not an Order in Council. They have passed, or are passing in England, a non-ferrous Bill, which practically puts under the control of the Government all metals of the nature of nickel. They are making considerable progress in that respect. I understand this Government has been asked to pass a similar law, and I would like to know from them whether we are to .pass such legislation which will be applicable to nickel, and

some other metals, and if no such law is to be enacted in Canada what the reason is?


Martin Burrell: In reference to my hon. friend's question I .might say that the Non-Ferrous Metals Bill passed by the British Parliament was considered very fully by a special committee, which, as Minister of Mines, I appointed last year. That Bill is designed not so much to serve the object my hon. friend has suggested, but really to get rid of German-controlled interests which were more or less predominant in certain metal interests in Great Britain. The conditions there were not the same as in this country. Our position in respect to our metals was entirely different from that of England. In this country a great many of our metal industries, and certainly a lot of our minerals are out of our jurisdiction and under the control of the provinces. If a law similar to the English Non-Ferrous Metals Bill had been passed here it would not operate in the same way as it did in. England, and would have involved legislation on the part of the provinces which might or might not have been put into effect and to some extent might have had a restrictive effect in respect to the investment of American capital, which especially in our western country, is very largely interested in the Canadian metal industry. For these, and some other reasons I need not elaborate now, the Government decided they would not take any action at this particular time but would give the question further consideration if necessary. I may add, however, that even after that law was enacted in England there was quite a difference of opinion as to the wisdom of continuing it exactly in its present shape.
Mr- W. F. MACLEAN: The explanation of the minister who has charge of the Mines Department is not quite satisfactory to me. I am told that the condition of affairs that the British Government eventually found in regard to the essential metals, and nickel is one of them, -was such that it was a matter of grave consideration for the home Government, and, for the defence of the Empire, that Germany did control these necessary or essential metals and that they did control nickel as made from the ores of Canada, and I have directed attention to it. As one who favours a national policy, I think it is high time we had in f-his country a national policy controlling these metals, yet we are allowing these metals to come in free. Who makes them? The Mond Nickel Company in Great Britain who control a great portion of the

Sudbury nickel mines, and the International Nickel Company that were in New. Jersey, but' are now in Canada. Neither of these companies up to date, although they have produced millions and millions of nickel and exported it all over the world-and I think in certain instances some of it has got to Germany-have told us anything about their business. I for one tell the Minister of Finance now, seeing that we are talking about nickel, that this same International Nickel 'Company that were operating in New Jersey a little over a year ago, suddenly paid to the United States Government over $3,000,000 of a war tax on their profits. This money was got, I understand, by the seizure of a large block of so-called nickel matte, which, when examined-I have known this to be the case for a long time, -but for some reason we cannot direct the attention of Parliament to it in this country-was found to be full of platinum, palladium, and all the rather precious metals that are in what is called the platinum group. The evidence was so straight that in two or three days this International Nickel Company, which controls the nickel mines of Sudbury, paid to the United States Government over $3,000,000 of a tax on profits, and that out of nickel that came from Canada and was refined in United States. I would ask the minister whether he has ever made an effort to compel this company to pay a war profits tax on the refinements of nickel that come from Canada. Then there is that other great monopoly, the Mond Nickel Company. Sir Alfred Mond is associated in the British Government at the present time. He is the head of the nickel trusts all over the world, I believe, and has had more or less relations with the Germans. He has never disclosed what his profits were on the nickel ore that he took from this country over to Wales and refined, and which may be equally charged with these precious metals. That is the position of affairs in Canada, and shows almost an absolute monopoly not only of nickel but of platinum. Platinum is- worth over $100 an ounce, five times the value of gold, and was an essential war metal-the only source of it was in Canada. We have the mines, but these companies take the ore out of the country and refine it, and that is not a national policy, and it is not good business. I want to ask the minister who is in charge of the Mines Department why he, and his expensive department, have not been able to tell the people of Canada what the precious metals content is of these ores

of which we have almost the absolute monopoly. I want a national policy in regard to the refinement of nickel ores in this country and I want the Department of Mines-a most extravagant department, but one well officered by men who know the situation and who know the precious metal content of these ores-why the facts are not disclosed to us. I have read the reports of the Department of Mines year after year, and they hint at the real situation, but that is not sufficient. The Ontario Government have been working on the question and appointed a most expensive commission to investigate it. That investigation was carried on for months, and yet the facts were not disclosed. We have now a refinery, a branch of the International Nickel Company, refining at Port Colborne, and they did a peculiar thing; they suddenly changed their organization. They were a New Jersey corporation, but they came back under the law of Canada, and, as I say, are located at Port Colborne. At the present time I believe their works have suspended operations because of over production. But here we have a Provincial Government, which has a high class expensive mining department, and we have a Federal department of the same type. We have a treasury to-day absolutely in need of money, and there is no place where so large an amount of money can he got to meet the expenses of 'Canada and to help to pay its war debt, as there is in some kind of a tax which will compel these two enormously rich companies Which control these essential ores;-there is no such source of income, to my mind, as there is in these two companies. Take the one fact that the United States Government, under their law for the taxation of war profits, were able to get $3,500,000 in a few days by seizure. The facts have never yet been disclosed, but they can be ascertained; and if there is such a source of revenue open to the people of this country in these times of extreme financial difficulty, and if we have an absolute control of this ore and of the metal produced from it, why do we not avail ourselves of that revenue and assume that control ? You talk about the production of iron and encouraging the reduction of iron ores in this country. Why not take charge of the precious metals we have in Canada, which are so rich and can contribute so much to help to pay the public debt.
I am not going into the question much more fully to-day, but I want to warn the Government that there are certain facts
soon to be disclosed in 'London and in Washington in connection with these metals that will startle the world and will show a pro-German leaning during the war that Canadians will be surprised to learn. And yet none of these facts have been brought out so far. I devoted months and years trying to get out these facts. I studied the question, and the further I got into it the more I was convinced of this pro-German influence. I was probably the first one in this House in the old days to set up this doctrine; that of all things we ought to have a national policy in regard to nickel and the other precious metals associated with it. But for some reason or other the hand of the Government in the province of Ontario and in the Dominion has been palsied and nothing has been done. There is a source of revenue, and again I want to call the attention of the Finance Minister to it. If the United States Government by a single seizure could compel the International Nickel Company, which was mining our ora in Sudbury, to pay $3,500,000 in one year- t	know what they have paid since,
because the minute they were caught red handed they jumped out of the country and moved their works into Canada-it will be manifest that we are overlooking a fruitful source of revenue. Let us have a national policy in regard to this nickel. Let us keep this great store of platinum, radium and the other rare essential metals. There is not one of them that is not two or three times more valuable than gold, and they are sought all over the world. When the American Government saw that it was likely to be involved in the war it spent millions of dollars trying to get platinum. We have these precious metals, and they all played an important part in the war-indeed, they were so essential to our success that the British Government, I understand, entered into correspondence with the Dominions in regard to obtaining the maximum output.
Why have we not had a national policy in this country to see what is in these metals and what revenue is to be had from them? But this Government will not move, this Parliament will not move, and the Government of the province of Ontario will not move. The International Nickel 'Company for a long time defaulted in the payment of their revenue tax to the province of Ontario. Three or four times since I first introduced into this 'House this question of a nickel policy this so-called International Nickel Company has changed its corporate form, and men who were promin-

ent in it have disappeared. It is known now that the International Nickel Company was controlled in the United States by a voting trust, but nobody has ever told the people of Canada or of the Empire who were behind this voting trust.


Jacques Bureau: Who do you think it was?


William Findlay Maclean: I think it goes back to Germany.


Jacques Bureau: Hear, hear.


William Findlay Maclean: 
The CHAIRMAN:: I must call the hon. member to order. The speech he is now making, although it would have been in order upon the Budget, is certainly not relevant to the item or clause under discussion, which concerns the 'admission into Canada free of nickel in bars and rods, strips, sheets or plates. The hon. member will be in order in giving his reasons why this article should not be admitted free into Canada; but he is not in order in making an attack on the Government for what occurred during the recent war.
'Mr. W. F. MACLEAN: I Tespect what the Chairman has said. But I say we should not allow this nickel to enter free of duty until we compel the United States to take its duty off our nickel. We are letting in free nickel refined in the United States, but the United States Government put a tax on our nickel. The very men who control these ores, after they got the right to ship them out of Canada to refineries of their own in the United States, went straight to Congress and got a prohibitive duty put upon pure nickel coming into that country from Canada, made out of ores that could

be found only in Canada. That thing has never been settled. It has.got to be settled, and it is one of the things that will have to be settled in the same way as the German control of zinc. I call the minister's attention to it-he may or may not explain it-but it has got to be settled, and I want to know whether the minister who has control of mines will bring down to this House any letter or circular that he has received from the British Government in connection with non-ferrous metals, of which nickel is one.
I may tell the Government that I am going into this matter later on, and the best place to fight it out may be in the country amongst the people. I never saw so much feeling in Canada as I have found to exist in connection with this nickel question. It is a shame that we should allow to come free into this country nickel which has been smelted by companies outside of Canada, who do not pay any business profit taxes to the Dominion treasury, who will not disclose the precious metal contents of the ores they take out of this country and who have renigged on every occasion as regards the payment of every just tax imposed upon them by the province. of Ontario.


Richard Smeaton White: A certain part only of what my hon. friend has said is relevant to the item under discussion, and I confess I do not pretend to be able to follow him with regard to many things he has said. He has put forward rumours that he has heard and things that he has read, but there is before this Committee nothing definite to which reply can be made. The item under consideration is No. 356, which provides for the free admission into Canada of nickel in bars and rods, strips, sheets or plates. There is no change in that item; it has been in the tariff, and the reason why nickel has been on the free list is because nickel is not manufactured in Canada. I do not see the reason at the present time for putting a duty upon nickel which has hitherto been admitted free, when there are under construction in Canada large nickel refineries at Port Colborne and Deschenes Falls, which will provide for all our requirements and also for a large quantity of nickel for export. Those who have established .these industries are not asking for any duty upon nickel, and I do not follow my hon. friend when he speaks about the national policy requiring us to put a duty upon nickel which has hitherto borne no duty, which is to be manufactured here to a quantity away beyond the needs
of this country and upon which the manufacturers ask no duty. That is the position as regards the item in question. My hon. friend has put out vague statements as to the Government's being at fault with regard to permitting the exportation of nickel from this country during the war. The Dominion Government, from the very beginning of this war, has worked in the closest possible accord and understanding with the British Government as regards nickel.


William Findlay Maclean: The same thing was done in Australia and what was the result?


Richard Smeaton White: There is this difference between myself and my hon. friend: that I have absolute confidence in the British Government.


Mr.  W. F. MAOLEAN@: Why were firms associated with members of the British Government fined?


Richard Smeaton White: I do not for one moment follow my hon. friend when he challenges the integrity of the Prime Minister of the British Empire, Mr. Lloyd George, in connection with this matter.


Mr.  W. F. MAOLEAN@: I do challenge it as far as the supervision of nickel is concerned, and I do so on my responsibility as a member-


Richard Smeaton White: I do not agree with my hon. friend, and I very much deprecate his doing it. When I was in England in the fall of 1916-there was agitation then about nickel in this country-I consulted personally with members of the British Government, amongst others with Mr. Bonar Law, in whom also I have the most absolute and implicit confidence, and I say that the Dominion Government's action throughout has been absolutely unquestioned and approved by the British Government, which was our senior partner in fighting this war. Suppose that in 1914 the Dominion Government had shut off the exportation of nickel matte from this country. Great Britain was pouring out millions of dollars into the United States for munitions and other supplies, the manufacture of which required nickel. Would we have been justified, after the declaration of war, in preventing the manufacturers of munitions required by the British Government from obtaining the matte with which to manufacture nickel? There were no refineries in this country.


Mr.  W. F. MAOLEAN@: Why were 'there not?


Richard Smeaton White: My hon. friend raises the question: Why were there not?
I am dealing with the situation that existed in 1916 and with the charge put forward that the Government should not have allowed nickel matte to go out of this country. If we had not allowed nickel, matte to go out of this country Great Britain would not have been able to obtain the munitions with which she was fighting the war. The British Government had to have available nickel in the United States for the manufacture of munitions and other supplies. The Dominion Government, through its officials, kept as close a supervision as was possible upon the output of nickel by the International Nickel Company. Mr. Graham Bell of the Railway Department, and, I think, another official visited the head office of that company on several occasions and checked up all receipts of nickel matte and all production of nickel. My hon. friend suggests that some of the nickel may possibly have -got into the hands of Germans. I do not believe that is so, but if it were so, would the Dominion have been justified, there being no nickel refineries in this country, from shutting off the exportation of nickel matte, on which, as I have said, Great Britain depended for the manufacture of munitions for which she had contracts with the United States' manufacturers?
There is another thing I would call to the attention of the Committee. Had the action suggested by my hon. friend been taken, a. difference of a very serious character would have arisen with the United States. The United States depends upon us for nickel matte, but this country depends upon the United States for coal, and the United States has treated us very generously with regard to coal. She has treated us most generously with regard to the coal we got last year and the year before. We depend also upon the United States for raw cotton. We must look at this question as statesmen. To come to the other point: My hon. friend says that the International Nickel Company pays a large business profits tax to the United States. So it should, if its earnings are such as to come within the scope of the United States law. The International Nickel Company is not a Canadian company; it is, as a company, absolutely outside of the jurisdiction of this Parliament. The International Nickel Company has no office in Canada, and so far as I am aware, does not carry on operations here. The operating company in this country is the 
Canadian Copper Company, and that company, which owns the mines here, under titles granted, I believe, by the Provincial Government, is assessed by the Dominion Government in respect of its excess profits, and we have found that company very ready and willing to pay the excess profits tax to the Dominion Government. I provided in the Business Profits Tax Act of 1915 thatf-' where any contract existed between an outside company such as the International Nickel Company and the Canadian Copper Company operating in Canada, in determining the profits of the latter, regard should be had, not to the contractual price at which its product was purchased, but to a fair market price.
The reason for that provision was that an American company holding the stock of a Canadian subsidiary might make a contract at much less than a fair price. I submit that this Government is not to blame for not assessing the International Nickel Company, which is not within our jurisdiction. The only question that could arise is as to whether we have assessed-and we have-the Canadian Copper Company, which is alone within our jurisdiction.
My hon. friend has spoken about a national policy to develop the nickel industry. I have pointed out to him that two large plants are in process of construction in this country. The Ontario Government required the refining of ore by refineries in Ontario, and as a result we have a large refinery going up at Port Colborne, and there is another large refinery in course of erection by the British-Canadian Nickel Company at Deschenes Falls- So I do not feee what ground my hon. friend has for his statement that there has been dereliction on the part of this Government in framing a national policy for developing the resources of this country, or what ground he has for saying that there has been failure to collect the business profits tax. We must deal with facts as they are, and we were obliged in war time to have regard to the international condition that existed and the supreme necessity of the British Government obtaining nickel for the use of its armies in France and Flanders.
My hon. friend puts forward the view that some tremendous revelation is about to take place involving governments, in connection with their acts respecting nickel.
I want to say as a member of this Government that we have worked absolutely in accord and in perfect understanding with the British Government, and I cannot understand this House blaming the Dominion Government for co-operating in time of war

with its senior partner, which has played the greatest part in this war, and the integrity of whose Government I never shall question. *
If my hon. friend has anything to say respecting what this Government has done with regard to nickel, let him put forward his facts, so that we may answe^ them. I think I am just about as jealous of the conduct of this Government in time of war as is my hon. friend or any other member of this House, and I do not relish the suggestion that this Dominion Government has in any way played into the hands of the enemy in time of war. I took the matter up, as I have already said, with the members of the British Government, and this Government has an absolutely clean conscience in the matter- If my hon. friend has any charges to make against us touching our conduct of this war, let him bring them forward specifically, instead of simply making insinuations.
'Mr. W. F. MAiCLEAN: I want to answer one or two points of the minister. First of all he says that the International Nickel Company is a corporation outside the jurisdiction of Canada. As a matter of fact it has taken itself out of the jurisdiction of New Jersey, where it was compelled to pay $3,500,000 of its profits in taxation in one year. It has come to Canada; it is here now, and is a Canadian organization.
'Sir THOMAS WHITE: My hon. friend is incorrect in his statement.


William Findlay Maclean: I am not. The International Nickel Company has its head office to-day in Toronto. It has advertised that it has left the United States.


Richard Smeaton White: My hon. friend
is confusing the International Nickel Company of Canada, Limited, with the other company.


William Findlay Maclean: I am speaking
of the company that controls the products of our mines, and I say that its head office is in Toronto. If the United States could get this amount of taxation out of the profits this company made on the metal which they got from Canada, why was not our policy such as to compel the company to refine the metal in this country? This is a key industry. Sir Alfred Mond, who is head of the nickel trust, and a member of the Lloyd George Government, said in the statement I have referred to: "We have the key industry of the world in nickel, and we have it in Wales. We have it in Wales because
we bring our ores from Canada, and Canada does not interfere with us." British workmen get the work that Canadian workmen should have. All this ore should be smelted in Canada, but we have not got a national policy in that respect. He says that none of this metal, so far as he knows, got into Germany. I should like to know where the Deutschland got its cargo of nickel which it took over. It was the nickel refined by the International Nickel Company in New Jersey, refined from the ore taken out of the Sudbury mines. Some hon. member says that the Germans did not 'get our nickel. If the German undersea campaign had succeeded, and they hoped it would, and if the United States had kept out of the war, they would have continued to supply the German munitions factories and plants with nickel from Canadian mines.


Michael Clark: Would my hon. friend say that if there was a risk of a little getting to Germany, the whole supply to Britain should be cut off?


William Findlay Maclean: If we had control of this key industry, and if Britain or the United States wanted the nickel in a war in which we were associated with them, we should say to .them: We want to check this metal off so as to make sure it will not get to the enemy. Before the United States entered the war, factories and foundries all over that country which required nickel for commercial purposes, as they alleged, could get a free supply. As we possessed this key metal, we should have 'insisted on checking it up. What I proposed at that time on the platform and in the press was that if our nickel had to be refined in the United States because we had no refinery in this country, the refined product should afterwards be sent to Canada, and we would dole it out to Great Britain and the United States. The United States to-day, I have been given to understand, had made an arrangement with this Government whereby they are to be allowed to take out of our country for their own war purposes our raw nickel ore. There has been no disclosure of that fact so far. The Minister of Finance said that I had made no direct charges against the Government, and that I should bring them forward if I have any disclosures to make. I am not in a position to make them yet, but they are coming along in a way which shows that the policy of Canada in regard to nickel has been improvident in every respect. We are not making those who control this nickel industry pay taxation.

The Mond Company of Wales, which is making enormous profits out of the nickel that it smelts from ores which it can only get in Canada, does not pay a dollar into the treasury of this country. I would bring these men out here and put them in the witness box just as the American Govern ment did. ' It seized their books and found out just what they were doing and made them pay a tax on their war profits. We have up at Sudbury a belt of country thirty miles across, containing the greatest store of precious metals in the world. We have not got this nickel industry under control. We did not control it for some time during the war, and we do not control it to-day. Outsiders control it; it is controlled in England and in the United States.
This key metal would give us absolute control of the steel industry not only of Canada but of the world, and I want to press on my friends from Nova Scotia who are interested in the steel industry, as well as my other friends, that we should have control of this nickel industry and compel refinement. The United States Government has never had any confidence in the International Nickel Company or the American Armour Trust associated with it in connection with United States steel, and that is why they made that contract with the British-American Company. If an industry is being established in Canada at Deschenes it is because the British Government have guaranteed bonds for millions of dollars for the purpose. The British Government will no longer deal with the International Nickel Company and the. Armour Trust who endeavoured to make them pay enormous prices for nickel steel for ships. They are looking to Canada, and the United States Government would co-operate with this country in controlling this great industry. We have had it in Canada for twenty years and it is not under our control. Outside companies come in and do what they like with it, and these very companies who are allowed to bring in their nickel free into this country actually went to Washington and conspired to prevent our nickel going in there, with the result that they got a prohibitive duty put on. With regard to the question of accepting the assurances of the British Government, this is all very well, but the British Government have given assurances of all kinds, and the revelations that are now being made in England, after the assurances of the British Government, are simply astounding as to the extent of German intrigue there. I have even heard of the
[Mr. W. F. Maclean. 1
case of a great insurance company in Great Britain that had an immense trust fund for the benefit of its policy holders, and during the war the fact was disclosed that a great portion of this trust fund had been suddenly, by a peculiar influence, switched over to the purchase of bonds of German municipalities and the improvement of German industries. That was only one case. The revelations in England are not yet all in the public knowledge but they are coming out, and they show that intrigue was so extensive that it permeated all America and Canada. From whatever source it originated it has worked to the detriment of Canada for twenty years, and indeed longer, for it is more than twenty years ago since Dr. Mond discovered that Canada had this store of nickel and sought to get control of it, succeeding in a measure. We have been talking about a national policy in this country, but the two Governments in the past have failed to have that industry established in this country and to compel it to pay its just share of taxes including, within the past few years, war taxes. These facts will come out and will be an issue before the country and I warn the minister and the Government that if they do not in the first place make this company disclose the precious metal contents of the ore which it takes from the country we will have no more business with them. Let us prohibit the taking of this ore out of 'Canada until these two great companies disclose its metal content. Why should we allow foreign companies-in which term I include British companies-to come in and take this most valuable ore which is the source of the great key metal that controls the whole steel and iron industry of the world? The only defence advanced at present is that this Government has every confidence in the British Government and accepts its assurances. After my examination of the subject, and I have looked into it pretty closely, I cannot accept those assurances. I do not think Lord Northcliffe or the American Government will accept them, because they all know better now, and I think it is high time there should be a declaration by a 'Canadian 'Government, after the experience of this war and in view of the knowledge we have of German intrigue, that henceforth we will control these ores in this industry and will not allow a pound of ores.to be refined outside of Canada. We should be masters of the situation and dole out these ores ourselves, and if they contain any precious metal,

as I believe they do, we should compel the companies that operate here to disclose the fact. I hope the time will come when Canada, with its expensive metallurgical and mineralogical department, will make it possible for the refinement of our nickel in our own country and ascertain the contents of these ores, not only as regards nickel but as regards other precious metals, and also undertake the distribution of it. Time after time public attention has been called to this matter, and the Opposition is just as derelict as the Government may have been. The same thing happened in the province of Ontario in connection with nickel. A clever Order in Council was drawn one day which gave the absolute title to these nickel mines to foreign companies, when, as I contend, they should have been kept on lease. Now, Mr. Chairman, I know that you are going to call me to order, but I have been replying to the minister. I have called the attention of the Government to something in regard to which the people of Canada will demand a satisfactory explanation.


Richard Smeaton White: Mr. Chairman, I cannot allow the remarks of my hon. friend to pass unchallenged. He has made what I regard as a tissue of misstatements. I ask him whether, as a responsible member of this House he thinks that any good national purpose is served by his calling in question the good faith of the British Government merely upon rumours which he isays he has not substantiated, and upon revelations which he says are about to be made but of which he confesses he knows absolutely nothing.


William Findlay Maclean: No, he doesn't
say-


Georges Henri Boivin: Order. This debate shows how far the Committee may wander when it once leaves the clause or item under consideration. Probably the Chairman is primarily responsible for not having called the hon. member (Mr. Maclean) to order earlier in the debate, but I trust that hon. members will now keep strictly to the subject under consideration.


Mr. McKENZIE:: There is one point about that matter, Mr. Chairman-*


Georges Henri Boivin: I have ruled that no discussion may fake place concerning what occurred during the war.


Daniel Duncan McKenzie: Is this concerning the war? It has been disclosed that metal which is classed under the head of copper
or nickel goes out of this country. The hon. member for South York says that other metals of greater value are included. Are we not inquiring into that question?


Georges Henri Boivin: No. This item has nothing to do with any metal which leaves the country. If merely covers the importation of nickel in bars and rods, strips, sheets or plates.
On item 384a being again called:


Jacques Bureau: The member for Red DeeT asked a question of the Minister of Finance as to why these articles were put free on the list, and the minister replied that [DOT] it was to give effect to an Order in Council which had been previously passed. I have not the same faith in the Order in Council as has the hon. member (Mr. Clark). This Order in Council does not satisfy me. Will the minister go further and tell us what inspired it?


Richard Smeaton White: The object of the Order in Council was to promote the galvanizing of iron and steel bands, etc., in Canada, which would otherwise have been done outside of this country if the raw materials mentioned were not admitted free. The Order in Council, which is under the general law, therefore, provided for the free admission of the .articles mentioned when imported for use in the manufacture of the finished products. We are now embodying in the statute what has been provided for by Order in Council for the purpose of ensuring the galvanizing in 'Canada of that which would otherwise be galvanized outside of Canada.


Jacques Bureau: What is the date of the Order in Council?


Richard Smeaton White: January 19, 1919.


[Stage Direction]
Item agreed to.
Item 386:
Rolled iron or steel, and cast steel, in bars, bands, hoop, scroll, strip, sheet or plate, of any size, thickness or width, and steel blanks for the manufacture of milling cutters when of greater value than three and one-half cents per pound	7J ,p.o. 1I2J p.c. 12J p.c.
['January 19, 1919.']
Jacques Bureau: What is the object of this addition?


Richard Smeaton White: To bring it into conformity with item 384, which we have changed.


Mr. LEMIEUX:: What is the object of the amendment?


Richard Smeaton White: Item 386 of the present tariff is as follows:



(Rolled iron or steel and cast steel, in tars, bands, hoop, scroll, strip, sheet or plate, of any size, thickness or width, galvanized or coated with any material or not, and steel blanks for the manufacture of milling cutters, when of greater value than three and one-half cents per pound	Free. 5 p.c. 5 p.c.
To which was added the 74 per cent war tax. It is necessary under this partial revision, which we are making to take out of the item the words " galvanized or coated with any material or not," which now appear in item 384. That necessitates the reenactment of item 386.


Rodolphe Lemieux: Was it an oversight?


Richard Smeaton White: It was an oversight.
Item 386 agreed to.
On items:
446. Cultivators, harrows, horserakes, seed drills, manure spreaders and weeders and complete parts thereof. .. .10 p.c. 15 p.c. 15 p.c.
446b. Ploughs and complete parts thereof	12J p.c. 17 J p.c. 17 J p.c.


Mr. MAHARG:: Would the minister explain to the committee, if he can. why ploughs carry a higher duty than the articles mentioned in item 446? It seems to me if he is looking to the interest of the. new settler, and if we are to have any difference whatever, these figures should be reversed. The plough is the one essential that every man must have. With regard to these other articles three or four settlers can club together and get them hut the plough is something that each musit have. He cannot join in with his neighbours in the purchase of a plough as he can with regard to some of the articles mentioned in item 446. I would like the minister to explain why the difference is made as between these articles.


Michael Clark: Before the minister answers, I would like to enforce what has been said by my hon. friend from Maple Creek (Mr. Maharg). What I propose to say may help the minister in giving a little study to this matter before he appoints his commission and it may lessen the work of the commission in the revision which is to precede the next Budget. I need scarcely explain to the minister that the plough, in agricultural operations, precedes the harrow, the manure spreader, the seed drill or the rake. In the figures of these two items we have a striking example of how easy it is for a tariff to be an unscientific thing. It would surely be the scientific procedure to make it easier to get the plough. I am thinking especially of the breaking plough. I remember very well
	*,	,
in my earlier years, my poor boy who is now sleeping peacefully in France, tackled the willows in a piece of breaking as manfully as he tackled the Huns, and he said " Father, some of these roots must have been there since the time of Abraham." They looked like it. Would it not be a scientific tariff which may help the early settler especially in the matter of the breaking plough to get that implement which, I can assure the minister, requires nerve and strength to use?
The minister yesterday in a very able and interesting speech-his speeches are always able and interesting to me and I am sorry that one cannot avow the same sponsorship for that which they contain as for the way in which he delivers them-expressed the opinion that if he had some of us in the Finance Department for one week he would make us tariff men. Just to go to the other end of the proposition on this tariff question, may I say to the minister, that if I had him out on the farm and with a breaking plough up against some of those roots, which have been there since the time of Abraham, I would make him a no tariff man in no time at all. He should take it up in the department and say: " Breadner, for goodness sake, let us look into this thing and see if we cannot get the duty off breaking ploughs altogether." I hope my hon. friend will not think I am hostile to him when I am helping him in connection with the coming tariff revision, to arrive at a scientific tariff on breaking ploughs. He says: " Produce"; then he makes dear the very first implement you must have to get out those awful willow roots, and they are fearful things to tackle. I am not sure but that the German business was about as easy as those willow roots. I hope my hon, friend will give attention to this matter. Would he not look into it on his own initiative without any more prodding from the western members and see why this duty on ploughs should be larger than on the other implements which follow the plough? I cannot understand how he has arrived at these figures unless it he strictly on the line of Scripture. On tariff matters Scripture ought to be left out sometimes: " Unto him that hath shall be given and from him that hath not even that which he hath shall be taken away." That must be the guidance of my hon. friend in making the difficulties greatest at the very beginning of the settler's operations. I hope my hon. friend will take these matters into his consideration and I would like him to do it now unless there is something special about the

plough industry which requires this protection.
I am told they are selling these ploughs in the United States quite freely. In that case, why should we not have free ploughs?


Richard Smeaton White: A plough is one of the most competitive articles, as far as business is concerned, of agricultural implements, and that competition is exceedingly keen from outside of Canada. There was a duty of twenty-seven and-a-half per cent, including the customs war tax upon ploughs, but we made a reduction to seventeen and-a-half per cent. I might say to my hon. friend that our mode of approach to the partial revision of the agricultural implement schedule, has been to reduce the duties as far as we could without doing material damage to established industries in this country. I have no hesitation in saying to my hon. friend that, whether 1 am correct or not, my belief is that if we had reduced the duties further than we have at this revision, we should have closed out many industries of this country employing thousands of men at the present time, and personally I would not take the responsibility of considering that. The partial revision which we have made this year represents a sincere effort on the part of the Government, at a time of great instability and fiscal difficulty to meet so far as we could, the request made by members of the House, and by the Western community, foi a reduction in the duty on agricultural implements. Now to show my two hon. friends how close a calculation is made in connection with a matter of this kind, I would say to them, that when in 1914 we reduced the duties upon binders we made a most careful examination into the question, and we found that if we had gone down to ten per cent we would have, without any question and beyond peradventure, closed up the International Harvester Company at Hamilton, thrown out of employment its operatives and transferred the business to the plant in Chicago. I do not think I can answer my hon. friends any more clearly than that, in order to convey to them at least my point of view.
The hon. member for Red Deer has spoken of a " scientific tariff." I do not recall that I have used that expression, although it is used by others, but I think I know what is meant. It is not a happy term, because I doubt if there is such a thing as a scientific tariff. But those who use the term have this in mind: That in considering what tariff duties should be imposed in respect of a particular commodity manufactured in Canada, regard should be had to the duties upon the raw material that is entering into the production of the article or articles in question-the duty upon coal, which is a factor of cost in production, the duty upon machinery, the labour conditions in Canada, and other items of cost upon which it is unnecessary for me to dwell.


Jacques Bureau: Including the maker of the article.


Richard Smeaton White: There are many makers of articles in Canada that appear to have a very substantial so-called protection, and if regard is had to the duties upon their raw material and upon the other articles which I have mentioned and to their costs, it is rather exceptional to find abnormal profits. My hon. friend knows that, and I am inclined to think that coming as he does from the province of Quebec which, if not the greatest, is a very great manufacturing province, he would not, I think, if he were standing in my place, assume the responsibility, as I said yesterday, of taking off all the duties at this time, or at any other time for that matter, upon the products manufactured by those engaged in production in this province who have to pay, the duties in respect of their raw material, and are confronted with the other items of cost to which I have alluded
Mr. OOOKSiHUTT:	I do not know why
the hon. member for Red Deer should single out the Breaker plough in order to " break " an industry. However, I did not rise for the purpose of rebutting the hon. gentleman's argument; I simply want to know why the term " complete parts " is used, and is it intended when the part is incomplete to charge a different duty from that which is levied in the case of a complete part? The term is rather ambiguous and somewhat contradictory, it appears to me, and I want to know why the word " complete " is used in several places?


Richard Smeaton White: The expression
to which my hon. friend has called attention, " complete parts," is that which has been used for years past in the tariff and it covers repairs. The idea of course was- I need not say this to my hon. friend- that if, let us say, an agricultural implement is imported free, but a duty is levied in respect of parts, the purchaser of an agricultural implement would consider that fact. He would not like to buy an agricultural implement without being able to obtain the parts, and the question of the

duty upon the parts is a very important one in the schedule dealing with these products. I understand that incomplete parts are manufactured but not sold to the consumer.


John Archibald Maharg: There is something further to be explained in regard to incomplete parts. Take ploughshares for instance. We used to bring ploughshares into Canada and I understand without being bored; that is the bolt holes were not made in the shares; the factory making them left it for the purchaser over here to bore or punch those holes. It was to get over that, I understand, that the word " complete " was used in order that these things could not enter the country unless they were absolutely in shape to go on to the article they were required for. Why they want to draw the line I cannot understand, unless it was for the benefit of some particular concern in Canada.


Mr. HENDERS:: I think it would be
well that in connection with the fixing of the duty on ploughs, consideration should be given to the suggestions made by the hon. member for Red Deer (Mr. M. Clark) and the hon. member for Maple Creek (Mr. Maharg). As I understand it we have two very large concerns that are manufacturing the major portion of the ploughs of Canadian make that are used in Canada at the present time, and these firms have been in business since the very inception of the national policy. They have had all the fostering of the National Policy up to now, and at the proper time I think it would be wise to consider whether they have not had all the fostering that they deserve.


Jacques Bureau: May I ask the hon. gentleman who the two great concerns are that manufacture all the ploughs?


Richard Coe Henders: The Massey Harris and the Brantford people.


Jacques Bureau: Brantford?


Some hon. MEMBERS:: Cpckshutt.


Richard Smeaton White: Answering a little further the hon. member for Maple Creek (Mr. Maharg), I would refer him to Article 444 of the tariff, which provides for the free admission of mould boards, shares or plough plates and other plates for agricultural implements, when cut to shape from rolled plates of steel, tout not moulded, punched, polished or otherwise manufactured. So what he has in mind has been provided for; those incomplete parts are free.


John Archibald Maharg: Provided they are completely finished?


Richard Smeaton White: No, not finished. Article 444 that I called the hon. member's attention to admits free of duty mould boards, shares or plough plates, etc., when they are cut to shape, but not moulded, punched, polished or otherwise manufactured. That is the plain sheet.


Michael Clark: With no purpose whatever to retard the item, I would like to say one word with regard to a remark from my hon. friend from Brantford (Mr. Cockshutt). There was not a syllable I uttered which would indicate in regard to the matter before the House that I spoke for any one else than the farmers of the entire Dominion. I have as much sympathy with the difficulties, and especially the early difficulties, which were enormous, of the farmers of Ontario as with those of the farmers of the West. I think my hon. friend from Brantford will find that the point I tried to raise in a perfectly courteous and parliamentary way, drawing my illustration from the West, is interesting the farmers of Ontario to-day just as much as it is the farmers of the West. I am no sectional man in this matter: I believe-we all believe, that agriculture is the basic industry of the entire country. I just wanted to say that in a perfectly courteous but firm way to my hon. friend. I do not understand what good purpose he wanted to serve in calling my attention to the rather elementary fact in Canadian history that there have been roots taken out of the soil in Ontario.


Jacques Bureau: There are more to be taken out, too.


Mr. ALFRED THOMPSON:: I have a
matter that I would like to call to the attention of the Minister of Finance, although I am not quite sure that I am in order in doing so. lit is in regard to the admission of machinery into this country for the development of new industries. If there is one thing more than another that we should encourage at the present time and for many years, to come, I think it is the development of new industries. I am advised that we have very large deposits of shale in this country from which oil of a very good quality may be procured. I am also advised that there is a duty upon the machinery which would have to be imported for the treatment of the shale. If that is so, and I believe I am correct, it seems to me that It would be the part of wisdom for the Finance Minister

and the Government and the people of Canada generally to encourage this industry, which is hardly established in our country, by absolutely removing the duty on any machinery required to reduce the shale from which oil may be procured.
I will give you an' instance, Mr. Chairman, of what occurred in the territory which I represent in regard to dredging. Many years ago dredging was in its infancy in the Yukon; to-day it is a highly developed branch of the mining industry. When w7e were looking around for capital to invest in the gold dredging industry of the Yukon to mine our low grade gravel, we found that one of the obstacles to the investment of capital was the duty on gold mining dredges. There were practically no gold mining dredges in Canada at that time, or at least very few. I went to the then Finance Minister, the predecessor of my hon. friend, and explained the situation to him. He removed the duty. The immediate result of that was that we succeeded in establishing in the Yukon a very profitable industry in the way of gold dredging, in which to-day I think we have invested probably $4,000,000. We have two of the largest gold dredging machines in the world, machines that will dredge 14,000 cubic yards per day.
'We have many minerals in the Yukon besides gold. We have tungsten, which is to-day a very valuable mineral; but in order to mine it successfully in competition with the other countries of production we have to have machinery, and that machinery is not now manufactured in Canada. Therefore I think it would be wise for us to permit machinery of that kind to come in free. We have antimony, copper, tin, and platinum-all these require a certain quantity of machinery to mine successfully.


Mr. EDWARDS:: Are the machines you speak of made in Canada?


Alfred Thompson: No. That is the point I am making, that these machines are not manufactured in Canada. If the minister cannot see his way clear to put these machines on the free list now, I hope he will do so when the tariff is being revised, as I understand it is likely to be within the present year. I am satisfied, from the experience we have had in the Yukon, that any legislation of that kind will bring excellent rewards.


William Cameron Edwards: I would like to say a word along the line of my hon. friend from the Yukon. In the constituency which I represent we have, perhaps, the largest and
the purest deposits of feldspar in the Dominion. Most of that feldspar is mined and sent in the crude state to the United States,-where it is ground into the finished article, and that ground feldspar is then shipped back to Canada to be used in processes here. A few years ago one of the companies operating in my county undertook to put up a plant for grinding the feldspar locally. I made representations to the Department of Customs and asked that the machinery for that purpose, which was not made in Canada. be allowed to come in free of duty, for the reason that we were endeavouring to start an entirely new industry. That request was acceded to and the new industry was established. I think that is a step in the right direction. I entirely concur with the remarks of my hon. friend, though I do not see the necessity, perhaps, of putting the item on the free list. A remission of duty might be made to those desiring to introduce machinery for the purpose of establishing new industries.


Mr. JOHNSTON:: Before we leave this item, I would like to refer to the matter in this light. The hon. minister, I believe, said that if the rate of duty had been reduced beyond the point herein outlined many of these manufacturing concerns would have had to close down, necessitating workmen, being laid off.
thorn the other standpoint, we must take into consideration, as pointed out by the hon. member for Maple Creek (Mr. Maharg) and the hon. member for Red Deer (Mr. M. Clark), the fact that the plough is the one implement every man going on to the land must have. That is the starting point, and if he finds that this implement is costing him more than he can afford to pay, that is likely to keep many people from going on to the land. As pointed out by the hon. member for Macdonald (Mr. Henders), there are in Canada few manufacturers of ploughs. A manufacturer is manufacturing ploughs and has to have a tariff of 17j per cent, and yet at the same time he is manufacturing cultivators and harrows and is getting along with a tariff of 15 per cent on those articles, I cannot understand why there should be these different rates. If he can get along with a tariff of 15 per cent on cultivators, I think, as pointed out by the hon. member for Red Deer, the tariff should be reversed and the 15 per cent duty charged on ploughs.


William Findlay Maclean: We have got into a general discussion on the tariff, and I am not going away from the actual question

before the committee now, but I wish to say this, in connection with these reductions on agricultural implements for the benefit of the people of the West, that I am a firm believer in a national policy and the encouragement of industries of all kinds in Canada. But I want to tell the manufacturers of Canada that there will be much greater agitation for still further reductions if they as a body throughout this country, endorse the resolution that was passed in Toronto the other day against public ownership - of railways. If that is traced back to the so-called reconstruction organization in Toronto which is dealing *with tariff questions, there will be more demand in this country for tariff reductions of this kind than there ever was in the past, and that will all come out of this fact, that the manufacturers of Ontario, from their association assembled in Toronto the other day, called upon the Government to go no further in the matter of public ownership of railways. Perhaps they were trying to prevent the taking over of the Grand Trunk. It will get very rapidly into the minds of the people of the West, as it will into mine, why the manufacturers should step aside from their special mission in order to warn this Government and this Parliament, which has the jurisdiction in this case, that they must not go any further in the matter of public ownership of railways.


Mr.   P ED LO W@: 
William Cameron Edwards: Is my hon. friend's idea that they should all be subject ito a duty of 17) per cent?


Mr.   P ED LO W@: No, I think they should all be subject to a duty of 10 per cent, 15 per cent and 15 per cent.


William Cameron Edwards: The reason why I asked that question was because my hon. friend apparently last night was willing to let them stay at 20 peT cent. I do not understand how he can advocate a reduction now and say he wants them all reduced to 15 per cent. He certainly put himself on record as being opposed to the reduction which is being made.


Mr.   P ED LO W@: If would be well for the hon. member to explain how he arrives at that conclusion.


Richard Smeaton White: The variation in duties is not peculiar to this partial revision of the schedule. ' The variation has existed foT many years.


Mr.   P ED LO W@: Why?


Richard Smeaton White: I explained a few moments ago, I think, pretty fully as to why. My predecessor, the hon. member for Shelburne and Queen's (Mr. Fielding) had, under his tariff of 1907, a duty on binders of 17) per cent, and upon cultivators, ploughs, harrows, etc., of 20 per cent. (I am quoting the general tariff.) Upon hay loaders, potato diggers, fodder or feed cutters, etc., the duty under his tariff was 25 per cent.


Jacques Bureau: That is twenty-two years
ago.


Richard Smeaton White: No, it is not twenty-two years ago, if I may correct my hon. friend; it is twelve years ago, but many modifications have been made since then. For example, we have been able to reduce the duty on binders to 12) per cent, as I stated a little while ago. Many facts must be taken into consideration. In the first place, there is the question of market, and of volume of business capable of being transacted. For example, the Massey-Har-ris Company, which is one of the largest concerns in the world, has an immense overseas trade, and I need not tell hon. members that the cost of production depends upon the volume of business. In the case of the International Harvester Company and the Massey Harris Company in connection with a standard article like

binders, the duty required after taking into account the duties on raw materials, is not as high as upon an article like a plough which is subject to highly competitive conditions in this country and where the export volume is not as great as in the case of the other article. All these facts have to be taken into account by a Minister of Finance in adjusting the tariff. We might as well make a plain statement about the matter. I think the previous Minister of Finance would say, as I say, that, if today, without taking the duty practically off everything that enters into production, we should substantially reduce those duties say five or ten per cent, wg would close up those plants. Hon. gentlemen might say: Close them up. There are $70,000,000 invested in those plants, and they employ thousands of men. I will give to the Committee an example that I have in mind at the moment. A year or so ago, in the interest of increased production, we put tractors valued at $1,400 and under upon the free list. Those engaged in the business suffered an immediate and very heavy loss last year, and a great part of the machinery which was manufacturing before is still closed down to-day, and many men have been thrown out of work. The condition of that industry is at present precarious in the extreme, and we can bring all those others to the same condition by just taking the duty off, but I submitted to the House yesterday and I submit to the Committee to-day: Is it in the national interest to do so?


Michael Clark: I should be very sorry to admit that the minister has, in the last utterance we have heard from him, exhausted the statesmanlike wisdom of which he is capable on this question. I do not believe that the men who are making ploughs are of such weak fibre as my hon-friend represents. I refuse to believe that. I have a personal acquaintance with some hon. gentlemen who are engaged in the plough business and those of them that I know are very, very strong men, men of good fibre. I am sure they would not be put out of business so easily.
There is another side to this question about putting men out of business and throwing men out of work. Is my hon. friend aware that 4,000,000 people have come to Canada since the year 1900? I have heard that phrase " national policy " thrown about here this morning, as if we were not in favour of a national policy. I am tired of hearing that phrase, as if it were the exclusive possession of one particular school of political thought. I believe in a national policy, beginning from the farm upwards, beginning from the coal and the steel and the iron, which we have just had an illustration of in one of the schedules which we passed this morning. Four million people have come to Canada since 1900, but our total population has not appreciably increased in that time-Would it not be a true national policy to find out what is sending these men out ot the country almost as fast as they are coming in? That is the other side to this question, and I submit to the minister, rather more emphatically than I need perhaps. but I can assure him that I speak in emphasis and not in anger, that it is worth looking into. I do not like to be personal in this matter, but I should like to ask my hon. friend from Brantford (Mr. Cockshutt) if he really believes that the people who are engaged in the plough business are such weak specimens of Canadians that the taking off of the 2* per cent necessary to put ploughs on the same level as manure spreaders, harrows, drill0, and other implements would put these great manufacturing concerns out of business in Canada. I do not believe it, and that is pretty straight talk. I do not believe for a moment that it would put them out of business; I am too good a Canadian to believe it, I believe that Canadians have a little power of competition in them. They were able to compete on the battlefield, and I shall believe in their power of competition in the plough factory, until it seems they are not of the same type of Canadians as competed elsewhere.


Richard Smeaton White: Would it be fair to the manufacturers of ploughs and other agricultural implements, in view of the duties they have to pay on iron and steel and the other commodities that form their raw material, and upon coal which they use in their manufactures and upon the machinery which they employ in their processes, to expect them to pay the duties on all these raw materials if the duty was taken off their finished product? I do not believe my hon. friend will say that that is good sense. I am sure he will say that if the duty is to be taken off their finished product, it should be taken off all these raw materials that enter into that product. That leads us to the question whether in the national interests-I do not speak in any narrow sense-I do not say for a moment that my hon. friend has not a national policy, as well as the rest of us, in the

broad sense - it would be possible or expedient to take the duties off all of these products of our great industries. I say that if he were Minister of Finance for a week he would not and could not consider it. I said yesterday that the way .to make a man a tariff man-I do not say a high tariff man, but a man who favoured raising a very large portion of our revenue from the tariff-was to make him Minister of Finance. Why? Because the bills are coming in every day and they have to be paid. Millions and tens of millions of dollars have to be found, and the money must be in the bank to pay our accounts. We could not find that money without a tariff. No Government in this country since Confederation has found it without a tariff. I am not speaking of whether a tariff should be high, intermediate, or low; I was only putting forward the view yesterday that the Minister of Finance in any administration will look to the tariff for a very large proportion of his revenue.


Michael Clark: The minister has asked me whether I would knock the duty off altogether. That is not a fair question under the circumstances. I am only asking for the 2J per cent to be taken off so as to place ploughs on the same footing as manure spreaders. I am glad that the minister is taking my ground that the proper way is to begin with the coal and the iron and the steel. I want to put a question to the minister. The Western farmer has no protection at all, and his argument is that under this thing called the national policy you have to keep the duty on coal and iron and steel and ploughs, and load the whole thing on to the Western farmer. Is that a square deal? I say it is not.
At one o'clock the Committee took recess.
The Committee resumed at three o'clock.


John Archibald Maharg: The minister pointed to the duty on the raw material entering into the manufacture of these machines as one reason why there had to be a duty on the finished article. If I understand aright there is provision in the Budget for a rebate of a certain percentage of the duty on raw materials. I think it amounts to 30 per cent. Does that apply to all implements or only to those dealt with in the Budget?


Richard Smeaton White: Those dealt with in the Budget.


John Archibald Maharg: Taking into consideration that rebate of the duty and the reduc-

tion in the freight, is the manufacturer of these articles not in practically the same position as he was before? In other words, the reduction in the duty is practically offset by the rebate of the duty on raw materials and reduction in the freight rates, which leaves him in practically the same position as before.


Richard Smeaton White: Not in quite as good a position, he is bearing a part of the loss. I might point out what I have often pointed out in Committee and to the House: that the existing tariff is to be regarded as a structure. If the duties are reduced on a finished article there must be some modification, generally speaking, with regard to the duties on raw material and other articles purchased by the manufacturer for his production. When the 1907 tariff was devised duties were fixed upon that basis. If, for example, a change is made in a 'duty, then there is, generally- speaking, some corresponding change necessitated in consequence in regard to raw material. The duties on agricultural implements have been fixed having regard to the factors which I mentioned this morning and which I shall not have to repeat to the Committee. In considering the question of how we could make a reduction in the existing duties we provided for the draw back to which my hon. friend has referred and also for a revision of the freight .rates which would give a certain advantage. But if you take all the advantages that have been given both by way of draw back and freight reduction, the manufacturers are still bearing a portion of the reduction. I will say to my hon. friend, as I have said to the House, that we have approached this matter with a sincere desire to do all we could this year to meet the requests put forward for lower duties on agricultural implements, consistently with not doing a national damage by closing up very many establishments engaged in this industry. If I were asked whether we could have gone a half point or a point more I would sincerely say to the House that I could not say, nor could any one else. That is one reason why a deliberately considered tariff revision is necessary before duties can be finally fixed. I say quite frankly to my hon. friend, and to the Committee, that in our judgment we have done the best we could in the existing situation.


Mr. ROBB:: The Minister of Finance made reference to the changes in the duty on agricultural implements and mentioned the freight concessions granted in regard to

agricultural implements shipped to Western Canada. That does not apply in any way to the farmers of Eastern Canada. How will it be worked out?


Richard Smeaton White: With regard to the railway situation, they have water competition in Eastern Canada, and the question does not arise. But all farmers of Canada, so far as any advantage will accrue by reason of the reduction in the price of agricultural implements, will benefit because we are reducing the tariff upon agricultural im-[DOT] plements, not only those sold in the West but those sold in other parts of Canada. There is water competition with the railways in the East, and what we had in.mind was placing the manufacturer of implements in the East, as regards the market in the West, in as favourable a position, so far as freight rates are concerned, as his American competitor, who has had the advantage of him in that regard. There is a vast stretch of unproductive railway territory between the East and the West in Canada, and the freight charges which have to be met by the manufacturer in the East in competition with the American manufacturers, are a very serious item. We did not feel we were doing anything that was not strictly in accord with the national interest in placing the manufacturer of agricultural implements, so far as his Western market was concerned, in a fair position with his American competitor. The American competitor is not in as good a position as the Canadian manufacturer in Ontario and Quebec. I have been unable to appreciate the force of the argument that there has been a discrimination in regard to the freight reduction in favour of the West as against the East, especially in view of water competition.


James Alexander Robb: I think the minister misunderstands me. In what regard will the reduction in the freight rates be helpful to the Eastern farmer? The minister has referred to the competition in water rates. As a matter of fact, the manufacturer of agricultural implements in Toronto or Hamilton has the advantage of cheap water rates as far as Fort Willian on shipments to Western Canada. But these cheap water rates are of no value as regards the Eastern Townships, or the northern part of Ontario, or the interior points of New Brunswick, or Nova Scotia. If the manufacturer of agricultural implements in Chicago wishes to take advantage of cheap water rates he can get a water rate from Chicago to such assembling points as Toronto or Montreal, and in that way he will have an advantage
over the Canadian manufacturer. That is the point I would like to have explained.


William Findlay Maclean: Speaking of freight rates as implicated in these tariff resolutions, I would point out that in government-owned railways, and in the Government having control of freight rates, lies the real adjustment of this great tariff issue that is now being considered in this Committee and that will come up in the country in a wide way. As regards the manufacturing interests of the East and the farmers of the West, the compromise between these conflicting territories lies in controlling the freight rates and in a reasonable tariff in the interests of the manufacturer, and the Government in regulating rates in this way is doing a great work. I desire to point out to the minister, as I had intended pointing out last night in the general discussion on the tariff, that the adjustment of this conflict between the farmers of the West and the manufacturers of the East in the obtaining of their rights, at the same time treating the Western farmer reasonably, lies in the Government controlling absolutely the freights of the country; and they will control it in no better way than by public ownership. That is why I regret that we have not had a full "declaration before to-day that the Government had taken over the Grand Trunk, or that it is to be taken over shortly.
By controlling the great Transcontinental Railway system, controlling railway freights and ocean freights, there should be an adjustment. I am glad to hear the minister say that he is trying to find a solution in regard to freights even if only with reference to this one item of agricultural implements. I want to see Quebec, Ontario and the East in a position to maintain a reasonable national policy by the aid of the tariff. While that might create a grievance for the western farmer, it is open to Parliament to so adjust the freight rates as to set off any inconvenience or overcharge that the western farmer thinks he suffers from by reason of the tariff. I want to tell the western farmer that from my point of view there is nothing of greater value to him than controlled freight rates, not only railway and inland waterway, but especially, ocean freight rates. In working out the policy of this country there should be harmony established between the East and the West and there should be an arrangement which will allow manufactures in the East, especially in Ontario and Quebec, to be developed and to keep forever a portion of the market under fair competition in the

West. As an offset against that, give the western farmer the advantage of an improvement in freight rate conditions. The minister has adopted this idea in controlling the freight rates even on these special articles. Carrying out this suggestion to a greater extent will be the solution of the conflict, and there is conflict. As one who believes somewhat in the national policy in regard to manufactures, I should say that the adjustment of that conflict will be reached by taking these two propositions together-the tariff and the relief that can be afforded to those who have to pay the freight rates. Let Parliament and the Government control these freight rates and especially the ocean freight rates.


Jacques Bureau: Does my hon. friend
lay it down as a proposition that Parliament should control and settle freight rates?


William Findlay Maclean: Through its control of the railways-yes; first of all getting control of the railway system and then getting control of the ocean freight rates. We have had control of railway rates for a long time but the farmer has got very little benefit from any reduction because whenever a reduction was made in freight rates, the ocean shipping combines took it all away. That still prevails. We have to take these two questions of the tariff and freight rates together. If we take these two conflicting interests of West and East and harmonize them by considering these two matters at the same time we will have a solution of the matter.


Mr. J. H. SINCLAIR:: I would like to get a clearer statement from the minister in regard to the difference between the position of the eastern and western farmer as to freight rates. The reason that the minister has given does not apply, when he says that the eastern farmer has already the advantage of cheaper freight rates from points in Canada than the western farmer has. The western farmer has the advantage of cheaper rates from Chicago to points in Western Canada, and consequently the minister gives a reduction to the western purchaser of implements for the purpose of equalizing the rates for the western farmer between Toronto and other points in Eastern Canada and the West. If it is true that the rates from Boston to Halifax are less than the rates from Toronto to Halifax, the same reason applies, and the minister should reduce the freight rates from Toronto to Halifax to make them equal to the low water rate that he speaks about. Perhaps the minister can give us the rates from points in the CM. W. F. Maclean.]
United States such as Boston to Halifax, St. John and Sydney, and points in the vicinity of Toronto to Halifax, St. John and Sydney. The reason that has has given does not apply, I think, because the rates are not exactly on the same footing. At the same time, if this advantage is to be given to the western farmer, I claim that it should be given to the eastern farmer as well.


Richard Smeaton White: In answer to my hon. friend (Mr. 'Sinclair), I would say there is no discrimination whatever against the _ eastern farmer. Let me explain what the situation is. Freight rates from points west of Montreal and the Canadian Northwest were higher than from Chicago to points in the Canadian Northwest. On the other hand, freight rates from points west of Montreal to the Maritime Provinces are not higher than freight rates from Chicago to the Maritime Provinces. A condition of inequality existed before in regard to the West and a condition of equality in regard to the East. We have rectified the inequality existing in respect to the West and left the condition of equality respecting the East as it was. So much for that aspect of the matter. In regard to the price of implements- to the extent that the reduction of the tariff affects any reduction, the farmers all over Canada will get the benefit of it. I think I have covered both points. There is no discrimination in so far as freight rates are concerned, but only an equalizing of conditions which formerly were unequal. In so far as any advantages are to accrue to farmers by reason of the reduction which has been made in the duty on agricultural implements, the farmers of all Canada will participate in its on an equal basis.


John Howard Sinclair: Do I understand the minister to say that freight rates from Chicago to Halifax and St. John are higher than the freight rates from west of Montreal to the Maritime Provinces?


Richard Smeaton White: I said that they were no lower.


Mr. HAROLD:: I think that the question of freight rates has been unduly magnified.
I have figured it out on a number of implements on which a reduction has been granted and it averages only from three-quarters of one per cent to one per cent.
I think the principle involved is perfectly right and .that the Minister of Finance is to be congratulated upon having taken these steps. In relation to the water rates, as practically all the implements for the West are shipped in the winter season, be-

cause it would be impossible to carry over these implements in warehouses or factories until navigation opens, the factor of water freight does not enter into the question to any extent. Furthermore the implements would be injured more or less from the handling into and out of the boats. There is another point I would like to speak about because a very false impression has gone forth in reference to the cost of certain articles. I would like to refer to the Trade and Commerce report which shows that the total manufactures of these goods for the year 1917 was $32,000,000; cost of the raw material entering into the same was $16,000,000; or one-half the selling cost of the goods was represented by the cost of raw material. Then there is labour $10,000,000, making a cost of $26,000,000 and leaving $6,000,000 for overhead charges and all expenses. Last evening we had figures presented here that showed a total cost of one-third of the selling price and it is in order to correct that very false impression that I make this reference. Another thing that I would like to refer to is the fact that owing to the necessity of having to give long terms and to carry materials for a long time the total capital is shown to be more than twice the turnover. For that reason the manufacturers are certainly entitled to more of a return in the way of profit on the turnover than those dealing in such articles as permit of the turnover of the capital some three or four times a year.


John Archibald Maharg: In the matter of discrimination I think the minister is absolutely right in so far as the farmers are concerned. I believe the farmer gets no advantage whatever from the lowering of this freight rate; that goes entirely, as he has stated, to the manufacturer to put him in the same position as his American competitor. However, the point I want to emphasize, and it has been demonstrated I think to a certainty by the figures we have just now received, is that the cost of the material equals one-half of the price of the finished article.


John Harold: That is right.


John Archibald Maharg: Now see what that
means. They get a rebate of practically one-third of the duty imposed and they are rebated the duty on one-half the cost of the raw material going into the machine if they import the goods, and if they export the finished article they get ia rebate of 99 per cent. So when you take reduction on the freight rates I venture the prediction, if it
is correctly figured out, that an advantage of 2i per cent will result to the manufacturer.


John Harold: I have figured up those costs, I have the actual figures and I can hear out what the Finance Minister says that the two items do not make up the amount of reduction on the general tariff.


John Archibald Maharg: That is taking the average of the 5 and the 2J. My point is that, the 2i per cent is practically, if not wholly, covered.


John Harold: It is not; I can show the hon. gentleman the figures.


John Archibald Maharg: Well, if you have the figures, will you be good enough to give them.


John Harold: I have not the figures here.


Richard Smeaton White: I want to point out an error my hon. friend has inadvertently fallen into. He states that we are giving 30 per cent drawback on half the raw material that enters into the manufacture of these articles. He has in mind that the 30 per cent applies to the whole of the material, but he has overlooked the fact that a considerable part was free before. Therefore, it is not accurate to make a computation based upon the assumption that we are giving back 30 per cent on one-half of the value of the manufactured goods.


Mr. COCKSHUTT:: The practice, as far as I understand it, of manufacturers in this country is to buy all the raw materials that are possible from our own factories that produce them and are called subsidiary interests, or subsidiary factories. For in stance, the malleables, which constitute a very large item in agricultural implements, are almost entirely made, and we hope will continue to be made, in Canada. We will only earn the 30 per cent to which the hon. gentleman has alluded, providing we take the unpatriotic course of buying those goods in United States. We do not propose to do that, although we are rather induced to do so if we take a strictly business view and buy absolutely in the cheapest market. My policy has always been, and I hope will always continue to be, to buy all the raw materials*madc by our subsidiary factories for use in the manufacture of implements or any other line in which I am interested. I think it would be a lamentable fact if this 30 per cent rebate which is proposed were to induce all Canadians who are manufacturing these lines-and they are mentioned

in Nos. 446B, 447, and 591-to ibuy all these raw materials that enter into the construction of these articles from United States so as to qualify for the 30 per cent rebate. We are already importing far too much stuff from United States, in my judgment, and I would rather diminish than increase those imports if possible. I wanted u, to be remembered that this 30 per cent does not go into the pockets of Canadian manufacturers by a long way, and is not likely to go there more than to the extent of 10 to 15 per cent at the outside, because we will continue to buy our raw materials in this country.


Jacques Bureau: By subsidiary companies, does the hon. gentleman mean companies formed and controlled by the bigger concerns to which he refers who have to buy this raw material?


William Foster Cockshutt: No. As a rule, the manufacturer is not interested at all in the investment that is employed in the manufacture, say, of malleables. The paints, bolts, screws, and a thousand and one things that go into the manufacture of im. plements are made by subsidiary factories or interests, but the stock is not at all the same. I would not say there is never a case where a manufacturer has not stock in some of them, but it is not the usual thing, and so far as I am concerned it is not the case at all. .
As to the question of freight rates, I do not think they should be linked up with tariff rates, but the question has been settled by the House, and I bow to the decision which has been arrived at with regard to it. I might point out, however, that the saving is not going to he as much as some imagine. For instance, take the ordinary walking plough-although it is not a plough that walks, it is drawn by a team-which is the ordinary plough used in Canada and weighs about 250 pounds. According to the schedule submitted by the minister the saving in freight rate to nearly all the points in the West is 10 cents per 100 pounds. Now taking a plough weighing 250 pounds at 10 cents a hundred and you have a saving of 25 cents in freight rate. That is not a very enormous saving on the price of ploughs which I believe is ranging at present from $15 to $25 for the ordinary plougH in use. I admit that the westerner uses a more expensive plough on account of the stubborn nature of the soil. That is, the soil does not clean from a plough in the West as it will clean from a plough in the East on account of the difference in the nature

of the soil. The material for ploughs used, in the West has to-day to be of a quality almost comparable to finished steel. It has got to be of a hardness which is extremely difficult to produce and can only he produced by using a special kind of steel of which the United States is the sole manufacturer in the world. Great Britain has never been able to overtake that monopoly. The steel is made from a patent process controlled by the United States Steel Company, and the product is known as "Soft-centred Steel." That is one reason why the plough in Canada or in the United States has a hardness, a finish, and a durability and strength that no British implement has ever been able to attain. For that reason if implements were put on the free list so far as my hon. friend's district of Red Deer is concerned I would not kick at all because it is a competition that does not apply to the class of goods that is used in our country to any great extent. I wish to say further that on the larger implements which weigh say from 750 to 1,000 or 1,500 pounds the freight rate would relatively be the same and would amount to-as my hon. friend from Brant has just said-less than one per cent on the cost of the goods. Therefore, I think members will see this is a comparatively small item that the minister is allowing. I would like to see that the Ontario farmer in this respect is placed at no disadvantage. Of course it is quite true that the Ontario and Quebec farmer is very near to the factory that produces the implements and the freight on the implements that he gets is a comparatively light matter in comparison to what the western farmer is obliged to pay. I hope I have made my point clear and that the House will understand that it is not a very large item that is being conceded to "the manufacturer in the matter of freight rates on these implements.


Michael Clark: I am afraid the Committee is getting away from the real point of disposing of these items. The freight rates question is very interesting. May I say in passing that I am very glad to have from my hon. friend from Brantford the concession that we have some difficulties in-the West which do not prevail in the East. I have no doubt, Sir, that -roots are as bad in Ontario as they are in the West. But he admits that the soil is harder to work in the West. I hope he will remember that when getting into a proper frame of mind in regard to the point that is really before the Committee.

My hon. friend from Brant (Mr. Harold) I do not think was in the House this morning, and perhaps I ought to explain to him what was the difficulty. There are six kinds of implements under item 446, which "have opposite them the figures 10, 15 and 15 per cent. In the next item, 446b, are ploughs and complete parts thereof, and the figures opposite those are 12J, 17J and 17i per cent. Now, it is not entirely that the eye is a little offended by the want of symmetry in the two lines; although the figures 10, 15 and 15 would meet the eye nicer and would be just the same as on the other implements. But as my hon. friend very well knows from his experience in Ontario, in the West we use the plough before we use the manure spreader. Why should the plough have a 2) per cent advantage in the tariff over the manure spreader? You cannot break virgin soil with a manure spreader; you want a plough. And what is the sense of putting all manner of difficulties in a man's way when he is dealing with the virgin soil and using a breaking plough, and then making it easier for him by 2J per cent when he comes to use a manure spreader? Before you get your manure spreader you have to use your plough, and you have to get a cow or two. Then you have got to consider the. manuring of the soil after it has been broken. But you put 15 per cent on the manure spreader and 17J per cent on the plough. Is that a scientific method of handling the tariff? I appeal to my hon. friend from Brant, who has a very good mind-a mind that I admire very much- and who comes from a centre where these things are manufactured; I appeal to him because I am not quite satisfied with the explanation given by my hon. friend the Minister of Finance and my hon. friend from Brantford. My hon. friend from Brantford says that he buys all the raw materials he can in Canada. I would tell him that we are just as loyal in that respect in the West. I never want to use a better plough than the Cockshutt plough. When I get back home I shall do all I can to influence my sons to use the Cockshutt plough, after the way my hon. friend stood by us last night and voted against the Budget. But when I acknowledge to my hon. friend that the Cockshutt plough is so good, does he not see that that carries with it the implication that it ought to be able to compete with other ploughs, come from where they may-and, certainly, it ought to be able to compete with the manure spreader. If the Cockshutt plough is as good as I say it is.-and my hon. friend has
not contradicted me,-then why not press the Minister of Finance to put it on a level with the manure spreader? That is all we want. I wish the hon. minister would be conciliatory and make the two lines exactly alike. Why should he compel us in the cross benches to adopt almost obstructive tactics? We have practically to be the Opposition because the regular Opposition are gone out of business in regard to these matters.


Jacques Bureau: I object to that.


Michael Clark: I do not want that opposition to be obstructive or obstreperous. I would rather be on friendly terms, as I always have been, with the hon. minister. I would like him to do the big thing. We have a good deal of unrest in the country, and I would ask my hon. friend to soothe the frayed edges of our nerves and put the plough on the same platform, so to speak, as the manure spreader.


John Harold: It is my desire to thank the member for Red Reer (Mr. Clark) for his kind remarks. It was not my intention to say anything if he had not brought up certain questions. If the hon. gentleman thinks it will be ever possible to find any uniformity of principle in this tariff now before us, I regret to inform him that he will be disappointed. In the first place, if he is going to follow up that argument, I would call his attention to the fact that he handles the harness before he does the plough, and the harness pays a considerably higher rate of duty.


Michael Clark: Not under this item.


John Harold: But it is the principle
involved in the whole tariff. The fact of the matter is that the manufacturer of implements is already greatly penalized, and these rates as fixed-which I am not voting against-do not do justice to these people as compared with the manufacturers of other lines of goods. I believe my hon. friend is exceedingly fair, and I know he has very sound ideas in regard to things as they should be when many years have elapsed; therefore I hope he will accept the rates as they are, and also consider the fact that a very large quantity of these goods is coming into the country from which the Government will derive revenue.


Daniel Duncan McKenzie: Mr. Chairman, the hon. member for Red Deer thinks that we on this side of the House have abandoned our functions as the Opposition. I notice that not only is the hon. member a critic of tariffs,

but he has lately developed as a critic of scriptural quotations or learning of any kind that we may make pretence to on this side of the House. It will be remembered that recently he brought the hon. member for Brome (Mr. McMaster) to task for misquoting the Scriptures. But I am sure my hon. friend's knowledge of the Good Book is very extensive, and he will remember the very good advice given therein that there is a time to speak and a time to keep silent; that there is a time when there is profit in talking, and a time when there is no profit at all. He will also find recorded there that the noble King David on one occasion had a sick child. While the child was sick the King threw himself down on the ground and prayed and put himself in sack-cloth and ashes, but immediately the child died he got up and washed himself and took breakfast, because there was nothing further that he could do.	'
We have fought the Government for the benefit of the West while there was any good in fighting. We voted against this tariff and for the amendment that would better conditions in the West; we did the very best we could. Now it has reached the stage when I realize that it is no good to ask the minister to stultify himself and change the tariff. I do not think he will. We are like King David, we have washed ourselves and taken our breakfast. We did the best we could. We stood by the West while there was any possibility of accomplishing anything.


Mr. ELKIN:: I would like to ask the hon. member for Brantford a question in connection with this 30 per cent rebate on raw materials which come in for the manufacturer. A large portion of the raw materials to be used in these ploughs and other agricultural implements would come from mills making these basic materials-malleable iron and things of that kind. The 30 per cent, therefore, becomes or is a duty; it is a duty by way of protection to the manufacturers of these basic materials. In quoting prices based on the Pittsburg or United States prices, to what extent do they take advantage of this 30 per cent, protection?


William Foster Cockshutt: I am afraid I do not fully understand the argument of my hon. friend. We buy these raw materials in Canada. We buy almost entirely the rougher classes of steel in Nova Scotia where the leader of the Opposition (Mr. McKenzie) comes from, and we get a good deal of steel from the city of Hamilton.

Therefore, there will be no 30 per cent rebate if we continue to buy from those sources, because you get the 30 per cent rebate only if you import the raw material, and that I would not purpose doing even now.


Stanley Edward Elkin: Perhaps I might make my point clearer if I quoted the figures, although they may not be exact. Supposing the price of pig iron at Pittsburg is $24. I am not familiar as to what the duty on pig iron is, but let us say it is $5.


An hon. MEMBER:: $2.80 a gross ton.


Stanley Edward Elkin: Under this tariff you get a drawback of 30 per cent on the $2.80 if you import the raw material from Pittsburg. What proportion of the 30 per cent drawback on that $2.80 does the Canadian manufacturer take in quoting a price based on the price of $24 at Pittsburg?


William Foster Cockshutt: I am afraid that has not been in operation long enough for prices to be settled. If it has, ,1 have not yet heard of any change in the price as a result of the proposals. Any one can see that, as only 50 to 100 pounds of iron would be used in the manufacture of an ordinary implement, with a price of $24 a ton, the amount would be very small if you got a refund on only $2.80 per ton, and under the operation of the tariff as I understand it, you would certainly not get the whole rebate. Prices have not yet been revised and I have not had any opportunity of finding out where we stand in the matter; but as far as I can see, I think the minister stated rightly when he said that under the old tariff the manufacturers were getting what was already an- exceedingly small profit-and I say that advisedly and I know what I am talking about. That being the case, then under the new proposals profit is going to be smaller, and because a low tariff, means larger imports, and larger imports in the country will, I think the minister will agree with me, result from this tariff, we are, with a reduced tariff, going to. be placed in this position that we shall have a circumscribed market and reduced prices, and in face of that, we have demands from labour which are very insistent at the present time for advances in wages of 25 to 30 per cent and, in some cases, for shorter time as well. So, if you take all these things together, the lot of the ordinary manufacturer of implements who is doing his best to satisfy the wants of the country in every respect is not a rosy one at the present time.


Mr. CAHILL:: Does the hon. member
argue that the raw material is costing him more in Canada than he could import it for?'	'


William Foster Cockshutt: 
Frank S. Cahill: Then where does the hon. member's patriotism come in? Why does he state that it would not be patriotic to buy outside of Canada? If he is buying as cheaply or cheaper in Canada, there would be no call to import from the United States. I took from the argument of the hon. member that he was probably paying a little more for Canadian goods, but that his patriotism would cause him to buy them. Am I correct in my assumption?


William Foster Cockshutt: I do not know that a question at issue on the tariff is my patriotism, and it is not a question I wish to dwell upon. I used the term because I believe we should all use Canadian goods where they	are as cheap
and as good as	can	be bought
elsewhere, and I believe every one will agree that that is a sound policy. It was only in that sense I spoke, and the policy of the manufacturers is to buy all their raw materials in Canada, thus building up our own country, and perhaps if we are not building up our own business, we are building up that of some one who is close to us. I do not want to succeed and see everybody else fail; I want as far as possible to see everybody successful, and for that reason I think the patriotic course of the manufacturer would be to continue to buy his raw materials in Canada so far as market prices will admit of his doing so. I think that is a sound policy.


Stanley Edward Elkin: I do not want the point I have been endeavouring to make to go by without getting it on Hansard. I used the case of pig iron only to demonstrate the fact that many other things enter into the manufacture of ploughs and reapers and other farm implements, and there is no getting away from the fact that, in rebatir g 30 per cent to manufacturers of farm implements, a principle is established whereby one-third is added to the present duty on raw material and the protection is made
absolute. If you rebate 30 per cent on the goods you place in the farm implements, you protect the basic manufacturer to the extent of one-third; in other words, he, knowing that he is going to get 30 per cent back from the Government on those goods can add a certain portion of that 30 per cent of the duty to his price.


John Harold: He has to take it oS, not add it.


William Foster Cockshutt: Very little pig iron comes from Pittsburg, because I understand Canada is able to produce pig iron as cheaply as any other country in the world if it has a fair chance, and I hope the iron mines will be brought into such a state of perfection that we can get all our pig iron in this country. To say we are going to buy pig iron in Pittsburg is a proposition which I do not think is likely to obtain. I think we will buy our pig iron in this country, and I would like to see every one else in this country follow a similar course.


James Alexander Robb: Will the reduction in freight rates bring the present rate down to the same basis as prevailed prior to 1912, or when the hon. gentleman became minister?


Richard Smeaton White: The rates, as my hon. friend knows, have all been raised both in Canada and the United States owing to the increased cost of operation of railways. I have not the figures before me, but I am quite sure reductions will be made, although not to what the rates were before the war. But the point in this matter is the disadvantage which the Canadian manufacturer has against his American competitor owing to the higher rates in Canada. It is only the reduction that is in question here so far as it has a bearing upon what we have done in the way of reduction in the duty.


Mr. KAY:: It was rather surprising to hear the appeal from the hon. member for Red Deer (Mr. M. Clark) for help from the Opposition. His opinion of the Opposition, as expressed frequently during the session has not been very high. Although I cannot always agree with the hon. member, I had a great deal of pleasure in supporting him in his appeal for a lowering of the duty on ploughs.
There is no doubt that greater production and cheaper food is one of the essentials of this time. Now, the plough is the first essential in production, and should be made as cheap as possible to the farmer. A further strong reason why it should be-made as cheap as possible is that at the-

present time we are trying to induce a great many returned soldiers to take up farming. I would go further than my hon. friend from Red Deer and my hon. friend from Maple Creek. I would suggest that the minister put both ploughs and the raw material entering into ploughs on the free list.


John Archibald Maharg: The longer I listen to this discussion the more convinced I become of the injustice of this duty on the items under consideration. I have heard no good reason advanced why these implements should not all be on the same basis, so far as the tariff is concerned. I therefore beg to move:
That the duty on ploughs and complete parts thereof he made uniform with the rates covering item 446.


William Cameron Edwards: 
Michael Clark: I want to meet one or two points raised by the hon. member for Frontenac. He is a very old member of this House, and has a very strong, and, usually, a very logical mind, but I do think that what he has advanced just now is practically an argument for never considering a Bill in committee at all. So far as the details are concerned, it does not matter how we vote on the principle, which is settled in the main debate, usually on the second reading in the case of a Bill. My hon. friend says that those who voted for the amendment yesterday voted for free agricultural implements. Very well. A

large majority settled that for the moment we were not to have free agricultural implements, but in the details of the schedules each item is presented to the committee separately for separate consideration, I take it, or the reading of the items by the Chairman is surely a gross waste of time and has no conceivable purpose whatever. While we have voted on the principle and the principle has been settled, nevertheless there may be inconsistencies or incongruities which may very well be settled in committee, and that I conceive is the reason why each item is presented separately.
Now our simple, and, it seems to me, logical and extremely supportable position, is that there is no good reason why ploughs, which are the primary and fundamental implements of agriculture should be put under a handicap in regard to the tariff as compared with cultivators, seed drills, horse Takesf manure spreaders, and all the other articles mentioned in the previous item. My hon. friend did not' deal with that point at all. He simply seemed to indicate that we ought, having voted on the question of implements being freer or not free, to leave the details to be settled without any further discussion or any consideration of them at all. I have only to repeat that that is really an argument against the Committee stage of legislation and is not worthy of what is usually the extremely logical mind of my hon. friend from Frontenac. I do not wish to say more on the subject. I have spoken at greater length than probably 1 should have done, and it is with the desire that the discussion may not be unduly protrae;ed that I understand my hon. friend (Mr. Maharg) has moved the amendment. I shall vote for the amendment because it seems reasonable and logical, and as we could not get the whole loaf we propose now to take a small portion of it. This position is entirely defensible from my standpoint.


William Cameron Edwards: I do not intend to boast about my logic in this House when it comes to a question of reasoning, but it does seem to me that the man who took the position in this House that he would vote for the amendment of the hon. member for Brome because it was giving him what he thought he ought to have and who, failing to get that, voted for the Budget because, although it did not give him all he wanted, it gave him some consideration, is in a position to come here and logically say: I voted for the Budget because it gave me something. It did not
go as far as I wanted it to go and therefore I am here to ask you to make this further reduction of 2J per cent. That man would be taking a consistent position. But the man who last night voted against the reduction of 2j per cent or 5 per cent cannot logically come forward now and ask for the reduction he opposed yesterday. That is my position.


Mr.   P ED LO W@: Before the Committee
rose this morning I raised a point which has been under discussion ever since, and that is the elimination of ploughs from the category included in item 446, cultivators, harrows, horse rakes, etc. I find on looking up the schedule that has obtained up to the present that this item included ploughs, and I should like to know why it is now eliminated. The minister's explanation does not quite satisfy me and I would like to have some further light on the subject. I know that the hon. member for Red Deer and the hon. member for Maple Creek who has moved the amendment are also of the opinion that there is no valid reason why ploughs should not be included in the same list as cultivators, harrows, horse rakes, seed drills, manure spreaders and weeders and complete parts thereof. These were all included in the same list a year ago and there is no reason why they should not be in the same class to-day. I should also like to know the reason for the small variation of 21 per cent in the duty to be collected on ploughs in excess of the duty proposed in regard to the other items.


Richard Smeaton White: I think I explained fully this morning the reasons why we had to differentiate in the reduction in the articles to which reference has been made. I explained that there were varying competitive conditions. There is a great range of ploughs, drills, etc., and-


Mr.   P ED LO W@: I would like to know
whether-


Richard Smeaton White: Just a moment, please. I would call the attention of my hon. friend to the fact that the importations of ploughs for the last fiscal year from the United States amounted to $2,500,000, whereas the importation of all the other implements embraced in the item amounted to only $860,000. I say again what I have already said two or three times, that we gave this matter our most careful consideration and reached certain conclusions as to the amount of reduction which it is possible to make. Having reached these conclu-



sions, as we believe, soundly and certainly sincerely, we are not able to accept the motion of the hon. member for Maple Creek.


James Alexander Robb: 
John Archibald Maharg: Has not the duty on
sleighs been increased under this item? Comparing this item with the tariff set forth in the Canadian Almanac there has been an increase of 2J per cent.


Richard Smeaton White: The general
tariff is 25 per cent and has been. The intermediate is 25 per cent; it was 22J per cent. There are no sleighs imported.


John Archibald Maharg: Then I am right. There has been an increase of 2j per cent in the duty on sleighs.


Richard Smeaton White: There are no importations. I have no objection to make the rate 22J per cent intermediate.


John Archibald Maharg: I was not pressing the
point, but merely asking for information.


Richard Smeaton White: We will have regard to it in the general revision.
Mr. iMABARG:	Do I understand that
the Minister of Finance is now making the duty 22J per cent?


Georges Henri Boivin: I did not understand the minister to move an amendment. If he does I will be glad to put it to the committee.


John Archibald Maharg: I am not very familiar
with Parliamentary procedure, but I understand that the Finance Minister said he had no objection to making the change.


Richard Smeaton White: I take it to be unnecessary to make any change; there are no importations.


John Archibald Maharg: Why will the Finance
Minister not make the change?


Richard Smeaton White: It would need
a formal resolution. The matter is not of any consequence, it does not appear to me to be of importance.


John Archibald Maharg: I do not wish to press
the matter.


James Alexander Robb: Let us understand each other as to the point raised by the member for Maple Creek. Is it correct that the duty has been advanced 2J per cent?


Richard Smeaton White: The intermediate tariff is 25 per cent; it was formerly 22J per cent. It does not apply to any country from which these articles come.


[Stage Direction]
Resolution agreed to.
[Stage Direction]
Resolved that it is expedient to provide that the following goods shall he exempt from the provisions of section 3 of chapter 3 of the Acts of 1915 ;
(r)	materials imported to he used; in the manufacture of goods enumerated in tariff items 446, 446b, 446c, 447, 448, 449, 4'5'0 and 591 ;
(s)	olive oil and peanut oil for canning flsh ;
(t)	materials imported prior to the first day of September, 1920, to be used in the manufacture of oleomargarine as described in The Dairy Industry Act, 1914, and amendments thereto;
(u)	linen or cotton clothing, n.o.p;
['The intermediate tariff is 25 per cent; it was formerly 22J per cent. It does not apply to any country from which these articles come.']
Daniel Duncan McKenzie: Has this resolution reference to the 7 per cent war tax?


Richard Smeaton White: The war tax is
7j per cent.


Daniel Duncan McKenzie: This is a point that
was not sufficiently explained by the minister. So far as I remember he has not dealt with the 7^ per cent war tax as he did with the 5 per cent tax on British goods. When both these taxes were taken off I do not see why the reduction was not made all round. I would like to have some explanation from the minister why he takes the 7J per cent off in some instances and leaves it on in others? [DOT]


Richard Smeaton White: My hon. friend
has forgotten that I dealt with the matter in the Budget, though probably not in express terms that would fix themselves in his mind. My hon. friend will recollect that we derived last year a revenue of $45,000,000 from the imposition of the customs duty war tax of 7J per cent general, and 5 per cent British preferential. On account of the difficulty that we have this year in raising sufficient revenue to meet our current expenditure it was not desirable that we should go further than we have in the reduction of the duty of 7i per cent. We took off the British preferential and by reason of that sustained a loss in revenue of $3,700,000. Then we dealt only with articles of necessity, so to speak, classifying them as foodstuffs, boots and shoes, and clothing, and we took the duty off agricultural implements for the reasons which I have given. The answer to my hon. friend briefly is this: The main reason for not taking the 7\ per cent off entirely is that we shall require the money. I desire to say to my hon. friend and the House, that I do not believe this year, with the reductions which we have already ma'de, and also the increases which we have made in income tax, we shall quite bridge the gap between the ordinary expenditure and revenue; in other words, I should not be sur-

prised if there is a deficit this year on ordinary account. That is the principal reason why we did not take off the entire 7| per cent, and I would submit that it is a good reason.


John Howard Sinclair: I have not the
tariff schedule before me, and therefore I would ask the minister if, in the various items that are mentioned in this resolution, provision is made for taking the 7j per cent duty off cordlage and twine used in the fishing industry, which were formerly free?


Richard Smeaton White: My recollection
is, and it is confirmed by the Chief Commissioner of Taxation, that the 7j per cent duty was not imposed upon those articles in item 15 and they are therefore put in the free list.


John Howard Sinclair: Would the minister tell us how many articles formerly admitted free will be taxable under the seven and-a-half per cent after we pass this new law?


Richard Smeaton White: I cannot tell my hon. friend the number. I can only say to him that $15,500,000 is the estimate of the loss which we shall sustain in duties by reason of taking off seven and-a-half per cent from the articles upon which it had been imposed.


William Frederic Kay: Would the hon. minister explain what materials are to be brought in under item (t) fsr the manufacture of oleomargarine, and also why they are not to be imported after 1920? Is it the intention of the Government to prohibit the importation and manufacture of oleomargarine after that date?


Richard Smeaton White: Oleomargarine is now being admitted free of duty. It is also being manufactured in Canada, and the purpose of this remission of duty upon materials used in the manufacture is obvious; it is to put the Canadian manufacturer of oleomargarine in as good a position as his foreign competitor who has his materials free of duty. The hon. gentleman will observe that the Dairy Industry Act of 1914, and amendments thereto, is referred to. There will be introduced at this session legislation under which-I am speaking from memory-the importation of oleomargarine will be admitted until the first of September, 1920. The matter will then be subject to such further consideration as may be thought proper.


James Alexander Robb: I notice that item 66, biscuits, sweet, is not changed at all; the seven and-a-half per cent surtax still applies.


Richard Smeaton White: It never was on that item.


[Stage Direction]
Resolution agreed to.
Resolved, 1. That it is expedient to amend The Business Profits War Tax Act, 1916, as amended by chapter six of the statutes of 1917 and by chapter ten of the statutes of 1918, and to provide that the provisions of section three of the said Act shall not continue in force after the thirty-first day of December, one thousand nine hundred and nineteen;
['It never was on that item.']
John Archibald Maharg: Is it the intention when this is repealed to continue the income tax on profits in connection with incorporated companies?


Richard Smeaton White: The effect of this legislation is merely to continue for a year the Business Profits War Tax Act, which under the legislation of last session would have come to an end on the 31st December last. This does not involve the question of income tax, to which no termination is put by the legislation governing it.


Daniel Duncan McKenzie: I must admit, Mr. Chairman, that I have not given very close study to those two systems of taxation, if I may so designate them, that is, the Business Tax and the Income Tax. I cannot very well understand why there should be both. The profits of an individual from his business constitute his income, and apparently the Government is going to tax him on those profits. Why do they also go after his business? Is it not sufficient to get the tax in one way and with less trouble?


Richard Smeaton White: My hon. friend asks a very natural question. He has not followed the legislation. The justification for the Business Profits Tax is. the abnormal conditions prevailing during the war under which unusual and what might be regarded as excessive profits were made- profits beyond the normal return' to capital in enterprises of a similar character in peace time. The Business Profits War Tax Act is much more severe in the amount of such profits which it takes than is the Income War Tax Act, which is designed not only for the period of the war, but also for peace times. No citizen is subject to both taxes. Probably my hon. friend had in mind that an individual is* liable to' assessment under both the Business Profits War Tax Act and the Income War Tax Act. He pays the amount which is greater. Whether one would be larger than the other would depend on the profits being excessive or not. If the profits are very excessive they would come under the Business Profits
War Tax, which always governs if the amount is larger than the Income Tax.


Mr. NICKLE:: Do I understand that it is the purport of this section necessarily to discontinue the Business Profits War Tax Act for next year?


Richard Smeaton White: Not necessarily. I believe this follows the wording of the Act for the past two years which provided for the termination of the Act at the end of the calendar years 1917 and 1918. Now we are extending it for another calendar year. It wil] be for the Government to consider in connection, with the next Budget whether the Business Profits War Tax Act will be repealed or not, and, if so, to what extent.	,


[Stage Direction]
Resolution agreed to.
2. That with respect to every business liable to taxation under the said Act the period for which the returns shall be made and during which it shall be liable for assessment shall be at least sixty months, commencing with the beginning of the first accounting period ending after the thirty-first day of December, one thousand nine hundred and fourteen, or for such less period as the business may have been carried on from the beginning of the said accounting period to the end of the .period for which the said tax may be levied under this Act;
['Not necessarily. I believe this follows the wording of the Act for the past two years which provided for the termination of the Act at the end of the calendar years 1917 and 1918. Now we are extending it for another calendar year. It wil] be for the Government to consider in connection, with the next Budget whether the Business Profits War Tax Act will be repealed or not, and, if so, to what extent.\t,']
Richard Smeaton White: Mr. Chairman, the existing legislation provides for assessment for forty-eight months. This merely provides for the sixty months-in other words, for the extension of one year which I mentioned.


Daniel Duncan McKenzie: Sixty months?


Richard Smeaton White: A five-year period altogether from the time it was originally enacted. The amending Act extended it for forty-eight months, now we are extending it a year, which means sixty months to take the place of the forty-eight.


Daniel Duncan McKenzie: That means you are going over the same ground?


Richard Smeaton White: No. The amendment necessary to make the extension will show my hon. friend we are not extending it beyond the period I have mentioned.


Daniel Duncan McKenzie: I rather thought that perhaps parties who had already accounted for their profits would have to make a further accounting, that this was intended to be retroactive. Is it the intention to make this retroactive?


Richard Smeaton White: The intention is not to add anything in the way of retro-

active legislation to that which has already been enacted. When we enacted this legislation in 1916 it was made retroactive because quite large profits had been made in speculation or otherwise in the previous year and a half since the outbreak of the war. That retroactive feature was objectionable, but 'Parliament enacted it. This does not add in any way to the retroactive aspect of the legislation.


Mr.   P ED LO W@: From a ruling I received a short time ago, I understood that each accounting period, that is, each financial year, stood on its own basis. This resolution speaks of a five-year period an^ not each accounting year. I would like to have a ruling on that point, because a man might have an enormous profit one year and be assessed and then next year he might have a loss. Is it the intention of the department to make the assessment over an average of five years?


Richard Smeaton White: No, each accounting period stands upon its own basis. We are dealing with the accounting periods over which the legislation extends and not the accounting period in connection with any business. If this legislation is adopted, as has been the case in previous legislation respecting the Business Profits War Tax Act, all parties will be in the same position so far as accounting periods are concerned.


Mr.   P ED LO W@: This means that even if a man has paid his income tax for 1917 the department can go back to 1914 and exact a statement from him for 1914, 1915 and 1916, and collect taxes under this legislation.


Richard Smeaton White: Not unless he was taxable before. If a man started a business in 1917 he would not be taxed in respect of 1915 and 1916, because he was not in (business in those years. But if a man was in business in 1915 and 1916, but was not assessed, then, if found to have been liable, he would be subject to assessment for the previous years.
Mr. PEDLuvv : Notwithstanding the fact that he was not assessed before?


Richard Smeaton White: Notwithstanding that fact because he did not pay what he should have paid.
3. That the word "commencing" be replaced by the word " ending '' in the proviso to section twenty-six as enacted by chapter ten of the statutes of 1913.


Richard Smeaton White: That was a typographical error last year which completely reversed the intention of the Government
fSir Thomas White.]
and Parliament in respect of the Bill. We are correcting it this year.
Resolved, That it is expedient to amend the provisions of The Income War Tax Act, 1917, as amended by chapter 2.5 of the statutes of 1918 and to provide,-
1. That income liable to taxation shall include the salaries, indemnities or other remuneration of members of the Senate and House of Commons of Canada and officers thereof, of members of Provincial Legislative Councils and Assemblies, of Municipal Councils, Commissions and Boards of Management, of any Judge of any Dominion or Provincial Court appointed after the passing of this Act, and of all other persons, including those whose salaries, indemnities or other remuneration are paid by His *Majesty in respect of His Government of the ' Dominion of Canada, or of any Province; excepting therefrom the income of the Governor General of Canada.


Frank S. Cahill: What amount of income tax was collected last year, and what did it cost the country to collect it?


Richard Smeaton White: 
Frank S. Cahill: Are they kept separately at all, or are they combined?


Richard Smeaton White: The expenditures are not kept separately because they are administered to some extent by the same office.


Rodolphe Lemieux: Have there been apy appeals?


Richard Smeaton White: Notices of appeals have been received in some cases under the income tax. With regard to the business profits tax, usually, after an investigation, we have been able to make an assessment that is accepted, and thus an appeal is avoided.


John Howard Sinclair: How'many parties made returns?


Richard Smeaton White: About 150,000. the majority of them not assessable.


James Alexander Robb: During the debate on the Address there was an expression of disappointment at the amount collected from the income tax, and that brings us back to the proposition submitted from this side of the House when the Act was first intro-

duced, as to the method of collecting it. I should like again to ask the minister if he does not think he could obtain better results by collecting this income tax through the secretary-treasurers of the different municipalities? They know every man in their community and his business, and if we made them officials of the Government, we could obtain much better results wit.i a minimum of expense. Surely we should be able to collect a greater revenue from this income tax than was the experience of the past year.
Will this income tax apply to Government pensions, whether paid to judges or colonels or generals drawing large pensions?


Richard Smeaton White: My hon. friend
has called attention to two matters. Personally I do not think it would be practicable to have the income assessment made as he suggests. I do not believe it would give us as good results as we are getting now, or nearly as good results as we shall get when the organization is more complete. My own view is that instead of the cost of administration being high, it is too small. I believe that to render the organization completely effectual for the administration of the income tax in Canada there must be a very considerably increased expenditure. The Commissioner of Taxation may not altogether agree with me. He is very desirous of keeping the cost down to the lowest possible point, but if the income tax is to be administered with a high degree of efficiency I think we must have a much greater organization than we now have. We might even be obliged to have an organization- it would be an immense one-under which practically every individual in the country would be visited and assessed as men are now assessed under the municipal administration. We naturally have been anxious not to increase beyond what is absolutely necessary the administrative expenses in connection with this legislation, but the task of administering the income tax in Canada is a very great one indeed. I pointed out yesterday that in the United States it had taken them some nine years to render their system reasonably effectual. The first few years they encountered all the difficulties that we have encountered. I would weary the Committee if I mentioned all the obstacles which present themselves to the efficient administration of the income tax. I will give this one example which I recall at the moment. The inspector who is in charge of the taxation administration
m one of the western provinces told me that he had found insuperable difficulties in attempting to assess a large farming section of that community, in which, he said, twenty-one different languages or dialects were spoken, and from which he could get practically no returns. I do not want to dwell upon the difficulties because it might be answered that difficulties are to be overcome. That is true. When you have an income tax in effect in the country the Government must do its very best to administer it; I am the very first to say that, but hon. gentlemen here, all of whom are practical men, will realize the very great difficulty :e have in enforcing this taxation in many of the sections of Canada. I called attention yesterday to the extreme difficulty of ascertaining, for example, what is the net income of a farmer. Why, with the best intentions, it is very difficult for the farmer himself to know what his net income is. Again, in a province like British Columbia you may have a man liable to assessment who is engaged to-day in mining, and who a week or ten days from now may be in the timber industry or may be in another part of the country. I am not using that illustration to magnify the difficulties, because hon. gentlemen may say that that is an exceptional case. I am simply putting forward to the Committee that the administration of an income tax in a country of the size of Canada, with the diversity of occupations that we have, is a very difficult one indeed.
-Some criticism has been made of the fact that we have collected only $10,000,000 from the income tax which was imposed a year and a half ago. I called attention to the fact, in replying to the leader of the Opposition some time ago, that if an individual, or a firm, or a company was liable for a higher assessment under the Business Profits War Tax Act than under the Income Tax Act, the higher assessment was made. Now if we eliminate the cases in which the assessment paid was on the basis of the Business Profits War Tax Act, and not the Income Tax Act, and consider what would be the additional amount payable if the parties in question were subject to income taxation and not to the Business Profits War Tax, our estimate is that $10,000,000 more would be derived, so that if the Business Profits War Tax Act were to-day repealed and we were thrown back solely upon the income tax, the revenue for this year, on the basis of the rates of last year would be about $10,000,000 more.
.3712


Rodolphe Lemieux: I was one of the first to agree with the Minister of Finance that the time had come to impose income taxation in Canada. I think it is the fairest mode of taxation in the world because it reaches the man most able to pay, and furthermore, it makes the citizen a little more attentive to the activities of public men, and especially of the hon. gentlemen who hold the country's cash box. My only regret is that under the present proposals the big man does not pay enough income tax, but I suppose that every year there will be an increase in the rates.
The minister says that the task of administering the Income Tax Act is most difficult. As income taxation is new in Canada I can understand that it would be rather difficult at first to put the machinery in motion; but in other countries, in England, for a century I believe, and in France, for the same length of time, they have had an income tax, and I think that we might very well adopt the methods which are followed in those countries in administering the Act. I quite agree that conditions are somewhat different, that Canada occupies a vast area and has a diversified population, but I think there must be some system which can be adapted to every country. The main thing is to have an efficient board of administration. I have known for many years the chief Commissioner of Taxation, and I must congratulate the Government on their choice in that regard. I think no man knows better than Mr. Breadner how . to administer such a complex taxation Act. The officers who are employed in this branch of the service in Ottawa and Montreal and throughout the country, do not come under the Civil Service Commission, I am told. I do not know why, and I should like to know if there is any special reason why they do not come under the Civil Service Act. I would urge the minister to see to it that these officers who are called upon to administer the Act should not be appointed, unless Mr. Breadner is satisfied that they possess the necessary qualifications.
There have been some complaints and I personally interviewed Mr. Breadner who gave me satisfactory explanations. I would urge upon the minister the necessity of appointing without any reference to political parties the men who have charge of that administration. As the minister said a moment ago, it is a very delicate matter to scrutinize and investigate the private business of any individual and if the appointments were made-I do not say they
rsfr Tli01 mix White.3
are-only at the dictates of political proclivities, my hon. friend would encounter some trouble in parts of the country, for human nature is universally the same. My hon. friend said there were difficulties in certain sections of the Northwest where there was a medley of various races. May I ask him to bear in mind that we have only two official languages in Canada, and also to inform him that in my province last fall and winter there were legitimate complaints that the blank forms were not issued in one of the official languages? Remonstrances were made and after a while the blank forms were sent. It is quite natural on the part of the habitant in Quebec to say:	I received a blank form in
English but that is not my language. I want the blank form in French and I shall keep Mr. Breadner waiting until I receive it. I think the grievance was remedied at the time, but the department ought to see to it that such remonstrances are unnecessary. These blank forms should be circulated in our province to preclude the possibility of any delay. I want to know from the hon. gentleman, in view of the amendments contained in this year's resolutions, what are his expectations for the coming fiscal year? In view of these amendments, what does he expect to obtain from the income tax source?


Richard Smeaton White: My recollection
is that in the Budget I estimated $15,000,000 or $20,000,000 additional.


Rodolphe Lemieux: Why is it that the officers are not selected by the Civil Service Commission?


Richard Smeaton White: The hon. member will recall that when the Business Profits Tax Act was first enacted it was regarded as of a temporary character, and it was considered that it would not continue more than three years. A staff was got together of as efficient officials as could be had for the administration of the Act throughout the country.


Rodolphe Lemieux: In other words, they
must be practically experts?


Richard Smeaton White: Yes. My hon. friend has put his finger precisely on the point. We do not believe that we can get by advertising, as the Civil Service Commission advertise, the class of expert ability required for this work. It is work that is of a highly confidential nature and all the men engaged in it should be exceedingly competent. We aim to get men having in some cases, in addition to the other necessary qualifications, legal experience.. Let

me say to my hon. friend further that except on the occasion of their coming here last February for a conference, I do not know personally one single member of the staff, ner have I recommended any member to the Commissioner of Taxation. My hon. friend will gather from that how much political patronage has been exercised. I have said to the Commissioner of Taxation, in whom I have the utmost confidence- and what my hon. friend has said about him is wholly deserved; I hold you responsible for the administration of that department. I give you a perfectly free band in selecting and recommending to me men who you think are competent to carry out this work. I have not interested myself in these appointments beyond discussing with Mr. Breadner the importance of getting the best men we could, and it has been exceedingly difficult to get men, especially during the last year of the war. I have had many .things to engage my attention and have fully appreciated the importance of the efficient administration of this department; and if there is any fault in connection with it it certainly does not lie in any endeavour on the part of the minister to exercise patronage. Of that 1 can assure my hon. friend.
With regard to the other question laised by my hon. friend, namely, the use of the French language, we have always realized in our department the fact to which he has called attention, of the French language being official for certain purposes. In the case to which he referred the order was given originally by the department for the returns to be printed. I think there were a million for Quebec in both French and English. There was a slight delay in translating from English into French and consequently the French printing was retarded. It might have been by inadvertence that the citizens to whom the hon. member referred received their returns in English. I am quite aware that in Quebec there are tens of thousands of people w(ho are familiar only with the French language, and the department, I can assure the hon. member, is anxious to meet their convenience and live up to its obligations in furnishing returns in French to be filled in by those who speak that language.
One other point was referred to in regard to pensions. I am not sure that I quite recollect what the hon. member who raised the point required. Subsection (b) of section 6 on page 5 reads:
Any part of the remuneration of a taxpayer retained by his employer in connection with insurance, sick benefit, superannuation, pension
fund or plan shall be allowed1 as an exemption or deduction from the income of the taxpayer for income tax purposes, and any payment to an employee out of such fund or plan shall be included as taxable income of the employee.
Is that the section to which the hon. member refers?


James Alexander Robb: I was speaking more particularly in regard to judges' pensions.


Rodolphe Lemieux: Before the minister
answers the question may I be permitted to say a word or two on the question? If my hon. friend (Mr. Robb) wishes to apply this principle to pensions received by judges who have retired, I would not approve of retroactive legislation. Judges who have retired and who receive a pension from the state are exempted by the Judges' Act from all taxes from any source whatever. I do not think it would be fair to have retroactive legislation apply to them. There are old gentlemen-one of whom I have in mind -who have been on the bench for many years and who. have now retired. Possibly within the next few months or the next year or so they may not be of this world. Their pensions, under the present high cost of living, afford them a bare subsistence. And in regard to civil servants, I might mention the case of my own father. He was in the Civil Service for fifty years and receives a very small pension.
Fortunately, he has something else; he has his boys and he has himself. But would it be fair to apply this principle to those who received a pension based on salaries of fifteen or twenty years ago? Civil servants since that time have obtained increases and if they were retired they would obtain much better pensions than the old superannuated civil servants receive. I do not believe in retroactive legislation. As to the future, it is different. Let us respect rights which are real vested rights.


William Cameron Edwards: I do not think that the words "retroactive legislation" are used in the right sense at all. There will be no attempt made, in asking judges or those receiving a pension to pay income tax, to compel them to pay it on income received five or ten years ago. They will pay it on what their income or pension is to-day.


Rodolphe Lemieux: I speak of retroactive
legislation in the case of judges who were retired and who are pensioned by the state. According to the Judges' Act, the moment they are appointed, their salaries and pensions are debarred from all taxes in the future.


William Cameron Edwards: I understand that and that is -what I protest against. There is always a sufficient number of lawyers in this House to look after any and every member of the legal fraternity and there is no reason under heaven that you can give and that is logical why a judge, any more than anybody else, should be exempted from taxation on his income.


Rodolphe Lemieux: It is the law.


William Cameron Edwards: It is no answer to say that you have a Judges' Act which exempts them. An Act passed by this Parliament can be changed by this Parliament. My contention is that we have laid down a principle here that an unmarried person is exempt from paying income tax up to a certain amount, that a married person is exempt from paying income tax up to a certain amount, but if an unmarried or a married person has an income which comes within the schedule provided under the law, he is liable to pay the income tax and I do not care whether that income is derived from a pension for services that a man has rendered as a civil servant, if the income reaches the amount stipulated in the law, that man has to pay income tax just the same as any person else. If he happens to be a judge who has retired and has an income within the meaning of the schedule I do not see any reason under heaven why he should be exempt from payment of the tax. We pay entirely too much attention to judges and we give them certain priyileges in this country that they are not entitled to any more than any person else. They are not white winged angels in my estimation, and I do not propose to place them on any pedestal of superiority over any person else. Let them meet their obligations to the State just as every other person has to do. Who is to provide for the old age of the farmer who has worked all his life trying to get a little property around him? Talk about the high cost of living ! My hon. friend speaks about the retired judge who has been pulling down $5,000 and $6,000 of a pension, but there is no consideration for the man who has worked hard all his life trying to get a little property together and to give his children an education. He can get along as best he may. Judges should be made to conform to the laws of the country and to meet their responsibilities just the same as other men.


Mr. J. H. THOMPSON:: I quite agree with the hon. member for Frontenac (Mr. Edwards). I am in favour of the income tax, but I think that it will take time to get
['Mr. Lemieux.]
it working smoothly. On going through the country I find there are a great many farmers and people in villages who do not understand the Act. The form sent out for them to fill in is too complicated. I believe that ninety per cent of the people do not understand it. They are quite willing to pay the tax, providing that they feel that their neighbour is paying it also. If a man is conscientious in filling in the form, he is taxed highly, while another man who thinks that he does not have income enough and does not go into the matter closely, gets off scot free. There should be a change. I am quite in accord with the hon. member for Huntingdon (Mr. Robb). I believe that the work of collection could be managed better by the secretary treasurer of the municipality. If that is not workable, I would like to ask the minister if it would not be possible for the income tax collector to he moved around from place to place. I will give you an instance. In my riding there are five villages. A great many people live in those places who do not understand how to make the return. If the collector would spend a week in those different villages, assisting farmers and others in making out their returns, it would go a long way in helping the situation. I am sure that these people are willing to pay. But there are questions on the form that no farmer can very well answer. There is one question in connection with horses: How much does it cost to produce a horse? Different farmers have spoken to me about this. One year hay is worth $10 a ton, while another year it is worth from $20 to $30. No man can tell what it costs him to produce a horse. That form might be simplified, and, if it cannot be, I would like to see the income tax collector spend a week in different parts of the riding to assist the farmers and others in making out their returns. They are willing to make them out, but they do not understand them.


Mr. LABOR:: I do not know what system is followed in Hastings or in other parts of the country, but I do know how the system is administered in the Niagara district. I would like to compliment the minister upon the man that he has appointed there. We have a very competent man in that district who can give any person any information that he requires in connection with the income tax and advise him as to the proper manner of filling out the form. He is located in the county town and he looks after Haldimand and Norfolk. If such as he are appointed throughout the country

generally the Government have good officials in that particular line. It was not a political appointment, because the man I speak of held for many years the position of secretary of the Liberal Association in the county of Haldimand. He lost his son and son-inlaw, both officers, overseas, and he deserved the appointment. He was formerly in the registry office, he is a first-class official, and I want to take this opportunity of complimenting the Government upon appointing such a man.
I believe there should be such a man in every district of the country. As the member for East Hastings (Mr. T. H. Thompson) has stated, the idea is that people should get this information in order that they may be instructed as to what the law is, and how the tax should be paid, and that they should get the proper forms and fill them out correctly.


Thomas Henry Thompson: Perhaps my remarks were misunderstood. The officer in charge, in the case referred to, is a competent man and I believe is trying to do his duty. I was speaking in the public in* terest, and dealing with the distance that people will have to travel in order to get in touch with the officer.


James Alexander Robb: Before the clause carries, I would point out that owing to the discussion which has taken place I have not received a reply from the Minister of Finance.


Richard Smeaton White: My hon. friend from Maisonneuve has raised the question of the principle that is involved in the exemption of judges from the provisions of the Income Tax Act. The point is that a bargain was made with the judges when they accepted office that they would receive their compensation, including their pension, free of any deduction whatsoever made by, or under the authority of, the Parliament of Canada. Now let us regard the situation for a moment. Take the case of an eminent lawyer who is making twenty-five, thirty, or forty thousand dollars a year, or not so much for that matter. Say he goes upon the bench. He accepts a salary of $8,000, let US' say, or $10,000, with provision for a retiring allowance. Now, the terms of his engagement are governed by the Judges Act, which expressly provides that he is to receive the whole of that amount without reduction. That is the bargain that is .made between him and the Government, and Parliament, for that matter, when he accepts office, and I submit that the question before the committee is as to whether the Government would be justified in imposing
income taxation upon those judges who have accepted their appointment on a definite, positive understanding governed by legislation. I have no hesitation in saying for myself that I think it would be inadvisable for the Dominion Government to enact legislation of that kind. I understand,
I think, fully, the views of hon. members who feel that the judges should be assessed. They proceed upon the assumption that as everybody else receiving an income beyond the exemption is liable for income tax so should the judges be. I submit the distinction lies in the bargain to which I have referred between the judges on the one hand and the Parliament and the people of Canada on the other. It is a question of whether we are going to follow a contract or not. In the amendment which we suggest we propose that income taxation shall apply to those who are appointed from the date of this legislation. In other words we are not adopting retroactive legislation, which would have the effect of breaking contracts entered into by the judges with the Government and people of Canada, but it will apply to future appointments. The justification of the amendment which we propose is this: that although we have the Judges Act, no laywer accepting appointment as a judge hereafter can allege that he should not be liable to assessment under the income tax by reason of the provisions of that Act because he will be aware, as all citizens are deemed to be aware, of the provisions in the legislation which we are now enacting. It is undoubtedly a question of whether the Government should break its contract with the judiciary. The judiciary has always been regarded as being in a peculiar position, and rightly so, under the constitution, a position of great independence so far as the Government of the day is concerned; and I believe it is in the national interest that any contract or agreement that we have with the Judiciary enacted in a law by this Parliament, as it is in the case in question, should be scrupulously observed. It may be that no untoward results would ensue if we were to make all judges, who are exempt under the Judges Act, liable to income taxation, but I submit that the preservation of the principle is important and should be respected by the Government and by Parliament.


Daniel Duncan McKenzie: I fully agree with what the Minister of Finance says that the statute governing the appointment of judges and their responsibilities, as far as contribution to municipal and other taxes are

concerned, should be observed. In my opinion it is a very grave mistake for any person to think that it is all right to commercialize a judge like any other person in the country, and that he should he subject to the same commercial laws and conditions. A judge may be getting $8,000 a year, and a railway manager may he drawing the same salary, but the two positions are entirely different; and we would be sorry to suppose that the judge was not on a higher plane, as far as independence, mentality, and frame of mind in dealing with his business is concerned, as compared with the railway manager. I am not saying that the railway manager must not be a good man in every sense of the word, but the duties of a judge are of a peculiar cast. It has always been said that the law is a very jealous mistress, and that the man who desires to have a proper knowledge of the law and be able to apply it properly, is a man who gives his entire time, attention, and ambition to its study and its application. For that reason it is in the best interests of the country that certain safeguards should be thrown around the judiciary, not for the sake of the judge alone but in the interests of the people in general. I am not only in favour of leaving the Judges' Act as it is, but I am entirely opposed to this amendment which will be drawing a line between the judge that will be appointed after this legislation is passed and the judge that is now holding that exalted position. It is the law that a judge is not subject to those exactions and it should stay that way. I think it would be a pernicious distinction, and a highly pernicious system of legislation that the judges oi the land who are to-day appointed and occupying those positions are exempt under the present Judges' Act, whereas the man who is appointed to-morrow, or any day after this legislation passes, shall be under a different law and different conditions entirely. I think it is entirely a 'mistake, and I hope that whatever law is enacted in regard to judges that they shall all be in the same position and subject to the same conditions.


William Folger Nickle: Last year when this subject was under discussion I took the same position as the Minister of Finance takes today-that a contract was entered into by this country with the judges who had been appointed prior to the income tax becoming law entitling them to exemption from taxation under this Act. I think that in all human probability when the Judges' Act was passed it was never contemplated for a

moment that income taxes would ever be effective in Canada; but whether that is so or not it is a matter of no very great importance when one considers it in relation to the maintenance of the national integrity. A contract was made between this country and those who have been appointed to the judiciary. It may not have been a wise contract-I am not discussing that, I am not saying that it was or was not right. But when a bargain is made, even if it is a bad bargain, I believe that it should he respected. I therefore agree entirely with what the minister said: That those who were appointed before the Income Tax Act became effective should continue to enjoy the exemption that that Act gave them.


Rodolphe Lemieux: Otherwise it would be simply a scrap of paper.


William Folger Nickle: Otherwise, as the ex-Postmaster General remarks, it would be a mere scrap of paper. But I am quite at variance with the position taken by the leader of the Opposition. A judge may or may not be in a different position from other men in some respects, but when it -comes to his bearing his share of the burden of the war, I think, provided he was appointed after this Act became effective, he should bear his fair share of the taxation imposed upon him. To do anything else would he to pass class legislation of a most pernicious character, and I think that the people at large would have reason to complain, as the hon. member for Fron-tenac did this afternoon, that those on the bench were given exemption-provided, of course, that their appointment was subsequent to the passing of this Act. It is quite true that the how. member for Frontenac went further than the leader of the Opposition; he thought the legislation should be retroactive. I do not agree with his argument. It would be a mistake, a breach of contract. But in relation to those judges who were appointed subsequent to the passing of the Income Tax Act, I think they should carry their share of the burden of taxation the same as any other citizen.
Speaking for a moment or two on the general principle of income taxation, in my opinion, though I have no specific cases by which I can ibaek my judgment, I think there are scores of people evading payment of this tax, and I think they are evading payment for the reason that they are only asked to certify as to their incomes. Being legally educated, I have great faith in the restraining power of an affidavit, coupled

with the possible penalty that may follow if the affidavit is false. Under the Income Tax Act all a man is asked to do is to sign a form. There may or may not be an investigation as to the correctness of the return. If there is an investigation, and the return is found to be incorrect, there is no criminal penalty incurred. I have on several occasions submitted to the officer who is responsible for this Act that all these returns should be made on oath, because I do not believe there is any restraining pecuniary disadvantage that can be compared with the sanction of an oath. I think that every return- should be sworn, and that in the event of its being found to be false, that is, not having been sworn to in good faith, there should be a possibility of punitive results. We have it under our income tax legislation in relation to municipal taxation, we have it in relation to succession duty taxation, and if you have it in respect of these classes of taxation, why should this Government make the Dominion income tax a matter of less importance than a municipal or a provincial tax? I believe the people would take the situation in more serious spirit if they had to swear to their returns, and I urge on the minister that he give consideration to my suggestion, although I know that his officer, with his broad experience, is- distinctly and flatly opposed to it.


John Howard Sinclair: There is a very general suspicion throughout the country that we are not getting income tax from the men who are liable to pay it. I do not know what steps have been taken by the department to see thkt every man with an assessable income is taxed. I do not know whether any prosecutions have been instituted or whether much energy has been spent in that line. The Minister of Finance will excuse me for saying so, but a few weeks ago, at the request of a prominent merchant in a certain Canadian city, I asked the fcon. gentleman if he would give me a list of the men in that city who had made returns. My friend was suspicious that some of his neighbours had not made a return, and that they were escaping from year to year. He said to me, "I do not want to know what they are assessed for, I do not want to know how much income they have returned; but if you will get me the names of those men who have made returns, that is all I want." The hon. minister gave consideration to my request, and he very politely told me that he did not think it, advisable to give me such a list.
I can see very grave objections to giving out any information as to what the returns contain, but I am not able to see any good reason why t)he names of the men who have actually made returns should not be given. If the Minister of Finance has any good reason against granting the information, I would like him to place it on Hansard, because I feel if there was some publicity with regard to men who are making returns it would assist his officers in various parts of Canada to do their work properly.


Richard Smeaton White: If my hon. friend, as a member of Parliament, desires information regarding the assessment of any citizen, he may obtain it by applying to the Commissioner of Taxation. But it was common ground at the time the Income Tax Act was passed that it was undesirable that t'he incomes of private individuals throughout the country should be published to the world. It may be that we shall come to the time when that is required and desirable; there is a good deal to be said in favour of it; but I believe that the view of Parliament at the time the legislation was enacted was against such action. If any -member of Parliament desires, for his own information and not for publication to the world, to know what income is assessable, or what business profits are assessable against any individual or firm, he can get the information by applying to the Commissioner of Taxation. If that were not so it would remove a rather valuable safeguard upon administration. I do not say in regard to the present administration, because I know the Commissioner of Taxation desires to do only one thing, namely, his duty. But it would be possible to have these matters too secret, and I have always taken the view that a member of Parliament desiring to obtain information as to assessment should get it, but I do not believe that he should publish it to the world. There is a good deal of spiteful feeling existing in this world, and very often people take a certain amount of satisfaction in rather maliciously publishing statements about neighbours which may place the latter unjustifiably and unwarrant-edly in a false position. My own experience has been that if a man is reputed to be wealthy, his wealth is always exaggerated in the public estimation. On the other hand, if it is reported that a man has lost a certain amount of money, that also is exaggerated. People like sensational news. Very few men indeed are found to be nearly as wealthy as they are generally supposed to be, and many who are reputed to be wealthy are

poor indeed. I remember for several years after I came down to Ottawa I laboured under the most unjust odium of being a well-to-do man. The House has long since realized how unjust was the feeling against me.


John Howard Sinclair: I do not want to be misunderstood. I was not asking for a statement of the assessment.


Richard Smeaton White: I did not misunderstand my hon. friend at all.


John Howard Sinclair: I am simply asking for a list of those who have made returns, merely for the use of the gentleman who requested me to obtain it for him. I was going to send it to him, and he would see if Mr. John Smith of his city had made a return, and, if not, he could write a letter to your officer.


Richard Smeaton White: I think he should see the income tax inspector in the district-and communicate his view to him as to the assessability of the parties in whom he is specially interested. The gentleman referred to is not an official. His motives may be of the very best-I have no doubt they are-to get the information, but it would be a violation of the Income Tax Act if such information were given to him, that is to say, made public.


Mr.   P ED LO W@: It is the practice in Great Britain that where life insurance premiums are paid by individuals, up to, I think, one-fifth of their income can be used for the payment of premiums, and that amount is exempt from income taxation. I submitted this proposition to the manager of this department, and his ruling was that no exemption would be made of the premium paid and that the returns from life insurance policies would not be included for taxation purposes in an estate. That is perhaps a fair ruling, but insurance should be encouraged to the limit, not only with those who are able to carry large amounts of insurance on their lives for the protection of their wives and families, but with those who are able to carry only smaller amounts. The minister should consider the advisability of exempting from income taxation up to a certain amount of the income of an individual when applied towards payment of premiums on life insurance.


Richard Smeaton White: I think, if my
hon. friend will reflect, he will see it would not be sound to grant exemption to the extent of premiums paid for life insurance.

Life insurance is an asset. A man might pay out of an income of $10,000 a year premiums on a very large insurance payable during his lifetime if he should live a certain number of years, and he might deduct that from his income. Especially is it objectionable where you have a sharply graded income tax. A man with an income of $10,000 a year is assessed on a higher basis than a man who has an income of $5,000 a year. If you were to exempt premiums paid on life insurance, the man with an income of $10,000 a year might take out a very large amount of life insurance, either on the tontine or straight life plan and thus get the benefit of a lower income tax rate. To safeguard against any injustice, we, in this Income Tax Act, provide that moneys derived from life insurance is not assessable as income. For instance, an estate or a beneficiary of a deceased, person receiving a large amount upon the death of the testator is not assessable in respect of that amount. It would not be fair to assess it as income. We considered that matter very carefully, and my recollection is that it was debated pretty fully at the time the income tax measure was introduced, and we have not been able to see our way to allow it.


Mr.   P ED LO W@: When a premium is paid on a life insurance policy, the actual cash paid is not the value as an asset from year to year. Therefore, it is hardly fair that the insurer should be compelled to pay an income tax on a value that is only apparent and that is not real.


Frank S. Cahill: What is the particular objection to a little more publicity in regard to income tax collection? In the United States, I understand, they have had considerable difficulty for eight or nine years in getting it on a sound- basis. I presume the tax commissioner has had consultations with experts from the United States and possibly from Great-Britain. Do they give publicity to income tax collections? I cannot see any reason why the tax collector should not give any man who cares to go into his office and ask for it the amount of money any individual in the community is paying. Until you have that publicity the feeling will prevail that some people are dodging their income tax. It seems to be a pretty general feeling in the country that people are dodging the tax, and I do not know that publicity would do a great deal of harm or hurt the false pride of people who are allowing others to think they have very large incomes when they have not, or

people who have the false modesty of gathering a large amount and who want to make it appear small. At present there is no way of finding out whether a person has paid the tax or not.


Richard Smeaton White: The practice in the United States and Great Britain is precisely the same as ours; it anything, it is more strict. I remember when the question was asked in the House as to what our policy would be with regard to making public assessments made under the Business Profits War Tax Act, I cabled the Canadian High Commissioner in London to find out the British practice. The reply I got was that under no circumstances would they bring down the information to the House of Commons. I am not saying that because they do that we should follow their example, but the British Government have had a long experience with income tax administration, and they are pretty efficient in their methods, and they have thought it undesirable to give publicity to the details of the taxation of individuals under the Income Tax Act or the Business Profits taxation measure which has been in effect during the war. The reason for their attitude is that which I have mentioned, namely, that people's private affairs are brought into publicity in an undesirable way, and that a great deal of injustice may be done to individuals who may have made perfectly fair returns and who yet may not appear to have done so in the eyes of the public. There is a great deal to be said for publicity. Personally, I am a great believer in publicity along all lines, but I would hesitate,'without a very full expression of opinion on the part of the House, to consider favourably making public the details of income and income assessments. If you take the case of municipal assessments of income, I had a good deal of experience in that years ago in Toronto, the assessment rolls contained the names of all individuals who were subject to assessment and any citizen could come in and look them up. I found there was practically no interest in them, and I do not think there is anything gained in Toronto to which I specially refer because of my long experience there years ago, by reason of the fact that individuals may come in and look up assessments, because the great body of the people certainly do not bother much with it. The only recollection I have of the income tax assessment in the city of Toronto was that I almost became a convert to Henry George's theory that the only kind of assessment was against land, because he held,
for the reasons which he elaborated in his work, that it was absolutely impossible to assess justly or fairly either personal property or income.


Mr. MACKENZIE:: I realize this resolution is going to pass, but I wish to register my most emphatic protest against making this distinction between the judges. The Minister of Finance will find no precedent for it in England or France or the United States, or any where in the world. I wish to protest in a most emphatic manner against legislation under which three judges of the Bench will pay taxation while three others on the same Bench will be exempt, under which one county court judge will be taxed while the judge sitting by his side will be exempt. I realize that I cannot prevent this resolution from passing, but I say it should not be passed. Whether men are judges of the Supreme Court or of any other court in this country they should all be in exactly the same position with regard to taxation. It is pernicious taxation to tax the one and exempt the other. So long as the law is that they are subject to taxation, that law should prevail with regard to all the judges.


Richard Smeaton White: I may say that one reason why this resolution was brought down was that there was a very strong view prevailing in the House last year that the judges' incomes should be liable to assessment. I confess to having a good deal of sympathy with the views put forward by the leader of the Opposition, but on the other hand I realize the strength of the feeling which exists that all should contribute to income taxation, especially at a time like this.


Daniel Duncan McKenzie: What the minister gets will be a mere trifle.


Richard Smeaton White: I appreciate my hon. friend's point, but what appealed strongly to Parliament last year when the matter came up was the principle involved, and this resolution has been brought down in deference to what the Government believe is the majority opinion of this Parliament with respect to the matter. Personally, I think there is a great deal to be said for the view of my hon. friend. I have a great regard for his opinion, but I think I must ask the House to adopt the resolution.


James Alexander Robb: I do not share the views of my leader or the leanings of the Minister of Finance. I believe that the feeling in the country is that judges must share the obli-

gations of the country with the rest of the people. I think Parliament will only be interpreting the view of the country if we put through legislation compelling the judges to pay their fair share of taxation.


Mr. FIELDING:: I took part in the discussion of this question last year and my view was emphatically in accordance with that which the Minister of Finance now presents. I am therefore not able to agree with the leader of the Opposition. I think if a vote had been taken in the House last year there would have been no difficulty in carrying a motion to abolish the exemption from taxation of the judges, but some good Conservatives like the hon. member for Kingston and myself paid due regard to vested rights and said: " A bargain is a bargain, and must be kept." I would suggest one way of removing the inequality, which perhaps will satisfy the leader of the Opposition. There is a movement, which may or may not take effect this session, to provide an increase in salary for the judges. If that matures, I would suggest that a condition should be made that on any increase in salary being granted, all the judges shall be subject to the income tax without any exception.
At six o'clock the Committee took recess.
After Kecess.
The Committee resumed at eight o'clock.


Mr. JACOBS:: Mr. Chairman, now that
the question of judges and the taxation of their incomes under the new resolution is being discussed, I think it is not inappropriate that I should make a personal statement. When the Judges' Amendment Act was before the Committee of the House on May 30 I had occasion to make some observations and I brought to the attention of the committee the fact that certain judges in Quebec, in my opinion, held cases pleaded before them, too long under advisement. I said that within the last few years there had been appointed to the bench some judges who I thought delayed their decisions too long. Hansard has me reported as saying " five " judges instead of " some " judges, and as a result I understand that five of the most recently appointed gentlemen have taken this to mean that my remarks were intended to apply to them. These judges are: Justices Allard, Tellier, Duclos, DeLorimier and Loranger. I wish to say that I did not have in mind any of these gentlemen. They are expeditious in the handling of their cases and in deliver-
ing judgments as those who practise before our courts know quite well. What I should have done, was to ask for an Order of the House for a return showing what judges have had cases before them for two years and upwards without delivering judgments thereon, and when the return was brought down discussion could have been had. I have made the necessary correction in revised Hansard and have written to express my regret to the complaining judges. My object in rising on this occasion is that this explr nation may be given the same publicity as my remarks on May 30.
2. That the exemptions and deductions allowed from taxable income by paragraph (a) of subsection one of section three of The Income War Tax Act, 1917, be amended to provide for suoh reasonable allowance as may be granted by the minister, in his absolute discretion for depreciation; by striking out the exemption for any expenditure of a capital nature for renewals or for the development of a business1; and by adding the provision that the minister when determining the income derived from timber limits shall make an allowance for their exhaustion.


Richard Smeaton White: In estimating the net income of a business it is proper to deduct a reasonable amount for depreciation. Under existing legislation depreciation is a question of fact and I need not suggest to the committee that a great number of parties subject to assessment are exceedingly desirous of wiping off as large a sum as possible for depreciation. It is very desirable that regulations should be made, having regard to various classes of business, providing for scales of depreciation so that all may be dealt with, as far as possible, on the same basis. I need not say that the department will act in no arbitrary or high handed manner. Our administration, I think, can be trusted to allow a reasonable amount of depreciation, but we have found that advantage is sought to be taken of the provisions of the Act and demands are made for an unreasonable amount of depreciation, with the result that the net income is reduced below the figure at which the assessment should be made.
The second part of the section, the question of renewals and the amount of expenditure for development of business, under existing legislation, lends itself as in the other case, to demands that are in many cases unreasonable. We propose, therefore, to strike out the provision permitting a certain amount to be set aside for renewals and development of business. Men's ideas as to the amount of earnings which should be kept hack for development or renewal vary greatly. In sound income tax legisla-

lion allowance should undoubtedly be made for depreciation, and the taxpayers should be given the benefit of any doubt; but where large profits are made and are put into renewals of a capital nature, or set aside for development of business, it is obvious that net earnings are cut down very materially. During the war, I think, it was proper that we should have those provisions, because many firms, for the purpose of getting war business, put up additions to their plants which would not represent in peace time the amount of capital invested in them. The cost of everything was very high and to meet war conditions there were expansions of plants which would not be required in a time of peace. But now that the war is, we hope, practically at an end and conditions are more normal, we propose to strike out the provision under which exemption is made for expenditure of capital for renewals or for the development 'of business.
As to [DOT] the third matter mentioned in the section, it is of course only reasonable that in determining the net income derived from the working of timber limits, allowance should be made for exhaustion. That principle is applied in the case of mines, oil wells and other businesses.


Rodolphe Lemieux: Real estate?


Richard Smeaton White: Yes. The depreciation varies according to the business. In one business it might be proper to allow 2 per cent and in another 5 per cent, while one can imagine a business in which as high as 10 per cent or more should be allowed. It depends on wear and tear of machinery and strain generally upon plant.


Mr.   P ED LO W@: Are the provisions of this paragraph intended to refer to retail merchandise on hand?


Richard Smeaton White: No.


Mr. JPEDLOW:: Is any provision made covering the handling of stocks in retail merchandise on hand?


Richard Smeaton White: My hon. friend has reference to depreciation in value of goods on hands. The inventories show that. There is a valuation of the goods on hand, and allowance is made for any fall in price.


Mr.   P ED LO W@: If the merchant has to give a return of merchandise on hand at cost under present conditions, it would be absolutely unfair, because the fluctuations are very great in the market on all kinds of merchandise. Certain merchandise may
be valued at so much to-day, and be very much less a month hence. A merchant buying merchandise to-day may have goods on hand a year from now, and when he takes stock his goods may not be worth the present cost price. What latitude will be allowed the commissioner in dealing with a case of that kind? It is important that there should be a decision along definite lines.


Richard Smeaton White: Under our regulations adjustment may be made within a year. My hon. friend has in min I that a fall in price occurs. If within a year after the close of the accounting period it appears that a fall has taken place in the price of the goods from that shown in the inventory, allowance is made by the department. But it would not do to allow for depreciation on an apprehension that goods may fall in price, because, on the other hand, they might go up. The fall has actually to occur, and a year is given within which claim may be made for a reduction by reason of such fall.


Mr.   P ED LO W@: I understood that each accounting period had to be dealt with by itself.


Richard Smeaton White: The Commissioner of Taxation tells me that the matter is being carried out.


Frank S. Cahill: With regard to the income derived from timber limits, what is the basis of estimating profits? I would suppose that the difference between the value of the standing timber and the cost of taking it out would represent the profit. Is that the basis?


Richard Smeaton White: Yes, and on the basis of stumpage, which varies according to the different provinces. I need not tell the hon. member how difficult it is to ascertain what the net income is from the working of timber limits. The estimate has to be made as nearly as possible on net profits, and one of the items of deduction-I think a proper one-is depreciation in the exhaustion of the limit by reason of the cutting that has taken place.


Frank S. Cahill: You know what it costs to cut the timber and you know just what the timber is worth standing, so that your profit would be the difference between the worth of the timber standing and the cost of putting it on the market, and I do not see why special provision is made in regard to timber.

.3722


Richard Smeaton White: If this special provision were not made the department could not allow an amount for exhaustion. In the present Act provision is made in the case of mines.
For example, if you simply take all the revenue from a coal mine, on the one hand, and deduct all the expenditures on the other, the net income that will he derived will be too great, because you have made no allowance for the exhaustion of capital, so to speak, from taking out the coal. The principle in the case of timber is precisely the same. The reason why we are inserting this provision in the Act is that there is no provision in the present Act relating to timber and the wastage of the property. We have legislation which enables us to allow for the exhaustion of mines and oil wells.


Sir HERBERT AMES:: In the original Income Tax Act there are two clauses which allow for exemption-clauses 3 and 5. We have been dealing with clause 3. I do not see that clause 5 is dealt with at all, but it relates to exemptions. I would like to make a few observations with regard to a matter that I desire to call to the attention of the Minister of Finance (Sir Thomas White). Paragraph (j) of clause 5 provides that:
The military and naval pay of persons who have been on active service overseas during the present war in any of the military or naval forces of His Majesty or any of His Majesty's Allies.

shall be exempt from taxation. I
would like to put in a plea for the same provision with respect to the pension that may be awarded to the widow of a man who has been killed in service, or afterwards, or the pension that is derived by a person who is disabled. It is quite possible that there may be a little other revenue in addition to the pension. If the widow of a colonel or a major has an income derived from life insurance, her pension income and life insurance income might bring the amount up to the point where a portion of her income would be taxed. I think the principle having been once adopted that the military pay of persons engaged in the war should not be taxed, the same principle should be applied to pensions and disablement allowances. Strictly speaking, the Government' simply pays with one hand and takes back with the other. As these deserving people will have to live mainly upon the pension allowance, I do not think this Government should exact from them sums that might otherwise be properly collectable, and I

would ask the minister, when the Bill comes down, to please include a clause to that effect.


Rodolphe Lemieux: I wish to support with all my heart the proposal or suggestion made by my hon. friend from 'St. Antoine (Sir Herbert Ames). I think that just as the military pay was placed beyond the reach of the tax collector so ought the pension paid to the widow. As my hon. friend says, that pension at the present time, until further amendment-and I hope amendment may come-is small and gives the recipient just the bare necessities of life. Under these circumstances I would certainly support any amendment which would provide for an exemption in favour of the widow who receives a pension.


Richard Smeaton White: I am disposed to regard very favourably the suggestion put forward by the two hon. members. The hon. member for St. Antoine (Sir Herbert Ames) had drawn the matter to my attention and it strongly appeals to me. It is not necessary to make any amendment to the resolution, because it is open to us, when the Bill is in the committee stage, to extend the exemptions by cutting down and not adding to the burdens of taxation. I will have a note made of the suggestions and get an appropriate amendment to the Bill when it is in the committee stage.


Mr.   P ED LO W@: There is another matter that possibly I might call to the attention of the minister. One of the provisions in regard to making up the schedule that the department requires is that no deduction shall be made in the case of a merchant for had debts that have occurred outside of the accounting period. If there are no transactions within the year it will not be permitted to be deducted in the statement in order to determine the actual incomes of the merchant. That is a very exacting provision. It is hardly fair, because in many cases amounts are carried from one year to the succeeding year in the hope that it may be collected before the current year ends. If that requirement were followed out it would impose a hardship in many cases. There should be some more elastic ruling in a matter of that kind.


Richard Smeaton White: The ruling applies only to had debts incurred prior to the Act coming into effect, 1st January, 1917. These debts were treated as capital at the time the Act commenced to have effect. It would, I think, be unwise to consider bad

debts that had occurred prior to the coming into effect of the Act, when such debts had been treated as capital because the Business Profits War Tax Act has regard to capital in the determination of the amount that shall be payable.


Mr.   P ED LO W@: You can easily understand that in many cases a merchant would carry an account when there was no provision to be made for a payment of that kind to the department. He would not be as careful in his accounting in a matter of that kind. When there was no object in deleting such accounts he would allow them to be carried on from year to year in the hope of eventually having them paid. He may have discovered since that that is impossible and that the accounts have to be written off. I think it is hardly fair to ask a merchant to pay income tax on an account that is actually worthless.


Richard Smeaton White: Bad debts incurred since the Act came into effect are allowed, tout in dealing with the matter of income it would seem to me that one would not be on sound ground in going back prior to the passage of the Act and making allowance for bad debts then existing which were assumed to be good. I think we can only deal with the accounting period since the beginning of the Act, making whatever adjustments may be necessary in respect of depreciation in the face value of the accounts since that time.


[Stage Direction]
Resolution agreed to.
That the allowance of two hundred dollars for each child under sixteen year of age who is dependent upon the taxpayer for support as enacted in paragraph (i>) of subsection one of section three of The Income War Tax Act, 1917 as .amended by chapter 25 of the statutes of 1918 be allowed for the purposes of the normal tax only.
['Bad debts incurred since the Act came into effect are allowed, tout in dealing with the matter of income it would seem to me that one would not be on sound ground in going back prior to the passage of the Act and making allowance for bad debts then existing which were assumed to be good. I think we can only deal with the accounting period since the beginning of the Act, making whatever adjustments may be necessary in respect of depreciation in the face value of the accounts since that time.']
Rodolphe Lemieux: It seems to me that my hon. friend should encourage the increase of population in Canada.


Samuel William Jacobs: Produce and save.


Rodolphe Lemieux: Instead of making an annual allowance of $200, my hon, friend should base his exemption in the case of children upon the well known rule adopted by all political economists. A child, according to the doctrines of political economy, is worth to the state $1,000. That is the average value of a citizen to the state, and it seems to me that the allowance provided for here does not give justice to those who are accomplishing their duty towards the state and towards, the country. I am sincere in maxing this plea. Our country will
not, in spite of all the expectations anu me hopes which I would like to share with my hon. friend, get in the years to come a large increase of populations for reasons which are very obvious. The countries of Europe have been devastated. Millions have died on the battlefield. From some allied countries we cannot, under any consideration, expect any flow of emigration. Even from the British Isles, I think, the tide of emigration towards Canada will be rather limited. I am not. referring to the enemy countries. From that source the Minister of Immigration and Colonization will not and cannot expect any population for this country. So that we will be limited, so to speak, to the continent of North America. We will encourage the coming of immigrants from the United States. They may not come in very large numbers on account of our financial situation, but many will come because we have such fine lands yet available for settlement left in the West. American settlers will be attracted to Canada only to a certain extent, and we must base all our hopes andx expectations, and they are the only legitimate ones, on the birth rate in Canada. Now I do not wish to draw any invidious comparisons between the provinces, but the comparisons are self-evident. In some provinces the people have deserted the old homestead and have drifted to the cities, and in the cities, it is noticed by statisticians, the rate of population has decreased -for what reasons I do not know, and if I did know I would not care to state. At all events, the fact exists that the birth rate in this country 'has not been as high as it should have been during the last decade. Now, what is the first duty of a government if it is not to encourage the settlement of the country out of its own population? That population must not remain stationary, and it is the duty of the State, as it is the duty of all constituted authorities, lay and civil, to encourage the increase of population, to view favourably a large birth rate. The income tax is an excellent mode of taxation. 1 have said so on many occasions before the Government adopted the policy, and I repeat it to-night. It is the best mode of taxation, but it is nevertheless taxation and it should rest upon the shoulders which can carry it the more easily. The father, or the mother, of a large family should be considered favourably by the Minister of Finance, and it should be proclaimed throughout the country that the larger the family the lighter the taxation. In the old motherland, France, the birth rate has decreased

enormously, especially since tlhe Napoleonic wars. After those glorious but deadly wars the people of France realized that the procreation of children had had until then only one effect-it had swelled the ranks of the army. In those days people thought only of war, of conquest, and as a matter of fact, I am sorry to say, the old motherland, led by Bonaparte, did not live up to the best traditions of the race as regards population. I have seen statistics on that point which are simply appalling. France faced the stern reality at the beginning of the recent war when realizing that she, at one time the great nation of the continent of Europe, had dwindled in population to a point where she was dangerously threatened by her neighbour, Germany.
There was a feeling of anxiety among all patriots in France at the beginning of the war. They had the spectacle of that nation of 70,000,000 facing their Motherland which should have had a population at least equal to that of her enemy. They realized that her birth rate had dwindled to such an extent that her population did not reach the 40,000,000 mark. So the best minds of all churches-and I may say that there are many churches in France-the various academies and the moralists of all shades, started a movement to promote the legitimate increase of population. Of course, this is a very big subject and I might dwell upon it until late this evening. But, to be brief, let me say in just two words that the question came up before the House of Representatives in France and a law was introduced embodying exactly the principle that I am now propounding. The Bill did not meet the fate it was expected to meet, but the question is still a very live one in France as to whether or not the State should not revert to the laws of Augustus and of Louis XIV and give a bounty to rthe fathers and mothers of large families-so much per child. The French income tax-I have not the law under my hand-is graduated according to the number of children, the amount payable decreasing as the number of children increases.
A gentleman who visited Canada some four or five years ago, a very distinguished writer, M. Etienne Lamy la/tely gave his whole fortune, which was quite large, to be applied in the shape of bounties to large families amongst the peasantry, and I am proud to say that he has succeeded in his patriotic appeal to the French peasantry to create a public opinion on the matter. M. Etienne Lamy in one of his writings, recalled the fact that in 1759, at the time

of the defeat of the French on the plains of Abraham, the French colony was composed, in round figures, of only 60,000 souls, and that at the last census it had reached the figures with which hon. members are familiar. He said that it was a miracle; he called it " the miracle of French colonization in New France;" and he appealed to his fellow men in France to rejuvenate themselves and to take example from French Canada.
T am only making these remarks, Mr. Chairman, to seriously call the matter to the attention of my hon. friend so that he may consider whether he should not extend the principle of tax exemption for children up to $1,000, which is the amount fixed by all economists as being the average value of a child to the State.


John Hampden Burnham: I have heard with considerable pain the doctrine laid down by the hon. gentleman who has just resumed his seat, and whose opinions I have always respected, as, indeed, I do the gentleman himself. He has enunciated clearly and absolutely a utilitarian doctrine. The old-fashioned idealism, if it is not now the subject of universal laughter and ridicule according to the speaker, has almost disappeared. That idealism meant belief in the efficacy of prayer; belief that man was in touch with a providential God, that when man appealed rightly to that God, he was sustained, that God watched over the world, and that not all the force of Germany or of the Bolsheviki could overcome one single man if he were under the protection of the Almighty. But having forgotten that old idealism, having seen it recede from a philosophy and a religion to a theory, and then into thin air, we ijnd the disposition is to trade off all the old idealism of the efficacy of prayer and the intervention of Providence for a good battalion; people, apparently, are prepared to give a bounty for flesh and blood. They revive the common utilitarianism of the negro era of the South, when the slaves who were strong of limb were led around like stallions, and population was increased in that way. This is utilitarianism. It has crept upon us like a thief in the night. We must either face it or succumb to it. It is, in the last analysis, the doctrine of materialism, the doctrine of force. If, then, we have nothing to rely upon but our good right arm, the subtlety of our intellect, our cunning, or the genius of a Foch,- if there is no longer a God that rules over us, let us know and we will put the mat-

ter in the Estimates and rely upon what we can do for ourselves!


Richard Smeaton White: In answer to my hon. friend (Mr. Lemieux) I think the principle of an allowance for each child is sound. We have recognized that principle by an effective allowance of $200. I would call the attention of the Committee, however, to the fact that under our income tax legislation there is already an exemption of $2,000 in the case of married people or of widowers or widows having dependent children. I have thought the matter over somewhat, and will consider increasing the age from sixteen to eighteen years so that the $200 allowance will be made in respect of children up to and including those of eighteen years of age. That will be an extension, and at the same time it will not seriously affect our revenue-after all, this is intended to be a revenue-producing Bill. Resolution agreed to.
4. That in lieu of the provisions of paragraph (d) of subsection one of section three of The Income War Tax Act, 1917, it be enacted that dividends received by or credited to shareholders of a corporation which is liable to taxation under the provisions of the said Act shall not be liable to normal tax in the hands of the shareholders but shall be liable to the supertax and surtax provisions of the said Act and to the surtax provisions of these resolutions. The amount of the exemption from normal tax to the shareholders shall not exceed the net amount of such dividends after the deduction of the interest or carrying charges, if any, in respect of such dividends. Provided, however,
(a)	that in determining the income no deduction shall be allowed in respect of personal and' living expenses, and in cases in which personal and living expenses form part of the profit, gain or remuneration of the taxpayer, the same shall be assessed as income for the purposes of this Act;
(b)	that deficit or losses sustained in transactions entered into for profit but not connected with the chief business, trade, profession or occupation of the taxpayer may not be deducted from income derived from the chief business, trade, profession or occupation of the taxpayer in determining hie taxable income.


Frank S. Cahill: Does paragraph (a) apply to farmers?


Richard Smeaton White: Yes, it always has so applied. When the Income Tax Bill was before the House in 1917, it was provided that the net income should be assessed, and that all incomes should be taken into account and that no deductions should be made for living expenses. The Bill went from this House to the Senate, who tried their hand by way of an amendment, which, as a matter of constitutional practice, they had no right to do. They inserted a provision which was intended to make clear
*
that there should be no exemption by reason of living expenses, but they worded it in an ambiguous manner. For example, take the house of a bank manager or other cases that will occur to the Committee. The Senate amended the Bill by putting in this provision:
Provided, however, that in determining the income, the personal and living expenses shall not 'be taken into consideration.
That language is equivocal. The Senate, no doubt, intended to make it clear that if a man got his living in addition to a certain income or had any allowance by way of a house, his net income should be determined by the addition to the amount of money he received of a fair amount in respect of the other advantage that he got. But unfortunately the wording is such as to-lend itself to another interpretation. Therefore, it has been put forward that a man who has his living expenses or an allowance by way of a house in addition to his salary should be assessed for income in respect of that advantage which he has in getting his living or in occupying his house. The department, in interpreting and administering the Act, takes the view that was taken by the House of Commons and that was undoubtedly meant by the Senate. This provision is to make it perfectly clear that, if a man gets his living expenses in addition to a money income, the two shall be taken together for the purpose of computing the income upon which he should be assessed.


John Howard Sinclair: This section provides that a shareholder of a corporation shall not he liable to normal tax provided the tax is paid by the corporation. I understand it is also provided that he shall be liable to the supertax. Is there a change in the law in this respect?


Richard Smeaton White: There is no change in this respect. My hon. friend is aware that we tax tile corporation in respect of its net income, and we have increased that to ten per cent. The dividends a man receives into his hands are not liable to assessment in respect of the normal tax. The principle of the law is not changed, although we have increased the normal tax to eight per cent in respect of incomes over $6,000. The supertax applies to dividends in the hands of shareholders, and that is a sound policy. Let me explain a little further in regard to this section, because I think that would be helpful to the Committee in considering it. The section reads in part:

The amount of the exemption from normal tax to the shareholders shall not exceed the net amount of such dividends after the deduction of the interest or carrying- charges, if any, in respect of such dividends.
Let us say that a shareholder is carrying shares with a bank, upon which shares he derives dividends to the amount of $1,000, and let us say that, to carry the stock, he has borrowed from the bank an amount which would cost him $1,000 a year by way of interest. He has no net income from that stock. But some shareholders have desired to set off against their whole income the amount of money that they pay the bank by way of interest for carrying their stock, and at the same time, to claim exemption as to the normal tax upon the whole amount of the dividends which they receive from their shares. They, as the saying is, " want it coming and going," and this is to make it clear that only the net income in the hands of the shareholders, that is to say the difference between the amount he receives from his dividends and the amount he pays out by way of interest for carrying charges, shall be taken into account in exempting him in respect of the normal tax.


John Howard Sinclair: Would it not be better, when he is allowed to debit any interest he pays during the year, if he paid his tax on his dividends and charged the interest on the other side of the account? Then be would not come under this section at all.


Richard Smeaton White: I do not agree with my hon. friend. He would take the $1,000 he paid by way of interest in carrying this istock and deduct it from the income which he receives, say, in. his calling, and in that way cut down the gross amount. The amount of income is important because of the imposition of the supertax. Under the suggestion made by my hon. friend, he would get exemption, as to normal tax upon the whole amount of the dividend, and on the other hand, he would apply the $1,000 in cutting down the amount of his income otherwise received.


Mr. NESBITT:: Is the report in. the press that 31,000 people are the only ones who paid income tax in Canada for 1917 correct? And does the minister expect to get any more income taxes for the year? Was the amount reported in the press only for 1917, or was there any amount for 1918 mixed up in it? .


Richard Smeaton White: This afternoon, I gave the committee information showing that 46,176 assessments had been made in

respect of 1917, aggregating an amount of assessments of over $11,000,000, of which 39,496 assessed parties had paid a total sum of over $9,000,000. I would point out also- and this is apt to be lost sight of-that with the Business Profits War Tax in operation there are many firms and companies which, but for the Business Profits War Tax Act, would pay on income account, because, as my hon. friend will remember, an assessable party pays whichever amount is the larger. If we did not have the Business Profits War Tax Act and were operating only under the Income Tax Act we would have received last year in income tax about $20,000,000. The amount of income tax which we received is apt to mislead by reason of the fact that so many individuals, firms and companies are assessed under the Business Profits War Tax Act for higher amounts than they would have been liable to pay under the Income Tax Act; in other words, instead of paying income tax they paid the Business Profits War Tax.


Edward Walter Nesbitt: It is reported in the press that 31,000 individuals paid income tax for 1917:	Was that the total number of individuals who paid income tax for that year?


Richard Smeaton White: That report was published some time ago. The number is greater than that. There were 46,000 assessments altogether, and I understand that 37,000 of these were individuals. It must be borne in mind that when the income tax was first brought down an exemption of $3,000 was allowed, so the tax applied only to those in the country having an income qf over $3,000.


[Stage Direction]
Section agreed to.
On section 5:
5. That it .be enacted in lieu of the provisions of subsection four of section three of The Income War Tax Act, 1917, that the share ofatax-payer in the undivided or undistributed gains and profits of a corporation shall not be deemed to be taxable income of the taxpayer unless the minister is of opinion that the accumulation of such undivided and undistributed gains and profits is made for the .purpose of evading the tax and is in excess of what is reasonably required- for the purposes of the business.
['That report was published some time ago. The number is greater than that. There were 46,000 assessments altogether, and I understand that 37,000 of these were individuals. It must be borne in mind that when the income tax was first brought down an exemption of $3,000 was allowed, so the tax applied only to those in the country having an income qf over $3,000.']
John Howard Sinclair: What change in the law does this section make?


Richard Smeaton White: Under the present law it is provided that:
For the purpose of the supertax only, the income of a taxpayer shall include the share to which he would be entitled of the undivided or undistributed gains and profits made by any syndicate, trust, association, corporation or other body, or any partnership, if such gains and profits were divided or distributed, unless

the minister is of opinion that the accumulation of such undivided and undistributed gains and profits is not made for the purpose of evading the tax, and is not in excess of what is reasonably required, for the purposes of the business.
With regard to partnerships, we find that profits are allowed to accumulate. The partners do not mind very much if the profits are left in the business. They will draw only a certain amount, and claim only to be assessable for that amount. But it is perfectly clear that if a partnership of two persons makes a net profit of $100,000 a year they should be assessed for that full amount, because they have made it. The two partners in question might say " We will leave $50,000 in the business and draw out $25,000 apiece," because the present supertax is a pretty serious thing. We are repealing that clause in the present Act and providing, with regard to corporations only, that the profits shall not be deemed to be taxable unless the minister is of opinion that the accumulation of such undivided profits is made for the purpose of evading the tax and is in excess of what is reasonably required for the purposes of the business. A corporation with a great many shareholders divides substantially all its earnings, setting aside a balance for reserve. The department will have to determine whether the amount set aside is an unreasonable amount or not. Many joint stock companies earning ten per cent net jrrofits pay out seven per cent to the shareholders, and carry three per cent to reserve or to undistributed profits, which in time may be distributed to shareholders, or may become reserve so-called. We desire to improve the legislation so as to get at the profits of those engaged in syndicate operations and partnerships, and others whom now we have great difficulty in getting at. We also want to bring it about, so far as we can, that companies shall distribute the amount winch may fairly be distributed to their shareholders. If they did not we would have to try to assess the shareholders, although that is a very difficult thing to do. It must be borne in mind as a safeguard in the case of a corporation that we are increasing the income tax upon a corporation to ten per cent of its net earnings, so that any company to-day earning $100,000 net profits will pay the Dominion Government $10,000 to start with, no matter what amount it may set aside or distribute. If it distributes $70,000 of its net earnings, then we assess the $70,000 in the hands of the shareholders in accordance with the law.


Frank S. Cahill: Suppose that this company making $100,000 net profits per year was investing $10,000 a month of its net profits in tax-exempt bonds; what taxation would it pay?
-Sir THOMAS WHITE: If the company's net profits were $100,000 they would be assessed for $100,000, no matter what they invested the money in, because they have earned that amount; but supposing that in that year they had made no distribution to their shareholders, but had carried those bonds to reserve, from which the shareholders would draw earnings later-that is, added to their capital-the income from those bonds would be exempt. But their earnings, whether they were invested in Victory Bonds or not, would be assessable.


Mr. McMASTER:: Does the minister regard the sums which a shareholder might obtain by selling his rights to shares as income or as an accretion of capital?


Richard Smeaton White: I am not sure that I follow my hon. friend. If a man owns shares and sells them, that is a realization of assets.


Andrew Ross McMaster: I do not mean that. Let us take a case which happened very recently, and which I had in mind. The Bell Telephone Company recently increased their capital stock, and every shareholder had the right to subscribe for a certain amount of the new stock. Those rights were quoted on the exchange at a few dollars per share. Would the minister regard the money which was obtained by a shareholder disposing of his rights in that way as income which could properly be assessed for income tax, or as an accretion of capital?


Richard Smeaton White: If a company distributes any part of its earnings by issuing stock, then that would be income. On the other hand, if there is a mere distribution of capital stock representing reserve, and a sale of mat, I should say off-hand that that would be a matter relating to capital, provided the reserve was there before the first of January, 1917.


Andrew Ross McMaster: I have not made myself quite clear. Let us take the case of the Bell Telephone Company. Quite recently that company increased its capital stock. It invited its shareholders to take up new stock.


Richard Smeaton White: At what rate?


Andrew Ross McMaster: At par. For every four shares which a man held he was allowed

to subscribe at par for one share of Bell Telephone. People sold their rights that were inherent in the old issue of shares to subscribe for new shares. It went first to about 5J or 5i and then to 2J and up again to 3. I would be glad to know the minister's view as to whether, when a man sold that right that would be income that would be properly chargeable with income tax or whether it would be regarded as an accretion of capital.


Richard Smeaton White: My row would be-but I would not like to commit the department to it-that that is an accretion of capital. He would not be able to sell it at a premium unless by reason of the reserve of the company which would give it a value above par. The company could issue it to him at a premium representing its real value so that he would not be able to sell it on the market at a higher figure than that. Suppose they had issued at 125 and there was no value in the rights on that. That would mean that the company had distributed part of its reserve to its shareholders. They issue stock to the shareholders at 125. Why would it be worth 125? By reason of the value of the assets or earning power of the company. That being the case it would seem to me, speaking off-hand, that that would be an accretion of capital. I do not say that positively, because it often requires a court of last resort .to determine whether receipts are assessable as income or should be treated as accretion of capital. It is difficult to answer these questions, which depend upon the interpretation of the Income Tax Act and upon decided cases. But speaking off-hand I would say it is an accretion of capital.


William Folger Nickle: If tlhe Minister of Finance is correct in his contention, an anomaly is created. Take three instances. First a stock dividend is declared and given as a stock bonus. This has been held assessable as income. That happened to myself last year, therefore I speak with authority. I also happen to be a shareholder in the Merchants Bank of Canada which issued at 150 one share of stock for every four shares held by the shareholder. But before that stock reached us it was worth 195 or thereabouts. There was an increase of 45 a share in that which entitled us to participate in the advantage of the increased dividend and in the reserve and which meant $45 profit on each four shares of stock by virtue of one new share issued. To an extent the same thing occurred in the case of the
[Mr. MoMaster.l
Bell Telephone Company. It would seem to me that in all these cases the increase in value, that is, the difference between what the stock was sold for to the shareholders and the market value of the stock when sold, should be treated as income and income tax should be paid upon it. I fail to see how a distinction may be made between a bonus of stock issued as bonus without anything being paid by the shareholder and an allotment of stock sold to the shareholder for much less than the market value of the stock. In each case the difference in value in the hands of a shareholder should be treated as income. In regard to the first case to which I directed attention, where stock was granted as a stock bonus and the income tax was collected on it, the result of the transaction was that the holdings of the shareholders were worth proportionately less than before the stock was issued, and yet it was held that being a bonus the tax had to be paid on it. I should be sorry indeed to think that the position taken by the minister was going to be regarded as a rule in relation to these stock dividends or bonuses or allotments to participations in reserve, because certainly it is a very subtle and gentle way of getting around the income tax.


Francis Ramsey Lalor: I do not agree with my hon. friend. If stock is worth $45 more in increased value the man who holds it pays an income tax upon the dividend he receives, which must be large or the stock would not be worth so much. If you assess the man for the increased value of the stock and then assess him again on the dividend he receives on the stock you would be assessing him twice, which would be unfair. If the view of the hon. member prevails, any stock which a man held that increased in value could be assessed on the increase. You must assess a man upon the dividend and revenue he gets, not upon the increasgd value.


Edward Walter Nesbitt: If you pass a law like that there will be no increased value and you will not get dividends.


Richard Smeaton White: It is a legal question which we shall be glad to look into.


Frank S. Cahill: How are the rest funds
of the banks treated, as for instance in the case of a bank declaring a dividend of say 8 per cent and putting a rest of a similar amount?


Richard Smeaton White: We assess the
banks upon their net profits whether they

distribute them to their shareholders or carry them to reserve. Where a bank distributes $600,000 to shareholders and carries $400,000 to reserve we make an assessment of 10 per cent on the whole million.


Mr.   P ED LO W@: With regard to the point raised by the hon. member for Brome (Mr. McMaster) I think the ruling of the department which is already in force is quite clear. Suppose a man speculates outside his own business and loses. He is not allowed to deduct that amount from his income or his capital. The same law ought to apply the other way around.


Richard Smeaton White: That is my own view but I do not like to commit myself to a decision involving a legal interpretation of the statute. The Commissioner of Taxation is of the opinion that there is a decision in England on the point, and that the sums in question are regarded as a return to capital.	.


Herbert Brown Ames: As I expressed acquiescence in the ordinance of silence in the Budget debate, I want to take this occasion to say a few words with respect to the income tax. Before the war we were enjoying an income of about $100,000,000. Now we are endeavouring to raise a new income, under present conditions, of about $300,000,000. We have put that additional taxation at about the amount that we are called upon to raise. In doing that we have not only strengthened our previous sources of revenue but have introduced new modes of taxation. In strengthening previous sources of revenue we naturally availed ourselves of both the customs and excise taxes. In the increase of these two taxes the amount levied fell upon all parts of the population, but when it came to the business profits war tax and the income war tax the impost bore more heavily on one class of the population than on another, because the class that was presumably able to pay was marked out as the one from which it might be expected to secure the extra amount that was required.
When the income tax was first put on we started at a fairly reasonable low rate. We started out to raise about $10,000,000. In the second year the income tax was increased so that we planned to raise $15,000,000. It is now being increased so that we plan to raise $20,000,000. We are constantly being told in the House that the income tax should be increased, especially on the incomes of the millionaires and on the wealthy men of the country. The Government is being repeatedly told that it would not be necessary to do anything else than to increase the taxes of the millionaires. The Government has already made two very material increases in the income taxes. When we compare the three years, 1917, 1918 and 1919, we find the following results:
Income Tax. Married man.
Income.	1917.	1918.	1919.$ 5,00 Of	$ 80	$ 100	$ 120'10,000	300	329	59015,000	660	887	1,200 est215,000	1,6:20	2,042	2,850 est50,000'	4,980	5,782	9,1>90100,000	14,310	17,607	. 31,190You see	that the	original income tax,	which was	moderate	and which	was more
or less experimental, was increased, first in 1918, and is again now being very materially increased. I do not think, judging from the debate that I have listened to in this House, that hon. members realize to what a very considerable extent the income tax is being increased by the legislation now before the House. I think we should all realize that a very heavy burden has been placed by way of income tax. Of course we are not being taxed as they are in England. Canada does not begin to possess the amount of liquid wealth they have in England. We do not begin to have the number of people who can pay heavy income taxes that they have over there, where they have a country that has been accumulating for a thousand years. We have comparatively few wealthy men in this country, and if we tax these out of existence we shall have none left. Our income tax differs very little from the American income tax. It is only a trifle lower.


Michael Clark: Has my hon. friend any comparative figures as to that?


Herbert Brown Ames: Yes, I have the figures of 1918, if you wish them. They are as follows:
Income Tax.
Canadian,	American
1919	1918
$ 5,000	$ 120	$ 18010.000	
5i90 . .	. .	83016.000	
1,370	
1,85024.000	
2,6'90	
3,49030.000	
3,890	
4,93050.000	
9,190'	11,030100,000	
31,190	
35,030
Ours is slightly but not very materially lower.


Francis Ramsey Lalor: Is that the present American income tax?


Herbert Brown Ames: That is the American income tax for the year 1918. The

Americans have since decreased their income tax. It was higher than ours until we made this last increase. I want to point out further that some of the provinces have income taxes and very severe ones. Do you realize that the province of British Columbia is taking more from its people by way of income tax than has the Federal Government 'by its income tax. The Provincial Finance Minister estimates in his Budget speech, delivered on the 4th April, 1918, that the provincial income tax in British Columbia should yield $2,215,000. That is more than we have taken out of British Columbia in any year so far by our income tax. For the man living in British Columbia and in some of the other sections of Canada there is a double income tax. If you add the two together it makes a very material burden.
I have listened many times to members who have been getting up and saying: "Tax the millionnaire; if you will only tax the milliionnaires who are rolling in -wealth you will not need to do anything else." That may sound very well when it is given to a popular audience on the street comer, but when we are seriously considering how to raise revenue we have to look such statements fairly in the face. I moved for a return which was brought down on the 9th June, 1919. That return gave information up to April 30 of the operation of the first Income War Tax Act. It set forth that there were 31,310 people who had paid income tax up to April 30, and that of those 31,310 people three per cent only had paid on incomes of more than $20,000. Ninety-seven per cent had paid on incomes below $20,000. I took the precaution of asking that they be put into categories. I think we may reasonably believe that with these categories we have a fair inventory of the rich men of Canada because the income tax gatherers had been at work for a year and being after the largest sum of money they could get they would regard as a shining mark every man with a considerable income and they would naturally first collect all that it was possible for them to get from that source. I think we may safely conclude that out of the 31,310 this three per cent represents pretty nearly all the men who have big incomes in Canada.
Let us see then how that figures out. Of men with incomes exceeding $100 000, according ito this return, there are twenty-four in Canada, That is one out of every 1,300 of the income tax payers.

There are in Canada 125 men who pay incomes on amounts between $50,000 and $100,000, or one in 250 of the total number of income tax payers. There are 241 who pay on from $30,000 to $50,000, or one in 130 of the total number of income tax payers. There are 461 who pay incomes on from $20,000 to $30,000, or one in 67. All told, you will see, there is just about 3 per cent of the total number of people who have paid up to the 30th of April, who enjoy what may be regarded as large incomes. But you will say: " Oh, but get after the millionaire. Make him disgorge. Use him as the means of meeting all your war obligations." Very well, supposing we do, let us see how we will come out. Let us get after the millionaire. We will strip that terrible millionaire down to a point where he will enjoy an income not exceeding $20,000. A man does not need to have $1,000,000 of invested capital to have an income of $20,000 you all know that a man may have an income of $20,000 with perhaps a capital of $200,000 of $250,000 which would be a very reasonable return. So we are getting down from the millionaire to the semimillionaire and the quarter-millionaire. Let us see how we will fare if we get after all of these. Let us hang them up, strip them of every dollar they have, and see how far it will go to meet the needs of the State. There are twenty-four of them whose incomes exceed $100,000. Those twenty-four pay $994,552. You will see that averages out at $41,500 each. Now if you take the old rates that were in force under the first .income wrar tax you will find that a man to be assessed $41,500 income tax would need to have an income of $190,000. Therefore, the average income of these twenty-four is $190,000. All right, hang up the twenty-four men, strip them of every dollar they have got, and how much do you get. Why you get twenty-four times $190,000, or only $4,560,000. Very well put that to one side. 'Let the twenty-four millionaires get along as best they may without a penny left of income.
Now let us get after the second category: 125 men under the first war income tax up to the 30th of April, 1918, paid between $50,000 to $100,000. They paid altogether $881,153, or an average of $7,050 apiece. That sum will pay income tax on $55,000 of revenue at the rates that were in vogue at that time which of course, were very much lower than the rates in force to-day. Now let us take those 125 men. Each enjoys an income on the average of $55,000. Multiply 125 by 55,000 and you have $6,875, 000. That is their whole combined income,

every penny of it. So strip them all of it and put it into the fund you are trying to meet your indebtedness with.
Now let us take the third category. Two hundred and forty-one persons have an income between $30,000 and $50,000. They have paid a total to the treasury up to 30th April, 1918, in the way of income tax of $821,659, or an average of $3,400 each. That amount is the tax that would be collected under the first Income Tax Act upon men having an income of $39,000, therefore, $39,000 is the average income of those 241 persons. How much would the whole 241 receive as an income? They receive $9,400,000. Very well, take it all and put. it towards meeting your, war indebtedness..
Now we come to the fourth category, the persons who have an income of from $20,000 to $30,000-461 persons. They are paying $700,216, or an average of $1,500 apiece. Now $1,500 is the tax a man would pay, under the first Income Tax Act, on $24,000 income. Very well, the average income for these 461 persons is $24,000 a year. Let us take every cent and the total amount is $11,064,000. That takes in the whole of them.
Now then to recapitulate. We have twenty-four millionaires with an income of $190,000 apiece; 125 semi-millionaires with an income of $55,000 each; 241 one-third millionaires with an income of $39,000 each; and 461 quarter-millionaires with an income of $24, 000 each. Add all these amounts together and you get 851 so-ctalled rich men whose total income amounts to $31,899,000.. But under your present taxation you are going to take from these people $4,750,000. Consequently if instead of assessing at usual rates your 851 millionaires, semi-millionaires and demi-semi millionnaires you would strip each one of his total income you are going to get $27,000,000 -more than you otherwise would. That is not going to go very far towards meeting $300,000,000 required. Of course, this is ridiculous, and we all admit it. No government outside of Russia, would undertake to strip a man of every dollar he receives of income over $20,000. Suppose you leave them with $20,000 each and deduct $17,000,000 income from their combined total income and you would get just $10,000,000 if you took every dollar that every man in Canada who made return, has by way of income in excess of $20,000 a year. 1 only need to lay these figures before the House in order to show you how ridiculous is the argument that we hear so constantly put up: "The only thing we have to do, is to make the income tax
press more heavily on the millionaire." Of course the state could take every penny a man has over $20,000 income. If you do that it will not increase your total revenue to an extent that will make any appreciable difference in the immense total that you have to raise.
Now let us take another phase of the subject for a moment before I sit down- and I do not want to speak very long tonight. Nobody likes to pay taxes. We city men do not like to pay taxes; and the farmer has shown that he does not enjoy this any better than we do. In the legislation we have had since the beginning of the war the farmer has not had much to complain of; for whenever a new tax is put on he has not been called to pay it to any considerable extent. When we come to put on a business profits tax-yes a business profits tax-oh, what care we take to put in a clause that the business of farming and live stock raising shall pay no business tax. Yet there are ranchers in the West who have been reported to have an income of $100,000 a year, and there are some grain growers that make almost as much. I think I can point to one in Alberta who made that much in one year.


Mr. J. F. REID:: Would the hon. gentleman give us the average?


Herbert Brown Ames: I cannot give the hon. gentleman the average. I would if I could because I have nothing to hide. Now we will .take up the matter of the income tax paid by the farmers. I had the curiosity to ask a question as to how many farmers paid income taxes and my hon. friend from Maple Creek (Mr. Maharg) who spoke last evening, and who is the President of the Grain Growers' Association I think, attributed to me sinister motives. I did not have in my mind any intention of placing any section of the country in unfavourable contrast with any other section; I simply wanted to learn how much the farmers paid In income tax. The farmers are 54 per cent of our population. I think we all admit they enjoy a very considerable degree of prosperity at the present time and therefore we hoped they would pay some income tax. Out of the 31,130 income tax payers, I find in that first return there were 3,623 farmers. In other words 14 per cent of the total payers of income tax were farmers, and 86 per cent consisted of the rest of us. I find that the farmers paid 3i per cent of the total sum collected while the rest of us paid 96J per cent.


Mr. BOYCE:: Do you mean that the farmers are practising fraud ?


Herbert Brown Ames: No, Sir, I do not. I mean that nobody enjoys taxation, but I would point out that the farmers are enthusiastic in the support they give to a tax on business, to a tax on income, and to these other taxes which they themselves pay in a very small measure, indeed. That is only natural. But "the worm will turn,"' and some of us who have to pay these taxes feel that it is desirable that the real facts should be known.


George Boyce: You will find no farmers getting big contracts for boots and making millions of dollars of profit.


Herbert Brown Ames: I do not know that anything is to be gained by being personal. I was trying to deal with a general matter.


William Cameron Edwards: Just while you are on that point, you stated that the farmers paid three and-a-half per cent


Herbert Brown Ames: 'I stated that out of the total amount that had been raised under the first income tax up to the 30th of April, the farmers had paid three and two-fifths per cent, while the rest of the population of Canada had paid ninety-six and three-fifths per cent.


William Cameron Edwards: The information I would like placed beside that, if you have it available, is: What proportion of the total income collected in the United States, was paid by the farmers?


Herbert Brown Ames: I cannot give you that.


William Cameron Edwards: I think the information is in the hands of the minister, or of Mr. Breadner. I would like that put on record.


Herbert Brown Ames: I am afraid I cannot give you the figures so far as the United States is concerned. Our own figures are bad enough, and I give them for what they are worth. We are all willing to do our share in meeting taxation, but when it comes to making sacrifices, I contend that one element of our community should not be constantly clamouring for relief, but that we should all bear our due share of taxation and not grumble over it. We city men are perfectly willing to shoulder our share. There is no section of the community that suffers more to-day under taxation than the business section under the excess profits tax, which is much heavier in Canada than it is in the United States, and which we hoped would be discontinued

this year. Was there any murmuring when we found it was to be continued ? No, Sir. If necessary the business community
will go on paying, it for five full yearsalthough Parliament is very careful to see to it that no farmer or stock raiser shall pay a business tax. We are adding to the weight of income tax year after year, the Americans have found it expedient lately to reduce theirs. The American scale I mentioned tonight, J am now informed by Air. Breadner, has been reduced so that it is now the same as ours. There, again, the farmer does not pay the income tax as a rule; it is the other classes of the community. We are paying, but we are not grumbling. We only ask the other people that they do not make excessive and continuous demands for relief.


William Cameron Edwards: I would like permission to place on the record along with the very interesting figures the hon. member (Sir Herbert Ames) has given, this information, that the American farmers paid 1| per cent of the total amount collected for income tax.


Herbert Brown Ames: Undoubtedly
there is the same enthusiasm for income tax among the farmers in the United States that our farmers have. I listened with a great deal of interest to what the ex-Minister of Agriculture (Mr. Crerar) said about the method of raising taxation. I know nothing at all about the single tax, or the tax on land, but I can imagine that if the tax was made on farm land generally throughout the whole Dominion it would no't meet with very great approval by those who have to pay it. But I do know something about succession duties and income tax. I have already pointed out that one province at least to-day is collecting by way of income tax from its own citizens as much as we are collecting in that province, and a resident in British Columbia when the two Governments get through with him, and perhaps municipal governments as well, has mighty little income left. As far as the succession duty is concerned, that is a line of taxation that has been worked to the limit in many of our provinces. I know the figures for my own province. We have had the succession tax there for many years, and we have collected from $1,500,000 to nearly $5,000,000 in one year, the duties being very heavy. If you are going to levy a federal succession tax as well, you are going to make exceedingly heavy taxation, and you will incur the enmity of the provincial treasurers, who feel that that money should be used for their own purposes. In Ontario that is the tax

the universities depend upon, and they would resent very much any attempt to cripple them in that respect.
There are two fields of taxation then: Income tax, which has been already exploited to the limit; and succession duties, which really belong to the provinces and are thoroughly worked by them, and therefore should not be considered as a possible means of additional federal revenue, notwithstanding the opinion of the ex-Minister of Agriculture. Whether any money can be raised from a tax on land I do not know; I leave that to the western gentlemen to take up. But I say we none of us enjoy paying taxes. Taxation, to be fair, should be levied on all classes of the community as nearly as possible in equal ratio. There are a certain number of taxes being levied which do not hit certain classes. Those who are paying those taxes do not grumble, but they do think it is scarcely fair to load such taxation on one section when other sections which do not pay those taxes are constantly asking for consideration which is not awarded to the section which is already bearing its full share.


Francis Ramsey Lalor: We hear a good deal of discussion about farmers not paying taxes. Although not a farmer, I represent a farming community, and I just want to give my view on that class of people in the county which I represent. The county of Haldi-mand is a. large and successful farming county. Tire farmers are prosperous-we will admit that they have done well during the war; prices are good. But I have thought it over carefully, and I do not know five farmers in the county who have an income of $5,000. It is all right to look over the list of income tax payers and say that not enough farmers are paying the tax, but it must be acknowledged that farmers with incomes of $5,000 to $10,000 are scarce in Canada, and in the county of Haldimand I cannot think of any man with an income of over $10,000, and we are a pretty good county in the Niagara district. Farmers have not large incomes, but they are doing well. A farmer thinks he is doing well in the province of Ontario if he is making $1,000 a year over and above his living expenses. When you search for farmers with incomes of from $3,000 to $5,000 you do not find them in the province of Ontario, or, if you do, they are very exceptional indeed. I think a lot of stress is laid on our farmers not paying income tax that is altogether unwarranted when you consider that they have not large enough incomes to bring them under the income tax law. In the
western country they may have a class of farmers with large incomes, but in Ontario we have not got them. The hon. member for St. Antoine is generally correct in his figures, but I think he is mistaken about the income tax in the United States. He is figuring his income tax a year too early.
The latest income tax in the United States is almost absolutely identical, dollar for dollar, with the present income tax now proposed. So the figures my hon. friend has presented do not give the American income tax correctly as compared with ours. Ours are just as large as theirs; I have compared them, and they are identical except that in respect of some of the very large incomes there may be some slight differences. I do not believe the farmers have incomes sufficient to make them liable to income tax as some of us in other lines of business think they have.


Mr. SEXSMITH:: The hon. member for St. Antoine (Sir Herbert Ames) seems almost to lay the charge at the farmers' doors that they have incomes that would come within the limit of the law, and that they are shirking the tax.


Herbert Brown Ames: Please, may I interrupt the hon. member to this extent: If in anything that I said I should be interpreted as saying there was any intention to avoid legitimate taxation on the part of the farmer I want it to be understood that that is taken back. I simply say that the figures show that they are not paying the tax; they are probably not being asked to pay it.


John Albert Sexsmith: They are asked to pay it if they have the income. In my opinion, outside probably of a few big grain growers and an occasional farmer between the Atlantic and the Pacific, very few farmers come within the limit of the income tax law. The agricultural statistics of 1917 show that the total capital invested in farm properties, land, buildings, machinery and stock, is in round figures $5,200,000,000. The same year, on a high scale of prices for wheat, flour, butter, cheese and all other farm products, the earnings, as estimated by the statistical branch of the Department of Agriculture, amounted to $1,600,000,000 in round figures. Therefore, the gross earnings of the farmers in the Dominion of Canada in 1917, with all. the high prices, amounted to only 31-1 per cent of the capital invested. Will any one tell me that the farmers on an average were, in 1917, making 6 per cent on the capital invested? Because, if he does, he does not know what he is speaking about. There is not- in the Do-

minion of Canada to-day a better class of men than our farmers, and there is no class more willing to pay their taxes'. While the farmers do not come under this income tax, they are paying taxes all the time in other ways just as the rest of the community, and they are willing to do so. It is unfair to insinuate that the farmers of this country are not willing to pay their taxes. The very argument that the hon. member for St. Antoine has set forth here is the best argument under Heaven why our farmers -are leaving the country and why the young men will not stay on the farms. Why do they not stay there? I have discussed the matter with people throughout the country and I find the young farmers go to school and they absolutely refuse to go back to the farm because they have to work from twelve to fifteen hours a day. And what for? Not for an income of $2,000 a year, but, as the farmers have done for the last half century, to feed the people of the urban centres for less than it actually costs to produce the food at an average wage of $2 a day. There were no complaints from the city people when they got butter at fourteen, fifteen, or sixteen cents a pound, but there is a serious complaint when the farmer can get enough to break even, let alone make a dollar. I wanted to say a few things last night, but at the late hour I would not impose myself upon the House. If you take the best one hundred acres in the experimental farm at Ottawa, or the best one hundred and fifty acres in the experimental farm -at Guelph, and run that on a mixed farming basis, producing butter and cheese and other farm produce at the average wages men are asking from the manufacturers-still more, at the minimum wage that Ford is giving his men-you cannot produce butter at $1 a pound and make a profit. I hope the people of this country will not think that the farming community are trying to shirk their duty. When I went through my riding in 1917, when the cry went out for more production, I saw old men with hair like the snow of winter out between the plough handles, and when- their work was finished, their limbs were trembling. Were they there to make a dollar? No, they were there to try to help out in the war.


George Boyce: I heard an hon. member saying that he was not a farmer, but that he knows a good deal about them. I am a farmer and- I know :a good deal about farmers, and they are not making the for-

tunes that are attributed to them. Since I came into this House, I have found that when any hon. member ran short of a subject and wanted to get one, he started to say hard things about the farmers. I want to tell those horn, gentlemen that, as long as I remain in this House, let that be long or short, I will, as far as lies in my power, put a stop to this habit of saying harsh things about the farmers. The farmers contributed both meal and money when they were needed, and they will be only too glad and proud, if need be, to do the same again. My hon. friend (Sir Herbert Ames) made some insinuations that we were not paying our share. Let me tell him that t-o make an income of $2,000 off a farm comprising 100 or 150 acres is pretty hard to do. He seems to think not, and he seems to have produced those figures to make a kind of assault, if I may say so, upon the farmers. Before the hon. gentleman begins to make any insinuations against the farmers, I would advise him to take some of the surplus money he has and visit them and make close inquiry, and if any farmers are making 'above the minimum, we are the men who will pay our share just as readily as my hon. friend or any other capitalist or millionaire raised in the Dominion of Canada. This discussion will probably do him good and do me good because I have sat silent here for quite a while. I thought I would have been able to say something upon the tariff, and I may be able to say a word or two later on. This discussion will only make us better friends, and I trust when he makes that visit, he will call upon myself and I will drive him around. I am not like my hon. friend here making a poor mouth-[DOT]


Georges Henri Boivin: Order. I am sorry to have to interrupt the hon. gentleman. He is not to blame. The fault is that of the Chairman in allowing a miniature Budget speech in Committee. That started the discussion. It is not relevant to the clause under consideration and I cannot allow it to proceed further except by unanimous consent.


Some hon. MEMBERS:: Carried.


George Boyce: I am not a law breaker although I am a farmer, and I obey your ruling, Sir, gladly. I do not, however, want to sit down as a criminal or a law breaker, but as one of the independent farmers of the Dominion of Canada, and I may say, of the county of Carleton.


Herbert Brown Ames: I do not wish my farmer friends to imagine for a moment that I insinuated that there is any deliberate evasion on the part of any portion of the farming community of the payment of their just dues. I was giving certain figures, which establish certain contentions, and I want them to be accepted in the spirit in which they were given. I did not make any insinuations, and I therefore trust that my figures will be taken on their merits. I stand by them.


Frank S. Cahill: The hon. member for St. Antoine claims great credit for the people of the cities and towns for paying something like $8,000,000 or $9,000,000 in income tax. He stated that about 54 per cent of the population of Canada was rural. Now this year we paid something like $140,000,000 in customs taxes, and I think my hon. friend will give the rural population credit for paying half that amount, which would be about $70,000,000. I have also heard it stated in this House on numerous occasions that Canadian manufacturers, through the policy of protection which prevails in this country, were collecting from the consumers of this country, chiefly from the farmers, between $300,000,000 and $400,000,000 per annum. If you take 50 per cent of $300,000,000, which the farmer presumably pays, it means the farmer is paying $150,000,000 to the manufacturer, out of which the manufacturer pays about $8,000,000 or $9,000,000 in income tax. That is what it amounts to. The farrher is the man who is producing. He supplies the money to the manufacturer to pay his income tax. He pays taxes on all his farm implements, and I think it is very unfair to attack him for not paying more income tax, when as a matter of fact he is paying all of the taxes, not only to the Government, but to the manufacturer and the city man as well.


William Folger Nickle: varied its income tax, it lowered the amount and I think the income tax in Canada this year approximates, and probably equals, the income tax levied in the United States.
There is another point to which I should like to direct the attention of the House and particularly of the Minister of Finance. On two previous occasions I have discussed the matter here without very great success, although the Acting Minister of Finance last year held out the hope that this year my contention would have weight and might be crystallized into legislation. What 1 have urged, and what I am urging now, is this: That in the case of married people the extra' exemption be not given to both the husband and the wife. Under the resolutions brought down, an unmarried person is entitled to exemption up to $1,000, and a married person up to $2,000. Now the fundamental of the distinction would appear to be that a married person, having the responsibility of a family on his shoulders-I use the masculine, because as a rule, the responsibility for the household is on the man of the House-an additional $1,000 exemption should be given before any income tax is collected. But the way the resolution is drawn, and as the law has always been in Canada, if a woman also has an income she is entitled to the same exemption as a married woman as her husband is entitled to as a married man. Now why should a man and a woman, because they are married, be entitled to an exemption of $3,950, whereas a brother and sister would only be entitled to an exemption of $1,950 ? I think that is one reason why our income tax has not brought into the coffers of' the country just as much as we expected it would, because the great majority of incomes are small incomes, and when you start off with an exemption for a married couplfi of approximately $4,000, it necessarily follows that the great majority of the families of the country escape. It has always seemed to me it was but fair that only one exemption should be given to man and wife, and that the aggregate income of the two should be taxable thereafter. I think it should be taxable for this reason: There is no class in the world that can more easily escape income taxation, if they desire to do so, than a man and wife who are not prepared to accept the legislation in the spirit in which it was enacted.
For instance, if a man has an income of $3,809 and he desires to escape, or have his family escape taxation altogether, it is the simplest thing in the world for him to trans-

fer half of his stocks into his wife's name. All he need do to make that transfer is to send one-half of the stock certificates to the headquarters of the company or the trust company that looks after transfers for the company and have the transfer made and the stock issued in his wife's name. If he desires to protect himself from any possibility of her keeping the stock and not being willing to return it to him later on, he can insist that she endorse the certificate in blank back to him, and all that he has to do is to keep it in his strong box and when the time comes he can use the certificate because it has been endorsed in blank. The income on the stock will be paid to the wife because the record of the company shows the stock in her name. But while the stock is in her name the actual ownership of it is in the husband. I do not say that much of this is done, I do not know of any case in which it has been done, but I think we should endeavour to frame our legislation so as to avoid subleties of the kind to which I have drawn attention, and to provide that married people should not be afforded an exemption to which they are not entitled.


[Stage Direction]
Resolution agreed to.
On section 12:
[u'Before this section is\npassed I should like to say one or two things in reference to the figures of the hon. member for St. Antoine. I am inclined to think that the income tax returns in the future will be a great deal better from the point of view of the country than the figures quoted by the hon. member might lead the House to believe. The figures he gave were figures up to the 30th day of April, 1919, under the Income War Tax Act of 1917. I would assume from the return which he has handed me that those figures were the return for incomes for the year 1917, that is, the fiscal year ending on the 31st of December of that year. That\nis a most unfortunate year to choose for the purpose of comparison, to indicate what will likely be collected from incomes in Canada in future. For this reason: Those of you who were privileged to file statements and were called upon to pay income tax for that year, will remember that- the taxes were levied-if my memory serves me right, and if not, Mr. Breadner will correct me-on incomes earned and collected during the year 1917. In other words, if the dividend on a stock or the coupon of a bond were payable January 2, 1917, the amount of money paid in respect of that dividend or coupon was not assessable for income tax because the money from which that return was made was earned in the year 1916. The returns for the year 1917 in reference to income tax only show the incomes that were taxed in respect of moneys, putting it generically, paid and earned in the year 1917. Any payments made on stock or bonds in respect of dividends or interest which was earned in the year 1916 paid no income tax for that year. Take, for instance, Canadian Pacific Railway. Dividends on that stock, I believe, are paid on January 2, and quarterly thereafter. Numerous other stocks pay on the same day, many of them in February, some in March or April, and so on throughout the year. Now in respect of all these stocks, and bonds, unless my memory fails me absolutely, an allowance was made in respect of the amount that was earned in 1916, although the money was paid to the person receiving it during the year 1917. My inclination would be to assume roughly that the year 1917, the return for which the hon. member for St. Antoine has quoted, would probably not show more than from 50 to 66\xa7 per cent of the incomes in Canada upon which income tax might be hereafter collected. My hon. friend remarks that we get -all the big ones. I do not think we get all the big ones. The big ones are the very ones who would escape. Their dividends are largely from debentures and stocks, and they were the class of people who could show beyond possibility of contradiction that their incomes was not earned in 1917-although paid in that year-but in 1916. I make that explanation because I do not want it to go out to the country that we are not likely to get from the income tax a greater amount than the hon. member for St. Antoine appeared to show by his return.\nThere is one other point. I have not the figures before me, nor the legislation, but I am credibly informed, and my recollection is that the United States last year', "varied its income tax, it lowered the amount and I think the income tax in Canada this year approximates, and probably equals, the income tax levied in the United States.\nThere is another point to which I should like to direct the attention of the House and particularly of the Minister of Finance. On two previous occasions I have discussed the matter here without very great success, although the Acting Minister of Finance last year held out the hope that this year my contention would have weight and might be crystallized into legislation. What 1 have urged, and what I am urging now, is this: That in the case of married people the extra' exemption be not given to both the husband and the wife. Under the resolutions brought down, an unmarried person is entitled to exemption up to $1,000, and a married person up to $2,000. Now the fundamental of the distinction would appear to be that a married person, having the responsibility of a family on his shoulders-I use the masculine, because as a rule, the responsibility for the household is on the man of the House-an additional $1,000 exemption should be given before any income tax is collected. But the way the resolution is drawn, and as the law has always been in Canada, if a woman also has an income she is entitled to the same exemption as a married woman as her husband is entitled to as a married man. Now why should a man and a woman, because they are married, be entitled to an exemption of $3,950, whereas a brother and sister would only be entitled to an exemption of $1,950 ? I think that is one reason why our income tax has not brought into the coffers of' the country just as much as we expected it would, because the great majority of incomes are small incomes, and when you start off with an exemption for a married couplfi of approximately $4,000, it necessarily follows that the great majority of the families of the country escape. It has always seemed to me it was but fair that only one exemption should be given to man and wife, and that the aggregate income of the two should be taxable thereafter. I think it should be taxable for this reason: There is no class in the world that can more easily escape income taxation, if they desire to do so, than a man and wife who are not prepared to accept the legislation in the spirit in which it was enacted.\nFor instance, if a man has an income of $3,809 and he desires to escape, or have his family escape taxation altogether, it is the simplest thing in the world for him to trans-\n\nfer half of his stocks into his wife's name. All he need do to make that transfer is to send one-half of the stock certificates to the headquarters of the company or the trust company that looks after transfers for the company and have the transfer made and the stock issued in his wife's name. If he desires to protect himself from any possibility of her keeping the stock and not being willing to return it to him later on, he can insist that she endorse the certificate in blank back to him, and all that he has to do is to keep it in his strong box and when the time comes he can use the certificate because it has been endorsed in blank. The income on the stock will be paid to the wife because the record of the company shows the stock in her name. But while the stock is in her name the actual ownership of it is in the husband. I do not say that much of this is done, I do not know of any case in which it has been done, but I think we should endeavour to frame our legislation so as to avoid subleties of the kind to which I have drawn attention, and to provide that married people should not be afforded an exemption to which they are not entitled."]
Richard Smeaton White: I move that this section be struck out, as it is not necessary.


[Stage Direction]
Motion agreed to.
On section 13:
13. That every person required to make a return of his income under subsection one of section seven of The Income War Tax Act, 1917, who fails to make a return within the time limited therefor shall be subject to a penalty of twenty-five per centum of amount of the tax payable, and every other person who is required to make a return under the provisions of the said section who fails to do so within the time limited therefor, will be subject to a penalty of ten dollars for each day during which the default continues, and all such penalties shall be assessed and colleoted from the person liable to make the return in the same manner in which taxes are assessed and collected. Provided that the minister may on application extend the time for making a return in such circumstances as he may approve.
['I move that this section be struck out, as it is not necessary.']
John Howard Sinclair: Has the minister any power to enforce penalties under this section?


Richard Smeaton White: The minister has no power. Under existing legislation the only thing the minister can do in the event of a party who is assessable failing to make a return is to summon him before the magistrate. I need not enlarge upon the difficulty

of administering the tax. After giving the matter careful consideration we determined upon the imposition of penalties. I am greatly impressed with the necessity of efficiently administering this income tax, and we must have power to compel the making of returns.


John Howard Sinclair: Whose duty is it now to institute prosecutions against those who fail to make returns?


Richard Smeaton White: The department.


[Stage Direction]
Resolution agreed to.
On section 14:
14. That the date of assessment fixed by subsection one of section ten be changed from the thirtieth day of April to the thirty-first day of October, and in default of payment within one month from the date of the mailing of the assessment notice, a penalty of five per centum of the amount of such tax shall be added thereto, and thereafter a further penalty of one per centum per month shall be added for each additional month or portion thereof during which the said tax and penalty remain unpaid.
['The department.']
John Howard Sinclair: What is the reason of the change?


Richard Smeaton White: It is quite impossible to get in returns by April 30. We are getting in returns now of over a year ago. It is necessary to extend the time to October 31. Although the legislation of to-day calls for a reply by the 28th of February, the returns do not come in and you have to extend the time, we are providing to make assessment may be made up to October 31.


William Foster Cockshutt: Is it intended that
this penalty shall be enacted in the case of delay for which the party assessed is not responsible but winch is attributable to the department? Frequently matters are not absolutely clear as to what the amount of taxation should be in respect of some claims, and in the result there is a delay on the part of the department in informing the assessed person how much his tax is. If the delay is due to no fault of the man who is assessed is it intended to exact a penalty from him?


Richard Smeaton White: The penalties are intended to effect the making of returns and the payment of the tax. Governments are always very lenient in the exaction of penalties and in a case such as that suggested by the hon. member, if the party assessed were not responsible for the delay, one could not conceive of the penalty being fairly exacted.


Andrew Ross McMaster: May I make one suggestion at this time which I made in my
address on the Budget? The Government could receive a considerable portion of the tax long before it does by allowing people, when they make out their returns, to assess themselves and send in their cheques, subject, of course, to correction afterwards either by way of refund or the payment of any amount payable.
It has come under my observation that people have been quite ready and willing to pay their assessment under the income tax and the Government might have got very substantial sums a few months before they actually touched the money. Is there any practical objection to that?


Richard Smeaton White: I see no practical objection to it. I think it is a very valuable suggestion. The Commissioner of Taxation tells me that as a matter of fact he is quite willing to do that. If a party in making his return sends his cheque along he will be credited with the amount. If it is necessary, upon examining the return, to add to it the party can be billed for the additional amount. In that way the money can be got in more rapidly.


Mr. ARGUE:: Last year, in March, I sent in my return, and, when I went home in June, I got a notice from the department in Regina stating that there were discrepancies in my return. I went in and fixed them up satisfactorily to the collector there. When I came down in February I got notice from the department that I had not made my return for 1917. I informed the department that I had made my return in June of that year in the office in Regina. I never heard from them afterwards.


Richard Smeaton White: That would appear to be a case in which the department had made a mistake. The commissioner states that the inspector at Regina informed the department he had not receiveu the return. It was clearly a departmental error. I am sorry.


[Stage Direction]
Resolution agreed to.
On section 16:
16. That any chartered bank of Canada shall receive for deposit without any charge for discount or commission any cheque made payable to the Receiver General of Canada in payment of tax or penalty imposed by this proposed legislation, whether drawn on the bank receiving the cheque or on any other chartered bank in Canada.
['That would appear to be a case in which the department had made a mistake. The commissioner states that the inspector at Regina informed the department he had not receiveu the return. It was clearly a departmental error. I am sorry.']
John Howard Sinclair: Does the department pay for that service?
Sir THOMAS WHiTE: The cheques are paid at par. It is a great convenience to the taxpayer.


[Stage Direction]
Resolution agreed to.
[Stage Direction]


On section 17:
17. That excepting such provisions as are applicable to income tax returns and assessments of income for the year 1919, and accounting periods ending in 1919 and subsequently, and as are applicable to income tax returns and assessments of income for the year 1918, and accounting periods ending in 1918, and subsequently, all other provisions of the proposed legislation shall, for the purpose of administration, be deemed _and construed as having force and effect as from the date on which The Income War Tax Act, 1917, came into force.
['Does the department pay for that service?\nSir THOMAS WHiTE: The cheques are paid at par. It is a great convenience to the taxpayer.']
John Howard Sinclair: What is the meaning of that?


Richard Smeaton White: That is to legalize rulings that we have made, some of which are embodied in, this legislation which we have passed to-night.


[Stage Direction]
Resolution agreed to.
Resolutions reported, read the second time and concurred in.
Sir Thomas White moved for leave to introduce Bills founded on the resolutions. Motion agreed to and Bills read the first time, as follows:
Bill No. 142, to amend The Customs Tariff, 1907.
Bill No. 143, to amend The Business Profits War Tax Act, 1916.
Bill No. 144, to amend The Income War Tax Act, 1917.

[Stage Direction]
On the motion of -Sir Robert Borden the House returned to the Order of Motions.
Sir ROBERT BORDEN (Prime Minister) moved:: That Messieurs Bristol, Bureau, Cahill, Calder, Henders, Lemieux, Mowat, Reid (Grenville), Rowell, Sinclair, and Tweedie toe appointed managers on -behalf of this House of the free conference with the Senate with respect to Bill No. 19, (Letter A of the Senate) and any amendment thereto, and that a message be sent to the Senate to acquaint their Honours therewith.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the motion of hon. -Mr. Calder Bill No. 134 respecting the Canadian Patriotic Fund was read the second time, and the House went into- Committee thereon, Mr. Boivin in the Chair.
Mr. CALDER:: I think that a brief explanation of the purposes of this Bill may be -given. It has come to the Government

from the officers of the Patriotic Fund, and as the member for St. Antoine 'Sir Herbert Ames) has been largely connected 'with that organization and its work I think a brief statement from him as to the purposes of the measure would be acceptable to the Committee. It is proposed to add one other section to the Bill as printed, viz.:
-Subsection 3 of section 1 of chapter 2 of the statutes of 191-5 is hereby repealed.
I have not had an opportunity of looking into this section and do not know exactly what the effect of it is, but I think the hon. member for St. Antoine will be able to give the necessary explanation.


Daniel Duncan McKenzie: We are anxious, of
course, to get away in view ol yesterday's prolonged sitting.


Herbert Brown Ames: Knowing the
good-will of the -House towards the Patriotic Fund and hon. members' knowledge of all its activities, I do not feel it is ne-cessary to make an extended explanation, further than this: Demobilization has taken place much more rapidly than was expected, and as a result the Canadian Patriotic Fund finds that it will cease its regular labours for the dependents of relatives of men in the service with a considerable surplus on hand. Our executive met in conference a few days ago and unanimously decided that they should ask Parliament to permit them to continue their work for the families of discharged sailors and soldiers while their funds lasted, feeling that was in conformity with the wishes of the subscribers. That is all this Bill does. First of all, it takes away the restriction that has been on us heretofore whereby we were unable to assist the dependents of soldiers after the man was discharged; it secondly provides a method by which, when the fund's moneys are exhausted it could be legally closed up and the association declared to have finished its labours-; and thirdly, the repeal of the clauses in -the amending Act which limited our operations for six months from the expiry of the war. That is all the Bill contains. I will be very glad to answer questions that any hon. gentlemen may desire to put, but I fel-t it was necessary for me to make this explanation.


Mr. BELAND:: Without any desire to
delay the business of the House in the slightest degree, I would like, and I think the committee would be interested to know wTiat is the total amount that was received or collected by the organization, and also

what amount is still at the disposal of the Patriotic Fund Cbmmittee?
'Sir HERBERT AMES: I am most happy to give these figures to the House although they will be in round numbers. The Canadian public have been extremely generous to the Patriotic Fund. We have raised altogether about $47,250,000, we have expended to date about $40,000,000, and we have at the present time in hand and collectable *-for there are some moneys yet to come in-somewhat over $7,000,000. We expect to finish our regular legitimate work by the time the troops are discharged, that is by September 1, with about $6,000,000 in the treasury which will enable us for some time to do supplementary work for the dependents of soldiers. The Pensions Board and the Department of Soldiers' Civil Reestablishment cannot meet the necessities of a number of families that are in chronic need, or families that are temporally in hard luck. We 'hope in that way to be able to alleviate suffering wherever it occurs in the families of men who have fought for us overseas.


Daniel Duncan McKenzie: Does the organization propose to continue the machinery which it now has in different parts of the country in order to carry on the remainder of the work as it has been carried on during the war?
Sir HERBERT AME-S: The machinery for the distribution of relief will Jbe continued and will in some cases have to be strengthened, because our task in dealing with post-war cases will require even more careful investigation than the work that we have been doing, 'but our machinery for the collecting of money will not Ije continued as we do not expect to ask the public for any more money.


Samuel William Jacobs: Will the hon. gentleman be good enough to tell us how these accounts are audited, whether they are audited officially by the Auditor General- or privately?


Herbert Brown Ames: The Auditor General is the auditor of the fund. The treasurer of the fund is the Finance Minister, and the head office books- are nominally kept by him, although they were actually kept by a very able member of his staff, Mr. E. L. Brittain. The Auditor General is our auditor, and he takes such steps from time to time as he sees fit to secure a proper audit at the end of each fiscal year, 30th of March. We ask, in this Bill, that before the Fund can be closed up, a comprehensive audit, satisfactory to the Governor in
237J
Council, shall take place. Then there must be published in the Canada Gazzette our intention to close up, together with a statement of this audit, before the Fund can be declared to he officially at an end. I might say that at our principle branches like Montreal and Toronto we have our own auditors; for the Montreal branch, P. S. Ross & Sons, and for the Toronto branch, Price, Waterhouse & Co. Our several large branches also have their own auditors. To our knowledge there has never been a dollar stolen or misappropriated by any official of the Fund.


William Frederic Kay: What is the present cost of distributing and managing this Fund?


Herbert Brown Ames: I might say that the operating expenses of the head oflfice-and all its* branches1-for we have had to/ have a certain amount of clerical assistance, although the great bulk of the work for the last five years has been done by volunteers -has not exceeded the amount of interest that the banks have paid us on our moneys on deposit, so that we are in position to say to-day that every dollar that has ever been contributed to the Patriotic Fund has either been paid to the soldiers' wives, to the extent of one hundred cents- on the dollar, or is in the hank, and the interest earned while the money was lying in the bank has paid all the operating expenses.


Samuel William Jacobs: Then the interest has
amounted to a very considerable sum?


Herbert Brown Ames: The interest during the last two y-ears has amounted to a considerable sum. Our expenses all told for the head office and branches ran to about $25,000 a month.
The 'CHAIRMAN: Shall the amendment carry?


Daniel Duncan McKenzie: We are taking the clause entirely on faith. I do not know what you are repealing, but I presume it is all right.


Herbert Brown Ames: I will be glad to read the clause that is being repealed. The Patriotic Fund Act was amended in the second year of the war, and in that Aet w as contained this clause:
The corporation may also during the war and for six months after the termination of the war, -assist in case of need incapacitated officers and men-
Then follows the description:
No assistance shall -he given to any person under the provisions of this subsection for a longer period than six months, or to any person who is in receipt of any gratuity, pension

or allowance paid toy His Majesty or by any foreign government in consequence of incapacity or death occurring as aforesaid.
Now that we have decided to go on doing post-war work we would like to have that limitation removed.


Samuel William Jacobs: Have these large sums of money been deposited in one bank or in various banks?


Herbert Brown Ames: In twenty banks. That has been done at the discretion of the Finance Minister. The method of distribution was this: In every part of Canada we have branches of the Fund raising money. Very often a branch secured the local banker as its treasurer. We always made it a practice that whatever bank a cheque was drawn on should be the bank in which the [DOT] money was deposited in the branch of that bank here in Ottawa.


Mr. MANION:: I had the pleasure of hearing the member for St. Antoine explain this proposition to a number of us returned soldier members, and I think in five minutes he could give the House an explanation which would be exceedingly interesting.


Samuel William Jacobs: We adjourned at half-past three this morning.


[Stage Direction]
Amendment agreed to.
Bill as amended reported and read the first and the second time.
James Alexander Calder: There is no objection to this Bill being now read a third time. I think it would be desirable to do so, because there are a good many cases that will have to be treated under this new law, and they are waiting to be dealt with just as soon as it is put through.
Bill read the third time and passed.


Robert Laird Borden: To-morrow we will take up the resolution respecting Vancouver Harbour Cbmmissioners standing in the name of the Minister of Marine and Fisheries; also Bill No. 39, to amend the Fisheries Act; Bill No. 131, for the Promotion of Technical Education; the resolution in the name of the Minister of Marine and Fisheries concerning the Canada Shipping Act. We shall also ask that public Bills and orders be taken up, and that the second reading of Bill No. 77, respecting divorce, be proceeded with.
On the motion of Sir Robert Borden the House adjourned at 10.40 p.m.

Friday, June 20, 1919.