Mr. T. L. CHURCH (Toronto East) moved:: That the petition of H. H. Gray, presented on the 4th instant, praying for the passing of an act regarding a charter for the Hamilton Light Company, together with the report of the clerk of petitions thereon, be referred to the Standing committee on standing orders for the purpose of considering the suspension of standing orders 92, 93 (3) (a) and (c) and 95 in relation thereto.


[Stage Direction]
Motion agreed to.
Mr. J. S. STEWART (Lethbridge) moved:: That the petition of the Cornwall Bridge Company presented on the 4th instant, praying for the passing of an act to extend the time for the commencement and completion of this undertaking, together with the report of the clerk of petitions thereon, be referred to the standing committee on standing orders for the purpose of considering the suspension of standing orders 92, 93 (3)	(a) and (c) and 95 in relation
thereto.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Hon, HUGH GUTHRIE (Minister of Justice) : Mr. Speaker, I beg to lay on the table the report made by tire Hon. J. B. M. Baxter, appointed a royal commissioner to inquire into certain allegations made in respect of the Royal Canadian Mounted Police.
I beg to move:
That these be printed two hundred copies in English and one hundred copies in French of the report now laid on the table made by the Hon. J. B. M. Baxter, respecting allegations concerning the Royal Canadian Mounted Police.
Mr. DUFF:: Why spend the money?


[Stage Direction]
Motion agreed to.
Questions

[Stage Direction]
Hon. C. H. CAHAN (Secretary of State) moved for leave to introduce Bill No. 85, to amend the Companies Act, 1934.
Mr. RALSTON:: Does the minister propose to explain the bill now?


Mr. CAHAN:: Mr. Speaker, as the bill includes a number of proposed amendments which have very little inter-relation I would ask leave to reserve my explanation until the second reading.
Motion agreed to and bill read the first time.



QUESTIONS

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

Mr. SEGUIN:: 1.	At what date did the government place an embargo on hay exports to the United States?
2.	At what date was the said embargo removed?
3.	Why was the said embargo placed, and why was it removed?
4.	After the removal of the embargo, were Canadian farmers relieved from the formalities to which they were subject owing to the enforcement of this measure?


Mr. WEIR (Melfort):: 1.	The export of hay from Canada was made subject to licence by order in council P.C. 1966, published in the Canada Gazette August 24, 1934.
2.	The provisions of this order in council were rescinded as from Feb. 1, 1935.
3.	It seemed evident in August, 1934, that speculators were becoming active in their efforts to contract for hay for export which might result in a serious feed shortage for the farm stock in several areas in Canada without corresponding benefit to the producers. It was believed that order in council P.C. 1966 had accomplished the purpose for which it was intended and it was considered to be no longer necessary to require licences for export hay.
4.	Yes.	t


THE KING VS. LEVESQUE
Mr. DESROCHERS:: 1.	Was the Canadian government represented in the case of the King vs. Levesque, in 19331934, before the criminal court of Quebec?
2.	If so, who were the solicitors representing the government?
3.	What emoluments or fees were paid to each of them?
IMr. Calian.J


Mr. MATTHEWS:: 1.	Yes.
2 and 3.
Lucien Moraud, K.C. $3,480	42
Antonio Langlais, K.C	6,190	60Edgar Champoux, K.C..	..	2,577	00Rudolphe De Blois, K.C...	2,708	00Paul Drouin, K.C.... 5,535	00Ross Drouin	
2,659	00


THOMAS TAYLOR
Mr. ILSLEY:: 1.	Is there a Mr. Taylor residing in the county of Pictou in the employ of the radio branch of the Department of Marine?
2.	If so, what is his full name?
3.	Where does he reside?
4.	What salary does he receive?
5.	What are his duties?


Mr. DURANLEAU:: 1.	Yes.
2.	Thomas Taylor.
3.	Springville, Nova Scotia.
4.	$15.00 per month.
5.	His duties are to see that private radio receiving sets in his district are licenced, and to investigate complaints of local electrical interference with broadcast reception.


MONEY GRANTS TO FAIRS
Mr. STEWART (Edmonton):: What money grants have been given to fairs, exhibitions and other organizations during 1934 and 1935. for (a) class A fairs,
names and amounts; (b) class B fairs, names and amounts?


Mr. WEIR (Melfort):: Grants Paid for Class "A" Fairs
1934	1935
Calgary Exhibition	$2,500	00	nilCanada's Great Eastern Exhibition	
2,500	00	nilCanadian National Exhibition. 2,500,00 nil Central Canada Exhibition.. 6,000	00*	nilEdmonton Exhibition	
2,500	00	nilNova Scotia Provincial Exhibition	$2,500	00	nilPeterborough Industrial Exhibition	
2,500	00	nil
Prince Edward Island Agric.
and Indus. Exhibition.. .. 2,500 00 nil Provincial exhibition of Manitoba	
2,500	00	nilProvincial Exhibition of Quebec	
5,500	00*	nilRegina Agricultural and Industrial Exhibition	
2,453	33	nilSaint John Exhibition	
2,500	00	nilSt. Lawrence Valley Exhibition	
1,837	20	nil
Questions
Grants Paid for Class "A" Fairs-Cone.
1934	1935
Saskatchewan Industrial Exhibition	
2,500	00	nilValleyfield Exhibition	
2.500	00	nilVancouver Exhibition	
2,500	00	nilVictoria Exhibition	
2,500	00	nilWestern Fair	
2,500	00	nilWinnipeg Industrial and Agricultural Exhibition	
2,500	00	nil
* Includes building grant.
Grants Paid for Class "B" Fairs
1934	1935
Canadian Lakehead Exhibition $1,539 75 nil
Chilliwack Agricultural Exhibition	 2,000 00 nil
Dauphin	Agricultural	Exhibition	
1,398	13	nilDufferin	Agricultural	Exhibition	
1,658	58	nilEstevan	Agricultural	Exhibition	
1.355	50	nilFredericton Exhibition.. ..	353 75	nilInterior Provincial Exhibition	2,000 00	nil
Kamloops Agricultural Fall
Fair	
631	38	nilLeamington District Agricultural Society	
2,000	00	nilLethbridge Exhibition	
1,284	75	nilLindsay Central Exhibition..	2,000 00	nilLloydminster Agricultural Exhibition	
1,827	95	nilMelfort Summer Fair	
1,538	88	nilMiramichi Agricultural Exhibition	
1,301	98	nilNorth Battleford Agricultural Exhibition	
1,355	80	nilPortage Industrial Exhibition.	1,496 48	nilPrince Albert Exhibition. ..	2.000 00	nilQuebec Regional Exhibition..	1,500 00	nilRed Deer Agricultural Fair.	1,702 00	nilRoberval Agricultural Exhibition	
1,500	00	nilSt. Hyacinthe Agricultural Exhibition	
1.500	00	nilSte. Scholastique Exhibition. $1,500	00	nilShefford County Exhibition. 1,500	00	nilStanstead County Exhibition. 1,433	50	nilVermilion Agricultural Fair..	2,000	00	nilWeyburn Exhibition	
1,288	95	nilYorkton Agricultural Exhibition	
1,693	63	nilREBATES OR DRAWBACKS OP CUSTOMS	DUTIES


Mr. STEVENS:: What is the total amount of rebates or drawbacks paid out of the consolidated revenue fund of customs duties paid on goods entering Canada during each fiscal year ending March 31, 1925, to March 31, 1935, inclusive?


Mr. MATHEWS:: 1924-	25	
$11,797,144	051925-	26	
15,560,449	901926-	27	
16,997,690	901927-	28	
14,946,141	111928-	29	
13,272,503	071929-	30	
19,572,222	881930-	31	
18,042.011	291931-	32	
9,865.173	641932-	33	
7,199.032	781933-	34	
6,849,116	101934-	35	
8,065,498	09


BANK OF CANADA
Mr. GARLAND (Bow River):: 1.	On what date did the Bank of Canada commence operations?
2.	What is the total revenue of the bank since that time?
3.	What are the respective sources of this
revenue ?
4.	What has been the total expenditure?
5.	On what basis is the recently announced 44 per cent dividend being paid?
6.	Why is this dividend being paid before the end of the year?
7.	On what capitalization iis this dividend being paid?
8.	What is the total profit to date?
9.	What commission did the bank charge in connection with any recent Government borrowings?


Mr. RHODES:: 1.	March 11, 1935.
2,	3 and 4. No information.
5.	The bank has declared a dividend of $1.26 a share payable July 2, 1935, representing a return at the rate of 4^ per cent per annum on $12.50 a share from September 21, 1934. the date of the initial payment, and on $37.50 from' January 2, 1935, the date upon which the balance of the subscription price was payable, to June 30, 1935.
6.	The statute provides that dividends may be paid half-yearly.
7.	$5,000,000. See answer to No. 5.
8.	No information.
9.	None. The Bank of Canada Act requires that the bank shall act as fiscal agent of the Government without charge.


GOLD TAKEN FROM CHARTERED BANKS
Mr. MACKENZIE (Vancouver):: 1.	Of the gold taken over from the chartered banks by the Bank of Canada, what percentage has been fixed by the government as held for external obligations?
2.	What is the total amount paid to the banks under this increased valuation?
3.	How much has been paid to each bank?


Mr. RHODES:: 1.	The order in council determining the amount is being tabled.
2.	Nil.
Questions

3.	Nil. Gold held against liabilities elsewhere than in Canada was transferred at the standard value fixed by the Currency Act, subject to the condition that any profit arising from its sale by the Bank of Canada or from any change in the monetary standard of Canada, shall belong to the chartered bank. No profit has yet accrued.
2.	If so, until what date was such a policy in force?
3.	Have the postmasters received instructions for some time not to hand the money orders to the purchaser but to give him a receipt only in lieu of the money order?
4.	If so (a) since when; (b) why; (c) to what countries does such a policy apply?


Mr. SAUVE:: 



ST. VINCENT DE PAUL PENITENTIARY-SUPPLY OP MILK


Mr. POULIOT:: 1. Since 1930, could the public, at post offices, purchase money orders on foreign countries, and were such money orders handed directly to the purchaser on payment?
1,	2, 3 and 4. Post office money orders may be purchased on most foreign countries at all accounting post offices in Canada. The procedure in regard to the issuing to the public of post office money orders on foreign countries has not been changed since 1930, with the exception of post office money orders drawn on France. In accordance with the request of the French postal administration, the procedure in regard to the issuing of post office money orders on France was changed as from the 6th May, 1935. Instructions were issued on the 4th May, 1935, to postmasters, that effective the 6th May money orders were not to be handed direct to the purchaser but only a receipt was to be given to the purchaser. The amounts of the remittances are advised to the French postal administration and that administration issues new orders to the payeees.


CUSTOMS, EXCISE AND INCOME TAX REVENUE
Mr. FONTAINE:: What revenue was accrued each year, between 1921 and 1934 inclusive, from the following sources:	(a) customs; (b) excise;
(c) income tax?
Mr. MATTHEWS;
Fiscal year 1920-	21 	
1921-	22 	
.. ,	(a) 	
8179,695,137 72 	
121.486,798 90	(b) 8115,974.022 78 110.808.977 59	(O 846,381,824 31 78,684,354 801922-23 	
133,804,924 08	144.253,669 92	59,711,538 371923-24 	
135,104.660 15	162265254 13	54204,027 991924-25 	
120239,864 60	125,573,856 25	56,248,042 821925-26 	
143,929.093 40	140,349,616 67	55,571,961 571926-27 	
158,966,368 54	154,415,171 97	47,386,309 221927-	28 	
1928-	29 	
171,872,741 76 	
200,479,339 38	151,728,045 43 148,805,787 82	56,571,047 39 59,422,323 251929-30 	
.	
199,002,252 63	130,566,117 31	69.020.726 231930-31 	
149,250,771 60	97,277,511 83	71,048,022 051931-32 	
113,997.850 99	109,586,729 39	61,254,399 801932-33 	
76,669,764 74	123.477,515 50	62,066,696 841933-34 	
72,360.469 97	145,174,727 84	61,399,171 52

Motions jor Papers


BUTTER IMPORTED FROM UNITED KINGDOM
Joseph-Théophile-Adélard Fontaine: How many pounds of butter were imported from the United Kingdom (a) in 1932; (b) 1933; (c) 1934?


Mr. HANSON (York Sunbury):: Calendar years-	Pounds
(a)	in 1932	
12,OOS(b)	in 1932	
170,464(c)	in 1934	2,238,448



CANADIAN FARM LOAN ACT

Mr. SPENCER:: As the rate of interest on new loans being made under the Farm Loan Act is to be 5 per cent, is it the intention of the farm loan board to reduce interest to this figure on loans previously made?


Mr. RHODES:: I would direct the attention of the house to the fact that this question contravenes the rules of the house in that it makes an allegation of fact. Furthermore, it also asks the farm loan board to disclose a decision before it has been reached.
Question dropped.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. BOULANGER:: 1.	What are the names, occupations and salaries of the persons employed by the government of Canada on the Welland canal?
2.	What is the country- of origin of each of the above persons?
3.	How long had those persons been residing in Canada when they entered the public service ?


Mr. MANION:: I have stated already that part of this information is not available and in connection with what is available I should like to have the question passed as an order for return.
.,	DEPARTMENT OF MARINE-DREDGES


Mr. WOODSWORTH:: 1.	(a) How many dredges were owned by the Department of Marine in 1928, 1929, 1930,
1931,	1932, 1933, 1034, and 1935; (b) what was the cost of said dredges?
2.	(a) How many scows to attend the said dredges for 'the years 1928, 1929, 1930, 1931,
1932,	1933, 1934, and 1935; (b) what was the cost, of said scows?
3.	(a) How many tug boats to attend the said:- dredges for the years 1928, 1929, 1930, 1931, 1932, 1933, 1934, and 1935; (b) what was the cost of said tug boats?
4.	What percentage of the dredging in the St. Lawrence river from Montreal to Quebec was 'given to private contractors?
5.	(a) How many companies have tendered for the said dredging; (b) specify bow many cubic yards in each section to be dredged; (c) how many cubic y-ards in each section have been dredged to date.?
6.	(a) Who makes the measurements; (b) who checks them for the Department of Marine; (c) who cheeks them for the general contractors?
7.	(a) .Have any dredges been sold to, or used by private contractors; (b) if so, what is the number?
8.	(a) Have any floating scows or rock breakers or stone lifters been supplied to contractors; (b) if so, under what condition?
9.	What was the cost to the Department of Marine of supervising the dredging done by contractors?
10.	Were any dredges or scows sold by the Department of Marine to the Quebec harbour commission?



MOTIONS FOR PAPERS . DEPARTMENT OF PUBLIC WORKS-PAYMENTS TO WORKMEN ON VARIOUS WORKS

Mr. CASGRAIN:: [DOT]
1.	The name of each workman or labourer engaged in the construction of a telegraphic-system, east of Penteeote, on the north shore of the Saint-Lawrenoe. in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4.	The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.


Mr. BENNETT:: Mr. Speaker, it is quite
obvious that this return and the succeeding 21 returns would, if given effect to, involve the expenditure of large sums of money. It would be impossible to have these returns made during the present session of parliament. Usually information of this kind is obtained from the public accounts committee of the house because the auditor general's report sets out in detail the payments that are made. This is an unusual return to be asked for as it involves considerable toil and the expenditure of large sums of money for something which may not be of much public value. I do not know whether the hon. gentleman has considered his motion from the standpoint of the amount of labour and the expenditures involved but if there is any information he would like to have, the various files could be made available, which would represent the minimum of expense and labour. Possibly he has not thought of this matter from that standpoint, if he has, well and good, if he has not, I should like him to do so.


Joseph Philippe Baby Casgrain: Mr. Speaker, with your
permission I should like to say a word or two. I do not think there would be much work involved in making these returns. I am only
Motions for Papers

asking for the list of employees and the wages paid. I have been given to understand that on many of these works only a few men have been employed and in many instances the time of construction was quite short. A few years ago, I made a motion for a return involving the production of correspondence and other records and I think the Prime Minister (Mr. Bennett) would be quite right in opposing such a motion as it would have involved considerable work. But this motion is different, it involves only the production of a simple sheet of paper giving the names of the workmen and the amounts they have received.


Richard Bedford Bennett: If the hon. member
desires to press his motion, it is the duty of the house to see that he gets the information that he seeks. I am only pointing out to him what it will involve in the way of the expenditure of public money.


[Stage Direction]
Motion agreed to.
On motion of Mr. Casgrain the following returns were also ordered:
1.	The name of each workman or labourer engaged in repairing the public building, at La Malbaie, county of Charlevoix, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4. The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in repairing and painting the public building, at Baie St-Paul. county of Charlevoix, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4. The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in dredging at the Imbeau dry dock, at Tadoussae, county of Saguenay, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4. The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in the construction of the extension .to the wharf at Baie St-Paul, county of Charlevoix, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each mam.
4. The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in the construction of protection works at Baie St-Paul, county of Charlevoix, jn 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4.	The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in the construction of the extension to the wharf at Beaupre, county of Montmorency, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4.	The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in repairing the wharf, at Cap a I'Aigle, county of Charlevoix, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4.	The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in repairing the wharf at Dolbeau (Grosse Roche), county of Charlevoix, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4.	The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in removing an obstruction in the canal, at Grandes Bergeronnes, county of Saguenay, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4.	The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer engaged in repairing the wharf at Les Escoumains, county of Saguenay, in 1934.
2.	The number of days each man worked.
3.	The total amount paid to each man.
4.	The date on which the Department of Public Works or the local foreman or superintendent of the said works paid each of the said workmen or labourers engaged in the said works.
1.	The name of each workman or labourer who worked on the repairs to the wharf at Mille Vaches, Saguenay county, in 1934.
[Mr. Casgrain.[

2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection wth such works.
1.	The name of each workman or labourer who worked in connection with the removal of stone at Petit Saguenay, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who worked on the repairs to the wharf at Petite Riviere Romaine, Saguenay county, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who worked on the extension and repairs to the wharf at Pointe-au-Pic, Charlevoix county, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who worked on the construction of the breakwater at Pointe-aux-Anglais, Saguenay county, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who worked on the repairs to the wharf at Pointe aux Outardes, Saguenay county, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
Motions for Papers
4.	Tihe date on which the Department of Public Works or the local foreman or superintendent of works paiid each such workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who worked on the repairs to the wharf at Port au Saumon, Saguenay County, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superin-tendemt of works paid each such -workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who worked on the repairs to the wharf at Sept lies, Saguenay county, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who worked on the repairs to the wharf at Ste-Anne de Beaupre, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who worked on the repairs to the wharf at St.-Ireinee, Charlevoix county, 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection with such works.
1.	The name of each workman or labourer who was employed in connection with dredging operations carried out at Sault-au-Mouiton, Saguenay county, in 1934.
2.	The number of days worked by each such workman or labourer.
3.	The total sum received by each such workman or labourer.
4.	The date on which the Department of Public Works or the local foreman or superintendent of works paid each such workman or labourer employed in connection with such works.
Motions jor Papers

Mr. BOUCHARD:: For a copy of all correspondence, documents, letters, telegrams, tenders, reports of investigation, paylists and invoices in the possession of the dominion government since 1931 in eoh-. nection with repairing the wharf at Riviere Ouelle (Pointe aux Orignaux), county of Kamouraska.


Richard Bedford Bennett: There is a reservation
which I have endeavoured to secure with respect to returns of this character. It concerns the confidential reports which are made and should not be produced until they have been embodied in some report.


[Stage Direction]
Motion agreed to.

Joseph Georges Bouchard: For a copy of all correspondence, letters, documents, telegrams, reports of investigation, paylists and invoices in the possession of the dominion government in connection with repairing or improving the wharf at Ste-Anne de la I'oeatiere, county of Kamouraska, during the calendar years 1934 and 1935.


Richard Bedford Bennett: There will be the same
reservation in connection with this motion.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Edgar Nelson Rhodes: The other day the hon. member for Proven-cher (Mr. Beaubien) submitted a question with respect to instructions, if any, which had been issued to receivers under the Farmers' Creditors Arrangement Act. I find that they have been specifically instructed not to call meetings, but they have been asked wherever possible to attend meetings held by farmers' organizations or boards of trade or municipal organizations or other public organizations of a similar character with the sole object of explaining the purposes, objects and operation of the act.


Mr. BEAUBIEN:: Have they been instructed to invite farmers to come in under the act?


Edgar Nelson Rhodes: No, unless making the
farmers aware of the nature of the act might be termed an invitation; they are not instructed to solicit.



GLOUCESTER RETURNING OFFICER

[Stage Direction]
On the orders of the day:
Charles Hazlitt Cahan: In connection with the suggestion made by

the hon. member for Gloucester (Mr. Veniot) as to the political activities of the returning officer for Gloucester, I desire to state that I am making inquiries into the facts and will reply later on.


Hon. PETER VENIOT (Gloucester):: I
based my statement upon what I saw in the press.


Charles Hazlitt Cahan: Naturally before the Secretary of State can take any definite action, he also should inquire into the matter.



REVALUATION OF GOLD RESERVES

[Stage Direction]
On the orders of the day:
Edgar Nelson Rhodes: On May 29 the hon. member for Vancouver Centre (Mr. Mackenzie) submitted to the Prime Minister a question with respect to an order in council as to the valuation of gold. I desire by leave of the house to table a copy.



DOMINION NOTES ACT

[Stage Direction]
On the orders of the day:
Hon, E. N. RHODES (Minister of Finance): Yesterday the hon. member for New Westminster (Mr. Reid) submitted a question as to whether the Dominion Notes Act had been repealed. It has. Both the Dominion Notes Act and the Finance Act were repealed and proclamation was accordingly issued in the Canada Gazette as of March 11.
Mr. MACKENZIE (Vancouver):: What was the date of the repeal?


Edgar Nelson Rhodes: The date the Bank of
Canada came into operation.



CANADIAN GRAIN BOARD

[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: Having in mind what was said by the Prime Minister some days ago and what now appears on the order paper, I assume that the house has before it notice at least of practically all the legislation which the government intends to introduce before the close of the session. I wish to say to my right hon. friend that if, with respect to one or two of these matters, we were aware of the intention of the government, I think it would be possible for us to expedite the proceedings of the house with a view to having them brought to a close at a fairly early date. There is one resolution which was placed on the order paper by the government on March 4; it has reference to the establishment of a Canadian grain board. I might say that the

Seizure of Schooner Paul T.
members on this side have refrained from questioning the government with respect to this particular resolution, appreciating the fact that there are many circumstances which will have to be very carefully considered and that the whole situation is a very delicate one. I think, however, it is advisable, that there should be, owing to its importance, a full discussion of the situation, before the house rises. I therefore ask my right hon<. friend at once if he is in a position to say whether or not the government intends to proceed with the resolution, and whether we may expect that an opportunity will be given at a fairly early date to discuss the matters related thereto.


Richard Bedford Bennett: I appreciate the terms in which the right hon. gentleman has spoken and his desire and that of his associates to expedite the business of the house. If it will be satisfactory, barring unforeseen circumstances, we will proceed with the grain board resolution on Monday next as the first order of business. I think the desire was to get through with as many of these, shall I say, more formal matters, and to proceed with this one as soon as possible. I would have proceeded with it before, but as the right hon. gentleman knows unforeseen circumstances in connection with the illness of many people have had their effect-not my own illness particularly but that of others as well. If, therefore, it is quite satisfactory, we will proceed with the resolution on Monday.


William Lyon Mackenzie King: Thank you.



CANADIAN FARM LOAN ACT

[Stage Direction]
On the orders of the day:
Mr. THOMAS REID (New Westminster):: Can the Minister of Finance tell me whether an official has been appointed for the province of British Cblumbia under the Farm Loan Act? If so, when was the appointment made and to whom was it given?


Edgar Nelson Rhodes: I should not care to rely on my memory and give an answer at the moment. I will reply to-morrow.



COOPERATIVE SOCIETIES

[Stage Direction]
On the orders of the day:
Richard Bedford Bennett: With respect to the question asked by the hon. member for Bow River (Mr. Garland) yesterday, the provisions of the Marketing Act as amended at the present session meet the recommendations of the price spreads commission.
HOUSING COMMITTEE'S REPORT On the orders of the day:


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: May we expect legislation implementing the report of the housing committee?


Richard Bedford Bennett: there is a resolution on the order paper with respect to it. The resolution will indicate the extent to which the government is prepared to go at the present session and the legislation will amplify that more fully.
GRADE CROSSINGS On the orders of the day:


Robert James Manion: The hon. member for West Middlesex (Mr. Elliott) has been asking a number of times regarding grade eliminations. I have the information he desires. It is to the effect that since the first of January, 1933>, twenty-two crossings or forty-one per cent of those eliminated were urban and thirty-two or fifty-nine per cent -were rural. In Hansard of yesterday I gave the hon. gentleman some information but unfortunately the figures were turned round by mistake. The correct division should have been seventy per cent rural and thirty per cent urban; the figures were reversed in Hansard by mistake.


Mr. ELLIOTT:: Would it be convenient to get a list of the crossings-the locations?


Robert James Manion: I will endeavour to do that.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Hon. R. C. MATTHEWS (Minister of National Revenue):: On May 28, on the orders of the day, the hon. member for Gloucester (Mr. Veniot) drew my attention to a question asked on January 17 last, relative to the seizure of the schooner "Paul T", and referred particularly to the discrepancy between the official answer to the third part of his question, as tabled in the house on January 24 and appearing on page 157 of Hansard of that day, and the answer which was handed to him by officials of the house. I was absent from the house and was not in Ottawa in the month of January when this question was answered and consequently was not in a position to discuss the matter when my hon. friend referred to it a few days ago.
Seizure of Schooner Paul T.

However, I have now made very careful inquiry and have ascertained that an answer to the hon. member's question was prepared in the department in the usual way. On being reviewed, prior to tabling in the house, it was felt that the answer to the third part of the question might not be considered quite adequate and accordingly a new answer was prepared in the form in which it appears in Hansard. The only reasonable explanation I can offer for the delivery to my hon. friend by officials of the house of the copy of the answer as originally drafted rather than as finally tabled is that in tabling the official answer a copy of the original draft must have been inadvertently attached thereto. In these circumstances I can merely express my regret for the incident and for any inconvenience it may have caused my hon. friend.


Peter John Veniot: On a question of privilege, Mr. Speaker, may I say that I am prepared to accept the explanation of the Minister of National Revenue, because I realize that at that time he was incapacitated through illness and perhaps could not give that attention to the matter which it required. But the explanation as to how the official answer, which after all is the official document, reached my hand, is not satisfactory. Under standing order 44, (2) (b) provides:
If a member does not distinguish his question by an asterisk, the minister to whom the question is addressed hands the answer to the Clerk of the House, who causes it to be printed in the official reports of the debates.
The answer sent to me through one of the pages, after it had been placed on the table, had no attachment whatever to it; it was the simple answer usually given and with the minister's name attached to it. The answer as it appears in Hansard could not have passed through the hands of the officials of this house. If it had. that would have been handed to me. It was not handed to me. The only document that passed through their hands and that was handed to me in answer to the third question contained this reply: "No specific instructions."
The question arises: How did this additional or improved answer, after the department had made the first answer and considered it not sufficiently full, reach Hansard? It is due to the house, as a protection which every member has a right to have, that any answer handed officially to any member should not be other than that which appears in Hansard. I claim as a privilege not only to me but to every hon. member and we have a right to find out how it is that that document got into Hansard in the way it did. It never, I am 
informed, passed over the tables of the house in that shape. It passed over the tables of the house only in the shape in which it was handed to me.
When that answer was handed to me, I considered it very serious, and based upon it, a few days later I made a certain charge in the house. That charge was investigated. I am not going to discuss to-day the process of that investigation; I shall do so at some future date. Had I received the answer that appeared in Hansard which pointed out that the vessel in question had been seized by the provincial government and afterwards handed over to the dominion authorities for action on the part of the preventive service or the Department of National Revenue, I would have hesitated to make the statement I made in the house. When I got the plain and straight answer that no specific instructions had been given for the destruction of the food stores, I felt justified, with the information in my possession, to make the charge I did.
Later on I am brought face to face with what appears in Hansard, an answer that never was given on the floor of the house, and it is demanded of me to prove the charge in the face of the answer that was given in the house as appearing in Hansard, when that answer, I repeat, was never given here. This is not treating an hon. member in an honest, fair and equitable way; when such a thing is allowed to take place, how can we depend upon the truthfulness of Hansard as it appears as an official record of this house? Is it possible to depend upon Hansard in the future if such tactics as those are allowed to take place in the House of Commons? Under those conditions I must protest and I must ask that further information be given to the house as to how that answer got into Hansard instead of the one that was officially given to me across the table.


Charles Hazlitt Cahan: The hon. member for Gloucester has made a suggestion which involves me as Secretary of State.


Peter John Veniot: I made no suggestion at all;
I stated the facts.


Charles Hazlitt Cahan: That is what I am dealing with.


Peter John Veniot: Well, deal with the facts.


Charles Hazlitt Cahan: That is what I am dealing with, but there is another side to those facts. The Minister of National Revenue (Mr. Matthews) was absent during a period of several weeks, and during that time the documents which he had to sirbmit to the house were sent to me to be submitted. On a cer-

Seizure of Schooner Paul T.
tain date which I have forgotten, three copies of an answer were given to me by his private secretary to lay on the table of the house. I did not send across the table any reply to the hon. member for Gloucester.


Peter John Veniot: I did not say the hon. member did.


Charles Hazlitt Cahan: I remember distinctly that three copies of the answer were included together with a binder or a pin as I handed them in. It appears that one of those copies was a first draft of an answer prepared in error which had been discarded, but what was handed in by me to the Clerk of the House was undoubtedly sent to Hansard by the clerk. The difficulty arose by reason of the fact that what was handed to the hon. member for Gloucester was a first draft which had been submitted to me some time before and which I had asked to have revised. The mistake was entirely one on my part, for which I have to take responsibility. There were no tactics concerning the matter; it was simply that I handed to the Clerk of House a copy for his records, a copy for Hansard and what I believed to be the same copy to be handed to the hon. gentleman.


Peter John Veniot: It was very conveniently given to me.


Charles Hazlitt Cahan: It was given to the hon. member as a matter of courtesy because I am not bound to hand in three copies. I am bound to lay on the table of the house one copy, but since I have acted as Secretary of State, as a matter of courtesy, I have annexed two copies to the official return, one for the member proposing the question and one copy for the convenience of Hansard.


Peter John Veniot: It has always been the practice in the house to hand in three copies.


Charles Hazlitt Cahan: That may be, but I have seen that that practice is not always followed. However I have adhered to it strictly. If any mistake was made, it was entirely inadvertent and there were no tactics indulged in. The reply which I had signed with my own signature was the one which was sent to Hansard and which was published there. I regret very much if any inadvertent mistake of mine has caused the hon. gentleman inconvenience, but if he had looked at Hansard on the following day he would have seen what the official reply was.


Peter John Veniot: I really think I ought to be allowed some latitude in this matter as I am the party who has been affected and has suffered on account of it. The Secretary of State says that I should have looked at Han-92582-211
sard on the following day to see what the official reply was. Why should I be called upon to look at Hansard when I have the official answer and have placed it upon my file? That is what I relied upon. May I say also that unrevised Hansard is not accepted in evidence as proof and, as an unrevised edition of Hansard, it is not an official document until after a certain period. I did not look at Hansard; it has not been my habit to scan Hansard every day. Even when I make a speech, I very seldom read it over in Hansard. Perhaps it would have been better for me had I adopted the practice of reading over in Hansard everything I had said or that others had said in which I was interested. By doing so I would perhaps have discovered errors that creep into the reports of things I have said in this house, inadvertently no doubt-by the reporters, which reports I should have looked at myself in order to have corrected. I repeat that I received what was given to me across the table of the house, handed to me in the usual way which has been the practice for years and years. I accepted it, as every hon. member would have done, as the official record of this house, and when the Secretary of State says that he had three copies it is very clear that the only copy that was wrong was the one that was handed to me. I am not attempting to blame him, I do not know who is to blame, but I repeat that an injustice has been done to me personally and to the members of this house in general, and I claim that the matter should in some way be rectified. I do not accept the explanations given here this afternoon as sufficient to justify what was done.


Richard Bedford Bennett: Mr. Speaker, the observations made reflect upon the conduct of the business of the house. The question divides itself into two branches; first, was there a question asked by the hon. member for Gloucester (Mr. Veniot); second, was it answered. The records show that the question, was asked, and that it was answered by the Secretary of State. The answer given appears in Hansard. Two copies of the answer were handed to the clerk of the house; one for Hansard, one for the clerk. One other copy, which has no bearing upon the official position in the house at all, was handed to the hon. member for Gloucester. It was his business to see that the official record and what he had in his hand were the same.


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: Pardon .me, the rules
of the house are clear, that the official ansiwer to that question is in Hansard-



Seizure of Schooner Paul T.


Some hon. MEMBERS:: No, no.


Richard Bedford Bennett: -and nowhere else.


An hon. MEMBER:: Cheating!


Richard Bedford Bennett: I heard an hon. gentleman say " cheating," but that is not cheating. If he will reflect he will see that the only official records are the Votes and Proceedings and Hansard itself. Hansard is the official record of this particular matter. To contend! that because he received something that was not in accordance with what appeared upon the official record of the house is a violation of the rules of the house, is incorrect. If there is any question I shall, of course, direct that an inquiry be held to see if the record in Hansard is the record handed in by the minister in answer to the question. If it is, that settles the question. If the hon. gentleman received something that was not quite in accordance with the answer, that cannot be blamed against the house nor the conduct of the business of the house. But in his first statement this afternoon the hon. gentleman charged that Hansard could not be relied on-


Peter John Veniot: No, I said if this is to
continue. Do not put words in my mouth that I did not say. I have enough to bear now, I will not stand for that, even from the Prime Minister of Canada.


Richard Bedford Bennett: Well, the hon. gentleman says that he will not stand for that. If I have done him any injustice in what I said I certainly desire to withdraw it. I heard what he said very distinctly. I say, if there is any question as to the accuracy of Hansard in transcribing the question in the terms in which the answer was given, we will have an inquiry without delay. That is the real issue, whether or not the official record of this house correctly represents the answer given to the question. If it does, then it is purely a matter, as the Secretary of State has explained, between himself and the hon. member for Gloucester. That is all that there is about it.


Ian Alistair Mackenzie: The
question is, why two answers were given.


Richard Bedford Bennett: No, not two answers, one answer. With all deference, if the hon. member will reflect a moment he will see that there could be only one answer given


Ian Alistair Mackenzie: There
should have been one, there were two.


Richard Bedford Bennett: -that was the answer in Hansard. If what is handed across the table happens not to agree with the official

answer that is unfortunate, but it does not change the fact that the official record is Hansard.
But all I rose to say is that in view of the observations concerning Hansard it becomes necessary that there should be no question of the position of the Hansard reporters and the accuracy of the record. I shall endeavour to secure the original and have it brought to the house, and after that make a statement as to whether or not it accords with the answer upon the pages of Hansard1 or whether there has been any alteration or change.


Ian Alistair Mackenzie: May I
interrupt? I understood the Secretary of State to say that the previous statement from the department was discarded. That proves my suggestion that there were two answers-


Charles Hazlitt Cahan: No, Mr. Chairman-


Richard Bedford Bennett: I have the floor. In
chapter 4 [DOT] of Beauchesne's Parliamentary Rules and Forms, on Questions, section 2, paragraph (b) reads:
If a member does not distinguish his question by an asterisk, the minister to whom the question is addressed hands the answer to the Clerk of the House who causes it to be printed in the official reports of the debates.
The issue, therefore, is, was that answer that was printed in the record handed to the Clerk of the House? In view of the observations that have been made as to the accuracy of that I propose to direct an inquiry to ascertain if that is so. If it has been, the rules of this house have been strictly complied with.


William Lyon Mackenzie King: I do not think there is any question about the accuracy of Hansard, having regard to what the hon. member for Gloucester himself has said. Is not the issue rather whether the hon. member for Gloucester was not justified in regarding as the same answer as appeared on Hansard the one which came to him from the same source as that from which Hansard received its answer? The good faith of the hon. member for Gloucester in accepting what came to him from the government as being the same as what the government had handed to Hansard cannot be questioned. I do not think there can be any doubt that he accepted what he received in good faith, and was so entitled to view the matter; and there can be no doubt, from what the Secretary of State has said, that what was handed to him was handed to him in error, and was not the same as was given to Hansard.

Customs Tariff Amendment


Charles Hazlitt Cahan: No, it was the first prepared answer; which I read over, and, as I was not satisfied with that answer, I sent it back to have that answer reconsidered. Subsequently, I think on the following day, there was sent to me by the department the answer which was the official answer of the department. Now it would appear that on my desk here my papers may be somewhat confused, but when I give an answer I must take the responsibility for it. I handed to a page for the Clerk of the House the official answer signed by me, because I always sign the original copy; and as I picked up the other two copies I inadvertently picked up one of the copies that I had previously discarded. That was an inadvertence, there were no tactics about it, there was no design, and no one could regret more than I that in dealing with these documents I apparently inadvertently annexed one of the four copies which I was discarding to the official copies which I handed in on that occasion.


Ian Alistair Mackenzie: May I ask a question? Was the discarded answer prepared by an official of the Department of National Revenue?


Charles Hazlitt Cahan: The first reply which came to me was prepared by the department.


Ian Alistair Mackenzie: That is enough, that proves everything.


Charles Hazlitt Cahan: But in these cases it is my duty as Secretary of State to examine these replies to see whether they conform to the request, and I endeavour to do so in each case. Day after day when answers and reports come to me from various departments, if I think they are not comprehensive enough, or, if by some inadvertence a mistake occurs, I send them back to the department for revision, because the official report which is handed in is signed by me as Secretary of State, and I have to take full personal responsibility in respect to it.



B.C. RELIEF CAMP STRIKERS

[Stage Direction]
On the orders of the day:
Mr. S. W. JACOBS (Cartier):: I should like to ask the Minister of Labour (Mr. Gordon) if he has any information to give the house with respect to the march on Ottawa of the relief camp strikers from British Columbia. I am prompted to ask the question by a statement which appeared in the Canadian Press this morning to the effect that the mounted police expect to get in contact with the vanguard of the strikers at Kamloops.
92582-2ll i
As this is a matter of considerable importance to the country I should like to know the answer.


Hon. W. A. GORDON (Minister of Labour):: The only information the Department of Labour has with respect to the so called trek of strikers is what appears in the press. So far as I am aware no communication has been received by the department from any official or unofficial source.


Samuel William Jacobs: May I point out that the press dispatch states that the mounted police in British Columbia are watching the movement. Have the government any information in that regard?


Wesley Ashton Gordon: I have no doubt the hon. member is aware that very likely the mounted police, in the course of their duties, would watch such a performance as these men apparently are staging, but so far as the Department of Labour is concerned we have no official knowledge of it.



FEED AND SEED GRAIN EXPORTS

[Stage Direction]
On the orders of the day:
Mr. JOHN VALLANCE (South Battle-ford) :: I should like to direct a question to the Minister of Agriculture (Mr. Weir), and if he has not the information I suppose he will be able to obtain it. How much hay, straw, feed and seed grain left each of the western provinces during the past season for the United States?


Robert Weir: The information requested by the hon. member for South Battleford (Mr. Val-lance) is not on the records of the Department of Agriculture; I doubt if all the information is on the records of the Department of National Revenue. Some of it should be there, however, and I shall gladly direct my hon. friend's question to the attention of my colleague the Minister of National Revenue.



CUSTOMS TARIFF AMENDMENT

[Stage Direction]
Hon. E. N. RHODES (Minister of Finance) moved the second reading of Bill No. 83, to amend the customs tariff.
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Morand in the chair.
On section 1-Extension of most favoured foreign nation treatment.
Edgar Nelson Rhodes: When we were in committee on the resolutions certain information was
Customs Tariff Amendment

sought by several hon. members which I promised to give when the bill was in the committee stage. The first question was by the hon. member for Macleod (Mr. Coote), who wanted the latest statistics with respect to the aeroplane industry in Canada, available from the bureau of statistics. These are for the year 1933, in which year the value of production in Canada was $103,532, and the aircraft produced numbered thirteen. Supplies and parts produced were valued at $102,863. Then my hon. friend from Shelburne-Yarmouth requested certain information as to the imports of fasteners dealt with under item 451e of the tariff. I find that it is not possible to segregate fasteners of the hookless or zipper type from other fasteners, clasps, buckles and so on. The only data available is that covering the entire item 451. Imports of zipper fasteners, therefore, were a part of the total thereunder. In 1933-34 that total amounted to $221,286.


James Layton Ralston: Is that the production?


Edgar Nelson Rhodes: No, the importation. For
1934-35 the importation totalled $285,302. These import's were made up as follows:
1933-34	1934-35
United' States	
$147,902	$148,159Czechoslovakia	
12,718	64,443United Kingdom	
51,537	60,028Germany	
3,429	5,943Belgium	
4,091	5,083
A further question dealt with the number employed in the industry in Canada. According to the information supplied by the Dominion Bureau of Statistics production figures for zipper type fasteners are available, and the bureau gives such data for the calendar year 1934 as follows: Number of employees, 115; salaries and wages, $123,815; value of product, $319,979. Three firms reported the production of such fasteners, and the data quoted is derived from their returns to the bureau. The hon. member for South Perth (Mr. Sanderson) submitted a question with respect to the same article; he queried as to whether the three firms or companies in Canada were or were not under one control. My information is that the plants are not under one control and, further, that the plants are not working under the same patent.
My hon. friend from Shelburne-Yarmouth (Mr. Ralston) also wished me to furnish information as to the number of tariff items in the budget affected as the result of reports of the tariff board. I have the list here, as follows:

Item	Commodity
39	 Starch
39d	Resin sizing
65a	Diabetic breads
66a	Biscuits
199e	Caps or hoods of	paper
232e	Cereal products (as adhesives)
255	British gum or	dextrines
362b	Toilet articles
384	Skelp
386r	Cold rolled strip
401d, 402e	Certain gauges of fence	wire
451, 451e	Certain fasteners and clasps
506b	Wooden doors
554b, 556a,556b. . Wool fabrics 569 (all sections) . Hats and hoods
571a	 Cocoa mats and matting
603	Fur skins
1024	Drawback item on wire	rods
These total twenty-eight items. I think this covers all the questions which were submitted to me when we were in committee on the resolutions.


James Layton Ralston: Mr. Chairman, I just
want to say a word to gather up the information which my hon. friend has given with regard to item 451e, slide, hookless or zipper fasteners, on which the duty has been increased ten per cent. My hon. friend gave the number of employees in this industry in 1934 as 115, and the amount of wages paid as $123,815. There were imported into Canada in that year $285,000 worth of these goods, and there were made in Canada $319,000 worth, a total of $604,000. Taking that total amount at twenty per cent, which I think was the rate of duty then, would mean that the people of Canada have paid practically the full wage bill of the industry in increased prices. In other words, whoever the firm or firms are, they have received in increased prices practically the full amount of their wage bill, and by increasing the duty another ten per cent it means that as against a wage bill of $123,000 in 1934 they would receive with the new rate of duty $180,000 in increased prices. The minister may say that I am unfair in that I am including in that figure the amount of goods which were imported. Perhaps I should not say that the amount which the firms receive will be increased by that figure; the amount which would be paid in increased prices by the people of Canada would be $120,000 under the present tariff and $180,000 under the proposed increase, a portion of which would go into the treasury of Canada, but the greater portion of it would go to the firms who are making this commodity. I submit that there should be the strictest inquiry as to the value of the industry to Canada as compared with the amount of taxes which are imposed on

Customs Tariff Amendment
Canadian consumers in order to keep up this industry by means of the increased protection granted.


Edgar Nelson Rhodes: Mr. Chairman, one could
discuss at length the question to what extent the statement of my hon. friend is true, that the purchaser or importer pays the duty. If my hon. friend is right in assuming that the duty is in all cases paid by the purchaser or importer, then his statement upon that point would hold good, but as my hon. friend knows, it by no means follows that because the duty is twenty per cent or any other percentage it is paid entirely by the purchaser or importer. My hon. friend no doubt knows, as I do myself, of cases where the importer pays not a cent of the duty, and of other cases where it is divided. But I do not think this is the particular place to debate the point. I only wish to say to my hon. friend and to the committee that whether the decision qua tariff with respect to this item is right or not it is after all based upon the finding of the tariff board after exhaustive inquiry and report, and the basis of their finding, as evidenced by their report, was the relative cost of production of the same commodity in other countries as compared with the cost of production in Canada. Having said so much, in view of the statement which I made before that it has been the policy of the government to implement the findings of the tariff board in all instances, I think nothing further need be said. In other words, we must assume that the tariff board is properly performing its functions, and that being so, I do not want to go behind their findings. Having confidence in the board I propose to pursue in the future the course I have followed in the past of accepting their reports and implementing them by legislation.


Mr. BROWN:: A few days ago when the
house was being moved into supply I mentioned some complaints that had been made against the rulings of the Department of National Revenue, and the Prime Minister (Mr. Bennett) said on that occasion that I would have full opportunity to discuss the matter later. Neither the Minister of National Revenue (Mr. Matthews) nor the Minister of Finance (Mr. Rhodes) was in the house at the time. I regret that the Minister of National Revenue has just left the chamber, but I might draw attention-


Edgar Nelson Rhodes: Mr. Chairman, I am quite
willing that my hon. friend from Lisgar should bring the matter up now, but it might perhaps be more in order for him to submit it on Bill No. 82, amending the Excise Act,
which deals amongst other things with matters of administration in the Department of National Revenue. I do not, however, take exception to my hon. friend bringing the matter up now if the chairman does not.


Albert Joseph Brown: I am quite willing to meet
the minister's pleasure, but I hope that the Minister of National Revenue will be in the house at the time.


Edgar Nelson Rhodes: I shall endeavour to see
whether my colleague can be present when the matter comes up.


Mr. POULIOT:: I was told this afternoon
that the government secured information from the tariff board in regard to the increases and decreases in duty that have taken place since 1930, but as the announcement of the appointment of the personnel of the board was not made in this house until February, 1933, may I ask the Minister of Finance who advised the government in regard to the increases and decreases in the tariff that took place from August 1, 1930, until the tariff board was appointed in February, 1933?


Edgar Nelson Rhodes: The government must take full responsibility for any changes it initiates, and I have no hesitation in saying that the government is quite prepared to undertake that responsibility.


Jean-François Pouliot: I understand that very
well, but during the period mentioned did the members of the government inform themselves through any other agency or organization than the tariff board with regard to the tariff increases and decreases it enacted?


Edgar Nelson Rhodes: There are permanent officials of the department with wide experience and great knowledge whose services are always available and are always availed of by the government, and I think that statement holds true not only with respect to this government but with respect to preceding governments.


Jean-François Pouliot: But how did they get the information? They must have got it from someone. From whom did they get it? From the manufacturers, or from consumers?


Edgar Nelson Rhodes: I cannot answer that question. Obviously there are numerous sources of information available-statistics of imports and exports and of manufactures. A thousand and one details are all a matter of record in the department and they may be obtained from numerous sources.


Thomas Reid: Has the minister looked into
the question of the sales tax on the peat
Customs Tariff Amendment

industry in British Columbia? The last time this measure was under consideration I appealed to the minister regarding the six per cent sales tax as applied to peat moss.


Edgar Nelson Rhodes: More properly my hon.
friend's question would come under the war revenue bill, when we are dealing with the sales tax. At the moment I cannot rely on my memory as to the precise status of the matter. My recollection is that it has not been dealt with, but we shall know when we come to deal with the war revenue bill.


Mr. COOTE:: When the budget resolutions were before the committee I took advantage of that fact to urge a reduction of the tariff on aeroplanes. Since then I have received a letter from Fairchild Aircraft Limited in which they seem to feel that some of the statements made here were not quite fair to that particular company, and in fairness to the company I should like the privilege of quoting briefly two or three paragraphs from their letter. They say:
We note in the press your remarks made in the House of Commons on May 31, in connection with the tariff as applied to aircraft. We read these with great interest, as it is gratifying ito know that the part which aircraft can play in the development of Canada is being recognized. There are one or two points on which yon have however been misinformed, and we take the liberty of submitting for yonr consideration a brief description of the activities of this company, which is but one unit of the Canadian aircraft industry.
With the exception of engines, we completely manufacture in every detail aircraft designed by our own engineering staff, and we believe the aircraft we produce are better suited to Canadian flying conditions than any obtainable elsewhere.
We have been in continuous operation since 1930 and at the present time employ 135 men. The payrolls for 1934 totalled $81,000 and we expect this figure will be doubled this year.
I asked the minister if he could give us any information with regard to the production of aeroplanes in Canada during the last two years but he did not have the information before him. He has given us the figures for 1933 and I have put part of this letter on Hansard so that this company might know that I did not intend to misinform the house in connection with the development of the industry in Canada. A few days ago I was asked the price quoted by the Bellanca aircraft company for one of their machines. I did not have the information before me but for the benefit of the hon. member who asked the question I should like to quote a paragraph from a letter I received from this company, as follows: Enclosed are specifications for the latest type of Bellanca pacemaker, using a Wright engine. You will note that the horsepower is 420 and 
not 340. These are the latest developments and give comparative performance characteristic of all Ballancas.
The price as a convertible land-seaplane, including Edo pontoons with all fittings and including all taxes, flyaway Montreal, is $29,310.
I wanted this information to appear on Hansard for the benefit of hon. members who are interested.


Mr. DURANLEAU:: I am glad the hon.
member has made this statement in connection with the Fairchild Aircraft Limited factory which is located in my constituency. I was not in the house the other day when my hon. friend made the statement that the aeroplane factories in Canada were only assembling plants or I would have corrected him. Fairchild Aircraft Limited have been building aeroplanes for many years on the south shore of the St. Lawrence. They have a complete plant and they build the whole machine with the exception of the engine. They employ between one and two hundred people all the year round.


[Stage Direction]
Section agreed to.
Sections 2 and 3 agreed to.
On section 4-Power to restore duties which have been reduced on liquors.
Mr. KENNEDY (Peace River):: Is this the first time an attempt to control prices in the interests of the consumer has been made under the provisions of the customs tariff?


Edgar Nelson Rhodes: The matter of dealing with duties by order in council is not new but this phase is new. It is introduced merely for the purpose of ensuring that the object of the reduction in the duty will be fulfilled. Otherwise we would be in the hands of the provincial liquor commissions which might set at naught the reductions made.


Albert Joseph Brown: Can the minister give us any assurance that the reduction in the excise and the customs duty on liquors will secure the result which he hopes to secure, the stopping of bootlegging? Can he tell U3 that or is it all a matter of guesswork as to just what the result will be?


Edgar Nelson Rhodes: I am surprised at such a consistent exponent of the doctrice of lower duties and freer trade asking whether a reduction in duty will mean a reduction in the cost of the article. We believe that if the price of liquor is placed at a figure where the ordinary man who desires to purchase feels that he is able to do so, he will prefer to purchase sound liquor from a legitimate source such as a liquor commission rather than to run the risk of buying an unsound

Customs Tariff Amendment
commodity through illicit channels. While I do not believe we have gone far enough, to the extent to which we have gone I think we will contribute to eliminating the illicit sale and purchase of liquors.


James Layton Ralston: I should like to revert to section 3. If this section is invoked for the purpose of reducing duties, is it the intention of the government to bring to parliament for ratification any trade agreement which embodies those reductions in the tariff?


Edgar Nelson Rhodes: As my hon. friend is aware, if it is a full treaty it comes to parliament as a matter of course, but I believe the practice in the past has been not to bring to parliament those matters which are dealt with by order in council under section 11.


James Layton Ralston: I cannot speak with
authority as to the practice in the past but I submit that it is the constitutional practice to bring to parliament any treaty or agreement which affects statutory provisions. I understand that there is a blanket provision here which permits the reduction of duties but at the same time I have always understood that trade agreements were brought to parliament as a matter of constitutional practice.


Edgar Nelson Rhodes: Yes, or treaties.


James Layton Ralston: Ratification is asked for as . a matter of constitutional practice although possibly not as a matter of strict legal necessity.


Edgar Nelson Rhodes: Concessions have been made by order in council which were not brought to parliament for the purposes of ratification, although parliament is entitled to the information. The action taken by order in council by virtue of this section is operative but it is always subject to the overriding action of parliament. Do I understand my hon. friend to suggest that in all cases the action taken should be brought to parliament for ratification?


James Layton Ralston: I am distinguishing constitutional practice from legal necessity. I understand that trade agreements and trade treaties are brought to parliament for ratification as a matter of course notwithstanding the fact that the governor in council might have the power under some blanket authority such as section 11 to conclude an arrangement for the reduction of duties. I want to know if that practice will be followed.


Edgar Nelson Rhodes: I think my hon. friend and I are in agreement as to what is the strict
constitutional or legal condition with respect to trade treaties or agreements, and I shall not discuss that matter at the moment. That is the practice which was obtained, that is the practice which should obtain and that is the practice which will be followed. Beyond that there are certain actions taken by order in council which are neither trade agreements nor treaties. In the past these matters have not been brought to parliament for ratification, though parliament should have the information; but I can assure my hon. friend that it is our purpose to adhere strictly to the practice which has obtained hitherto with respect to treaties and trade agreements


James Layton Ralston: Can the minister mention any instance in which it has not been done?


Edgar Nelson Rhodes: For example, we passed to Australia and South Africa under this section by order in council concessions by way of reduction in duty as a result of the operation of the French treaty. That would be a case in point illustrative of what I had in mind when I spoke of action other than by trade treaties or trade agreements.


James Layton Ralston: I do not think that would be under section 11 because under this section the provision is that the governor in council may reduce duties by way of compensation for concessions received from the particular country in whose favour the duties are reduced, and the application of the French treaty provisions to Australia would not bring it within that category.


Edgar Nelson Rhodes: In that case there was a specific concession on the part both of South Africa and of Australia.


James Layton Ralston: As regards the amendment made by section 3, whereby the word "concessions" is introduced, has the minister anything particular in mind in that respect? What is the nature of the concessions other than reduction in duties which it is contemplated might permit the governor in council to take action under section 11.


Edgar Nelson Rhodes: Australia would be a case particularly in point. We could not strictly say in that instance that they had reduced the duty, which would enable us to make a corresponding reduction here, but they gave us a concession by way of margin which was one of real value to us, though strictly speaking it was not a reduction in duty. That is why there is this amendment. It is really, in a sense, widening the spirit of the section- perhaps that is not the correct language. It
Customs Tariff Amendment

is carrying out the intent and purpose of the section, but changing the verbiage to meet the condition I have referred to.


James Layton Ralston: Wfyat I had in mind was whether or not a concession by way of a treaty respecting the St. Lawrence waterways, for instance, would be regarded as a concession under section 11 and so enable the governor in council to reduce tariffs as a quid pro quo.


Edgar Nelson Rhodes: That would be a question of fact. I should not care for a moment to attempt to follow the interpretation to its furthest ramifications, but I say in all deference to the committee that it would be a question of fact and of interpretation as to whether it would be a concession coming properly within the spirit and the intent of the section.


Mr. EULER:: I understand from the remarks of the hon. member for Shelburne-Yarmouth and of the reply given by the minister that the governor in council has authority to reduce the tariff, for which we may receive some concession from some other country. My impression is-and this is the point on which I should like to have information-that the governor in council has authority to make reductions whether a concession is received from some other country or not. It might be deemed in the interests of Canada alone to reduce the tariff, without reference to the circumstances affecting other countries.


Edgar Nelson Rhodes: That is all right; there is always the sovereign right of this or any other country to take such tariff action as it chooses. Parliament is supreme.


William Daum Euler: I mean the governor in council.


Edgar Nelson Rhodes: I am following the argument. Section 11 of the Customs Tariff has specific reference to reciprocal tariff reductions and the wording is:
The governor in council may by order in council make such reductions of duties on goods imported into Canada from any other country or countries as may be deemed reasonable by way of compensation for reductions on Canadian products granted by any such country or countries.


William Daum Euler: But they could do it in any event, whether they got a concession or not.


Edgar Nelson Rhodes: Certainly; there is always the sovereign right of parliament in the matter. But we are dealing with reciprocal action between two countries, without parliament. That is all that section 11 is for. Here, 
instead of using the words "reductions on Canadian products" we say "concessions"; that is the change.


James Layton Ralston: Is there any objection to making that "tariff concessions" rather than merely "concessions"?


Edgar Nelson Rhodes: I know of no immediate objection to the use of those words except that it makes the operation of the section unduly restrictive. There might very well be some other consideration which would be deemed of value to this country and which would warrant making a concession by way of the tariff. I can readily see that a situation of that sort might arise. It might be a question of margin, for example.


James Layton Ralston: But it is a tariff concession.


Edgar Nelson Rhodes: Yes, it is a concession. I do not press the matter at all. I would be content to take the phrasing my hon. friend suggests. I see no objection, if it is a real concession given us by another country, why we should not be able to go beyond the bounds of customs action alone.


William Lyon Mackenzie King: I should like to have the matter made clear with respect to what may be pending in the way of negotiations. We were advised the other day by the Prime Minister that negotiations respecting a trade agreement with the United States were still proceeding but might not be concluded before the close of the session. As I understand the minister, if anything in the form of an agreement were entered into between the United States and Canada, following constitutional practice that agreement would have to be submitted to parliament for approval. On the other hand, it is possible that the negotiations proceeding between the two countries might take the form of some reduction of tariffs on each side, in which event the reduction of tariff on one side would be regarded as a compensation or concession for a reduction of tariff on the other. In that case, under the legislation now proposed, the governor in council would have power by order in council to reduce the duties without reference to parliament.


Edgar Nelson Rhodes: Apart from any question of interpretation, I would not have the slightest hesitation in saying to my right hon. friend that in anything so important as a trade agreement with a country such as the United States, it follows as a matter of course that it should be subject to ratification by parliament. That is not the kind of agreement in contemplation which would enable the country to secure con-

Customs Tariff Amendment
cessions by way of order in council under section 11. I want to make that abundantly clear.
Mr. LUCHKOVI'CH: I understand that there is a reduction on liquors. Why has it been limited to liquors? Why should it not be applied to machinery? We in the west like our liquor as well as anybody and would rather get it cheaper than we can at the present time. But we should prefer to have this section made applicable to farmers' machinery, for we certainly need cheap machinery in the west to-day.


Edgar Nelson Rhodes: I am not aware that there is any bootlegging in machinery or any illicit importation. If there were it could be dealt with similarly. That was the reason for the action taken. It is not a question of cheapening the product as such; it was a question of attempting in this way to make at least a contribution toward the elimination of bootlegging.


James Layton Ralston: I do not want to delay the committee, but I would ask the minister to consider inserting the word "tariff" before the -word "concessions." It is advisable that we keep tariff matters within the tariff ambit rather than to contemplate some bargain the consideration on one side of which might have nothing whatever to do with tariff.


Edgar Nelson Rhodes: I shall be pleased to consider the matter. If the committee in its wisdom decides to report the bill, I can hold the third reading and, if it is thought advisable, it can be moved back into committee. There is nothing in my mind other than having an instrument which will be of use; that is all. It may be thought wise on reflection to limit it in the sense suggested by my hon. friend.


[Stage Direction]
Section agreed to.
On section 5-schedule A amended.
Samuel William Jacobs: Does this deal with item 66a, biscuits?


Edgar Nelson Rhodes: Yes.


Samuel William Jacobs: I have a letter here received from the Canada Biscuit Company, Limited, and which I wish to place before the committee. This company owns and operates the following companies:
McCormick Manufacturing Company, Limited, London, Onit.
J.	A. Marven Limited, Monoton, N.B. Montreal Biscuit Company, Limited, Montreal,
Que.
D. S. Perrin and Company,
Limited, London,
Onit.
Paul in-Chambers Company, Limited, Winnipeg, Man.
Northwest Biscuit Plant, Edmonton, Alta. Northwest Mill and Feed Plant, Edmonton, Alta.
I would cite a few excerpts from this letter, which is dated June 3, 1935:
It has come to out notice that the government are considering the passing of an act which will allow English-made biscuits valued at over twenty cents a pound to come into Canada duty free-this would cause untold damage to every high grade biscuit manufacturer in Canada, as it is impossible for a Canadian manufacturer to compete with the large-volume production of the British manufacturer on high-grade biscuits. The effect of this legislation would be to force all Canadian manufacturers to make very cheap quality goods at low prices on which there can be no profit.
Canadian biscuit factories are chief market for Canadian soft wheat, and are very large users of butter, eggs, lard, sugar, Cheese and paper products.
United Kingdom biscuits contain no Canadian wheat, butter, eggs, lard, sugar, cheese and practically no paper products.
Even allowing for the present tariff, it is a known fact that the biscuit industry of Canada has suffered very severe losses. The industry represents an investment of many millions of dollars, and if this legislation is allowed to become effective, the results will be further large numbers of unemployed in the biscuit industry, and terrific losses of capital.
Will you please use your very best efforts in conveying these facts to the interested party? If you require any further information please do not hesitate to call upon me.
I would recommend that you communicate with Mr. Hanson, the Minister of Trade and Commerce, as I understand that Mr. Rhodes in addition to being a sick man is deluded with all kinds of other matters so that he could not give this serious question the attention it deserves.
In regard to the last sentence, I wonder whether the writer refers to the other members of the government or to the members who sit behind the minister. At any rate I feel I have done my duty when I bring this matter to the attention of the minister, pointing out to him that this protest comes from practically every part of Canada; every biscuit manufacturer is represented.


Joseph Philippe Baby Casgrain: I have received a similar communication.


Edgar Nelson Rhodes: The Minister of Finance
is "deluded" with many other matters. I may say that I am sure my hon. friend is deluded also if he subscribes to the prayer or request contained in the letter, because as a matter of fact the total importation of British biscuits is one-third of one per cent of Canadian consumption. Furthermore, Canadian biscuits in price have ranged from eleven to fourteen cents per pound, and the
Customs Tariff Amendment

class of biscuits from the United Kingdom affected by this reduction in the tariff range in price from twenty-seven to thirty-four cents per pound, so that this tariff action had reference to what might be termed1- and I say this not offensively-a luxury product.


William Daum Euler: Fancy biscuits.


Edgar Nelson Rhodes: Yes. I do not shield myself behind the circumstance that the reduction is made in consequence of a report of the tariff board after full inquiry and finding, but I leave it to the good judgment of the committee whether in the circumstances the dire disaster which apparently the biscuit manufacturers think will overtake them is likely to occur.
Mr. LAPO'INTE: I would follow the minister down a little -more.


Mr. YOUNG:: I notice in the letter which the hon. member for Cartier has just read the Canadian biscuit manufacturers object to English biscuits coming in because they contain no paper products. I do not consider that is a very serious objection.


Samuel William Jacobs: The writer refers to the containers, I fancy.


John Campbell Elliott: I should like to call the attention of the minister to the fact that I have received several telegrams to the same effect. I assume his mind is quite clear on the subject.


Edgar Nelson Rhodes: Perhaps every hon. member who lives within one hundred and fifty miles of an industry of this kind has received similar communications. I have received dozens1 of them. The wires have been quite warm as a result of the sending of telegrams to me, but that is nothing new.


Mr. QUINN:: I have also received similar
telegrams, . one from a biscuit manufacturer in Halifax, Moirs Limited, and also telegrams from Christie Brown and Company and others. I suppose the answer is the same to all.


Albert Joseph Brown: I do not suppose the hon.
member for Weybum has received similar telegrams.


[Stage Direction]
Section agreed to.
Sections 6, 7 and 8 agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
Hon. E. N. RHODES (Minister of Finance) moved the second reading of Bill No. 80, to amend the Income War Tax Act.

Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Smith (Cumberland) in the chair.
Section 1 agreed to.
On section 2-Company rate of tax.
Thomas Langton Church: I would like to ask one
question on behalf of the municipalities of the province of Ontario. Any section of this bill might serve to cover it. I introduced a resolution on coordination of income tax in this house on this question in 1927, and it was continued in 1928 and 1929. From 1867 down to the introduction of the Income War Tax Act in 1917 the income tax was the exclusive field of' the municipalities. As we all know, at present the municipalities are having a very difficult time owing to conditions. Their sources of revenue are restricted by statute. There has been a gross invasion of their field both by the dominion and by the provinces. I do not object to the dominion levying income tax, because they had to carry on the war, relief and unemployment, and have other heavy burdens. But the present Ontario government have announced that next fall a special session of the legislature is to be convened in order that we shall be given the unexpected joy in the province of Ontario of a triplicate income tax. The income tax of the dominion government is collected chiefly in Ontario and Quebec; a very small part comes from the other provinces. The returns from the city of Toronto for the last year of record were $17,486,000, and for the city of Montreal, $18,893,000. I raised the question of the legality of this provincial tax in 1927, and I think the question is a cogent one whether the proposed tax by the province of Ontario is direct or indirect and the method of collecting illegal. The method of collecting it is both direct and indirect.
This burden of a third income taxation is going to retard the growth of industry in Ontario. There should be some coordination, because in view of the period of unrest we are going through and the condition of business to-day, industry cannot carry any further burdens. I should like to know if any negotiations on this matter have taken place with the provinces, or whether any reference is to be made to the supreme court, because it is in the interest of the taxpayers and the provinces that it should be done. This income tax comes very largely out of the working classes. They had an investigation of this in Washington and it showed a dreadful state of affairs-people like Pierpont Morgan with an income of millions paying no inoome tax at' all. They are now bringing in a provision

Income War Tax Act
for registration, I may say that there is registration to-day in Toronto on municipal income tax and there are facilities there for anyone to go to the city hall office and find what income taxes have been paid. Are we going to wait for the Ontario government to put the cards on the table? As far as the assessment rolls and the collector's rolls are concerned you can walk into the office of the city clerk and turn up the rolls and find out what every person and corporation is paying in income tax to the municipality. The same applies to wills, deeds, and bills of exchange and hen notes and many other matters; they are all registered and open to inspection by the public, and I do not see any reason why there should not be similar publicity concerning income tax
As one of the representatives of an industrial city I protect against a third or provincial income tax in Ontario. The cities are already paying more than they can 'afford for the burden of government. It is all very well to talk about maritime rights and Pacific rights and prairie rights, but what about the rights of the old industrial provinces of Ontario and Quebec who pay over 84 per cent of the federal income tax? We hear a lot about the rights of minorities, but what about the rights of majorities who have to pay all these taxes to maintain this country? I protest against this tax by the province. Under section 92 of the British North America Act they have the right of direct taxation to raise revenue for provincial purposes, but not by the widest extension of imagination can it be said that the provinces should take from the municipalities the income tax powers of taxation which they have held from time immemorial. I do not know what is to become of the municipalities of Ontario if they do not get some relief. Are we to wait, year after year, and have these provincial burdens increased? It would be a godsend to the people of this country if there had never been provincial governments. It was the greatest mistake the fathers of confederation ever made; it was done for political rather than for economic reasons, and we see the result in overtaxation and over government.
I have been asked to mention this matter on behalf of some of the municipalities which are being crushed at the present time owing to the burden of relief. A large number of properties are up for sale for arrears of taxes; in many cases the mortgagee has taken possession, and now are we going to add another income tax? This government or any other government in charge of the affairs of this country at present and for years to come will no doubt have to have this federal income tax. The present government and the minister have taken over regarding relief from some municipalities .many of their obligations; in fact I do not know where the municipalities would have been had we not had the Unemployment Relief Act, as the hon. member for St. James (Mr. Rinfret) mentioned in connection with Montreal, It is not the only city in which that situation exists; almost every large city in the country would have been in an even worse .position than it is at present had it not been for the very active support which the federal government gave to the larger municipalities. But when we have an announcement from the Ontario government that they are going to ask publication of income tax matters and require affidavits or [DOT]provide that people may be examined on oath by the local commissioner, and when you see what they are doing in the United States, allowing people to go to the register and see what is being paid, then I think that in the interest of more revenue for this government a similar amendment might be made in the law here. I do not wish to detain the minister;
I am sorry on his account for having to mention the matter, because I have a great admiration and respect for him and sympathy with him in respect to the burden he has had to bear for the last ten years, not only in this parliament but as a provincial leader. But I should like to hear from him anything he can say in a few words as to the legality of the .proposed provincial tax and the method of collection.


Edgar Nelson Rhodes: I do not think there is
any question as to the right of the provinces to impose this tax. It is a direct tax. As far as it is a direct tax it is strictly within their legislative competence. Neither is there any question as to the right of the dominion to impose this tax. That was settled in the case of the King v. Caron, which went to the privy council, the judgment being delivered by Lord Haldane, who decided that the dominion had jurisdiction. It is perhaps unfortunate that there should be a threefold tax, but as far as that is concerned the question is between provinces and municipalities and is one which must be settled within the province; it is not one which we can settle here. There are certain phases of the incidence of this tax which do work an injustice. That is, a man has a certain income, and income tax is imposed by the dominion. When the province imposes an income tax it is imposed not upon the residue of his income after he has paid the tax to the dominion, but upon his whole income as though he had actually received it, although as a matter of fact he has parted with a portion of it. The
Income War Tax Act

same statement applies to its application in the case of the municipalities. We had that, among other things, in mind when we sought to have a dominion-provincial conference last autumn. The question of income tax was placed upon the agenda of the proposed conference and I think it was unfortunate that we were unable to have that conference, because that was one subject that perhaps we could have dealt with in a manner that would have made it more equitable in its application not only as between the dominion and the provinces but perhaps also as to the individuals whether they pay taxes to the provinces or to the dominion. As a matter of fact, however, we could not have the conference for the reason that we could not secure the attendance of representatives of all the provinces; more than one raised objection to a conference being held at that time. It follows, of course, that there will be no possibility of a conference this year unless it is held late in the autumn, after a new government is in office.


Mr. LAPOINTE:: Hear, hear.


Edgar Nelson Rhodes: I do hope, however, that
for the wellbeing of the country the incoming government, whether it be this or another government, will take some action. I notice my hon. friend from Quebec East smiling when I use the term "new government." He has in mind the circumstance that it will be a government of some other party. I had no such circumstance in mind. What I had in mind was that we will have a newly elected government with a newly elected parliament.


Ernest Lapointe: I withdraw my smile.


Edgar Nelson Rhodes: We have no misgivings
upon that point; in due course we will know the answer. In all seriousness, however, I do express the hope that there can be a fair and frank discussion between the dominion and provincial governments in the hope that there may result something fairer in the way of the application of income tax. It is all very well to discuss the dominion giving up the tax. Municipalities and provinces are put to it for revenue, but it requires no stretch of the imagination to realize that the dominion government is also in dire need of revenue, and that will be so for a number of years or at all events until some solution has been found of many of the problems we have before us at the present time. So it is idle to discuss giving up this tax, but I do think in fairness we can discuss with the provinces a more equitable application in the hope that it will improve conditions not only as they concern the dominion and the provinces but also as they concern the individual taxpayer.


William Daum Euler: I am glad to hear what the Minister of Finance has to say with regard to the multiplicity of taxes and the undesirability of such a condition. But I should like to remind him that the government of which he is a member, and in fact the previous government, have practised the same thing even within the dominion itself. I know there is not usually a great deal of consideration or sympathy for corporations or those who derive their incomes from corporations, but if I recite the facts briefly it might be of interest to the committee. So far as income tax is concerned a joint stock company pays on its profits a tax of 13^ per cent. Another business, perhaps of the same nature-and I believe I referred to this last year or two years ago-which happens to be carried on by a partnership or under a single proprietor, making the same amount of profit, escapes that tax altogether. There, I say, is an unjust discrimination. First, so far as the corporation is concerned, there is the 13^ per cent tax. Then when the balance of the profits are distributed among the shareholders they again pay taxes as individuals. Then the provinces come along and exact a tax from the corporation. Now we have the announcement by the premier of the province of Ontario that he is going to propose an income tax also. That will be a fourth tax. Then the municipalities, at least in the province of Ontario, exact still another income tax, so the man who happens to get his income from a joint stock company-and I am no special pleader for those who hold stocks in joint stock companies-is faced with the probability of having to pay five income taxes in one form or another.
I should like to suggest to the minister that he is certainly on the right track when he suggests that there should be some sort of getting together to prevent this multiplicity of taxes. It is perfectly right that those making a great deal of money by way of income from stocks or bonds should pay a proper tax, but surely it cannot be right that the jurisdiction should be spread over municipalities, provinces and the dominion so as to bring about practically fivefold taxation on the same income.
In conclusion I just want to repeat what I said two years ago, or perhaps it was last year, with regard to the absolute injustice of the double taxation now exacted by this government from those who happen to get their incomes from stocks. It is a discrimination against joint stock companies, and after all that is a fair method of doing business. Consider two businesses side by side, perhaps in exactly the same line of business. One is

Income War Tax Act
operated as a joint stock company, perhaps with almost all the stock owned by the same man or the same family. Next to that business or across the street is a firm doing business under a single proprietor or a partnership. The joint stock company pays an income tax of 13J per cent while the other business escapes that tax altogether. In addition all the individuals concerned pay taxation on their incomes. I say this is a double tax that is utterly inexcusable unless it arises through the necessity of securing revenue, and even that ought to be subject to the ordinary laws of fairness and equity.


Edgar Nelson Rhodes: With the general tenor of the remarks of my hon. friend I am in entire accord and sympathy. I rise only for the purpose of correcting what I know was said by him inadvertently and in error, when he spoke of double taxation having been imposed by this government. That principle obtained during the whole of the nine years that hon. gentlemen opposite were in power.


William Daum Euler: I said it was imposed by this government; I did not say it was inaugurated by this government. It was im-po :ed by the previous government as well, bv t that does not make it any more just.


Edgar Nelson Rhodes: Quite so. I mention that only for this reason, that by the layman the statement of my hon. friend immediately would be interpreted to mean that this government was responsible for the condition; that is, that the Bennett government was responsible.


William Daum Euler: I did not say that, but this government have accentuated the condition by increasing the tax from time to time.


Edgar Nelson Rhodes: Perhaps it is a question of degree. I might say to my hon. friend, however, if he wants to pursue the discussion along that line, that the government of which he was a member not only maintained this principle all during the period it was in office; it maintained the principle during a period of prosperity when there were abounding revenues. If it could be justified under those conditions what can be said of a government in office during the period of the greatest depression in the history of the world, when governments all over the world are hard put to it for every cent of revenue they can derive?
Having said that I do not for a moment want to go back on what I have already stated as to the injustice of the principle of double taxation. It is unjust, and I hope
the time is not far distant when we may be able to get away from it. As I pointed out last year, it is all very well for us to feel that a certain principle is not to our liking, but it is quite another thing to have to forfeit several millions of sorely needed revenue under the conditions which exist today.


Mr. RINFRET:: Before the section is carried I should like to make an observation which I think is in order at this time. There has been much confusion in the minds of many taxpayers this year-probably it existed in previous years also-with regard to the retroactive feature of the changes and increases in the income tax, especially with regard to unearned or investment income. Quite a number of my constituents came to me to find out whether in the returns to be filed April 30 they had to provide for the changes in regard to investment incomes. I directed them to the officers of the Department of National Revenue. I was quite aware, of course, that these changes were retroactive and, consequently, should be provided for in the returns, but the confusion was brought about by the fact that in the first place the changes had not been adopted by the house-in fact they have not been adopted yet-and in the second place the forms supplied to the public made no provision at all for investment incomes. I feel sure therefore, that a large number of the returns that have been received by the department up to the present have made no provision at all for that new feature. I will take the stand that perhaps it might be a good thing for this government or the government to come to consider the advisability of not making these changes retroactive. I understand that it has been working both ways When the income tax was reduced by the former government it did apply to the previous year, and therefore when it is increased it seems only fair that it should be made retroactive, but there may come a time when the income tax will be increased by such an amount that the income tax payer will not have made any provision to meet the increased tax exacted from him, and I am not sure that it would not be advisable to consider whether, when changes are made in the income tax, the new tax should be made applicable to the current and not to the previous year. However, that was not my point.
I am quite aware that a large number of taxpayers have probably not provided for the investment income in their returns this year.

332S
Income War Tax Act
I see that section 15 provides that interest shall be charged on the tax imposed by section 2, and I would ask the minister why that special section is in the bill.
Section 16 says:
Sections, one, two, three, four, five, six, seven, eight, ten. eleven, twelve and thirteen of this act shall be applicable to income of the 1934 taxation period.
Does that mean that in the case of every taxpayer who has failed to file his return according to these sections interest will be charged from the thirtieth day of April also?


Edgar Nelson Rhodes: Mr. Chairman, I would be disposed to agree with the objection raised by my hon. friend that it would be preferable in dealing with the income tax to get away from the retroactive feature, but that feature has been in our income tax from its beginning. In that respect there has been no change in the method of applying the tax this year as against former years, not only with respect to this government but preceding governments. I can speak from a somewhat painful experience with respect to the difficulty in which the taxpayer is placed because I recall very well that I had to pay in one year an income tax whi-ch was greater than my income in the year I paid the tax, and I had to resort to the banks to borrow money to pay the income tax. So I can speak feelingly of the position the taxpayer finds himself in who is called upon to pay a heavier tax in a year when his income has been greatly reduced. It is very difficult to defend that, but before we can alter our system we have to have a treasury overflowing to such an extent that we can forego one year's income tax. That is just about the plain fact of the matter, and in those circumstances we are not in a position to change the method of applying the tax. It is the same to-day precisely in every respect that it has been hitherto.
It has always been so that -when there have been changes in the tax imposed, that change has come subsequent to the date upon which the income tax forms, having of necessity to be prepared in advance, have been sent out to the various income tax offices throughout the dominion. That difficulty has arisen hitherto whenever there has been any change in the income tax, and I do not see any way of avoiding it so long as we have the circumstance that the date for sending out the forms in the usual course practically always precedes the date when the budget ordinarily is brought down.
My hon. friend from St. James (Mr. Rinfret) put a specific question with respect to section 
15. The principle there is precisely the same as has obtained in other years. It merely deals with the circumstance that inasmuch as the bill has not become law provision must be made for interest from the period when the taxation period commenced. There is nothing new in principle in section 15 from previous income tax acts.


William Daum Euler: Mr. Chairman, perhaps I am not in order because clause 16 is not under discussion, but as reference has been made to section 15 I might be permitted to ask a question in regard to section 16. It says that sections from one to thirteen inclusive with the exception of section nine "shall be applicable to income of the 1934 taxation period and fiscal periods ending therein and of all subsequent periods." The explanation in the bill implies that there are no changes except that the rate is increased from 121 to 131 per cent. I just want to make certain that this does not imply a change such as we had two or three years ago when the family corporation tax was abolished. I recall at that time that in the case of a company whose fiscal year ended with January instead of December the interpretation given by the department was, and I have no particular fault to find with the legality of it, that a company or an individual might be forced to pay a tax for twenty-three months and when you are paying a tax on a twenty-three months' period you would naturally get into the higher brackets, and the tax would be exceedingly high, I would like to know in regard to section 16 whether in the case of a company whose fiscal year ends with January the same sort of thing might be possible, because it says that it "shall be applicable to' income of the 1934 taxation period and fiscal periods ending therein." Would that mean that if the year of a company ended January 31, 1935, the taxation period would be for the twelve months preceding January 31, 1935?


Edgar Nelson Rhodes: Yes.


William Daum Euler: Then it says the taxation shall be applicable also to income of "fiscal periods ending therein and of all subsequent periods." Would a company have to pay for that year ending January 31, 1935, and also for the eleven months ending with January, 1935? In other words, would a company be called upon to pay taxation for practically two years?


Edgar Nelson Rhodes: I recall very well the incident to which my hon. friend refers. This section has no incidence, no bearing nor application similar or analogous to that case.

Income War Tax Act


William Daum Euler: There is no possibility of them having to ipay for a period of practically two years?


Edgar Nelson Rhodes: No possibility of that arising. This has reference only to the extra one per cent and it has no bearing and there is no change with respect to the period to which the tax might be applied.


James Layton Ralston: Since we are discussing the period to which the changed tax applies I understood that the 1934 taxation period, for instance, would be deemed to be any fiscal period which ended in 1934, and that therefore a company whose fiscal year ended March 31, 1934, would be obliged to pay the increased tax back to March 31, 1933, because the increase in the tax is made applicable to the 1934 period. In other words, the 1934 period included nine months of 1933. I brought that to the minister's attention when the resolution was up, and the minister was going to look into it. If that is the case it should be made clear that this only applies from January 1, 1934. When I say that, it is subject to all that my hon.. friend from St. James (Mr. Rinfret) has said in regard to making these increases retroactive. I spoke to that point on the resolution and in previous years I have protested against it. I am not impressed at all by the fact that under previous administrations, as my hon. friend says, changes in the income tax have been made retroactive. As I have pointed out most of the changes were downward rather than upward, and I submit that regardless of who does it, it is wrong, it is unjust, it is unfair, it is inequitable, it is not good legislation to make increases in taxation or changes in the law apply to a period that has already been closed, the commitments for which have already been undertaken, the disbursements for which have already been made. As I suggested in the discussion on the resolution, it seems to me to involve a violation of what is an implied contract between the government and the taxpayer that his taxes for that period will be so much. The government comes in with a statute and says to the taxpayer: Although we said your taxes would be a certain percentage for this period, although you have based your commitments upon that percentage, we now propose to take so much more. That is not fair and it is not sound for business and it is not fair to the individual. If the treasury needs the money I submit that it would be better to provide for the levying of a double increase in the current year. We would thus preserve the principle that legislation is made for the future and not for the past. I believe the
minister agrees with me in principle although he has said it is impossible to do this because of the necessities of the treasury. I submit we ought to make a change in this respect and not make increases in taxation retroactive. With that general observation I couple the special case to which I have referred and to which the hon. member for North Waterloo (Mr. Euler) has referred, the case of an organization with a fiscal year ending during 1934. I understand that such a company will now be taxed back into 1933.
Mr. RHODES': The law with respect to the fiscal year of corporations will be found in section 35 of the Income War Tax Act, which reads:
Notwithstanding the provisions of section 33 of this act,

Section 33 has reference to the general returns.
-any corporation the fiscal year of which does not coincide with the calendar year, shall make a return within four months from the close of its fiscal year and the tax shall he computed as if the said' fiscal year coincided with the calendar year within which the said fiscal year ends, and the provisions of this act shall mutatis mutandis apply.
Let me assure the hon. member for Shel-burne-Yarmouth (Mr. Ralston) and the committee that when I say that this act was in force under preceding administrations I do not make the statement for the purpose of placing responsibility upon other governments for the actions of this government nor to evade the full share of responsibility which a government must take for its own acts. I do so solely for the purpose of emphasizing the difficulty in which the government is placed particularly when it desires to make a change in a period of stress such as has confronted us during the last few years and is confronting us to-day. My hon. friend has said that rather than have the retroactive phase of the taxation maintained he would prefer a double taxation applied in one year and let us start anew.


James Layton Ralston: A double increase.


Edgar Nelson Rhodes: As a matter of fact the retroactive feature, so far as it applies to incomes, has always been in the act. You could not tell how much income a man would make until the end of the year and you could not impose a tax upon this income until he had received it. In other words, you could not impose a tax upon income in advance as the income might be larger or smaller than expected. It is only after a man has received his salary or income that he should be told how much tax he will have
Income War Tax Act

to pay. The objection I have recorded with respect to this method of application, as far as this or any other government is concerned, is that it is right enough for a man or a company to pay an income tax under those circumstances if it is known that the rate of taxation will 'be the same next year or the year after but it is a different thing when there is an increase in the income tax and a man has to pay an additional tax upon income which has already been expended. I mention this to indicate the retroactive features to which I object and which I wish we could get away from. So far as the main principle of the act is concerned, it has been applied to the income of past years for the reasons I have indicated.


William Daum Euler: The minister's reply to my question was quite unequivocal and I was satisfied with it but since I have heard the remarks of the hon. member for Shelburne-Yarmouth (Mr. Ralston) and the reply of the minister I am not so sure that I should be satisfied. Take the case of a company the fiscal year of which ends, say in January or in any other month other than the end of the calendar year; will it follow under this amendment that that concern will have to pay taxes for more than twelve months?


Edgar Nelson Rhodes: The method of applying the tax as a result of this section will not differ from that at present prevailing.


James Layton Ralston: I know my hon. friend is making this as clear as possible but I do not think he has answered the question. The minister has his officers before him and I shall give a specific instance. A company ends its fiscal year on March 31, 1934, and an increase in corporation tax is provided by this bill which becomes law. Will the increase apply further back than January 1, 1934?


Edgar Nelson Rhodes: If the fiscal period goes beyond that, yes. What I said in my answer to the hon. member for North Waterloo (Mr. Euler) was this: Assuming there had been a change in the company tax this year, the application of that tax would be precisely the same with respect to that company. The only change is with respect to the rate and the increased rate would be dealt with in the same manner as the other rate and as if there had been no increase.


James Layton Ralston: There is still a very
definite doubt in my mind as to whether the increases which are said to go back only to the 1934 period will not go back to 1933. The minister has directed attention to sec-

tion 35 and1 it seems to me that that section would confine the increase only to the portion of the fiscal year which was within the year 1934.


Edgar Nelson Rhodes: I do not think I can add
anything to what I have said already. I say that it will apply beyond January of 1934 if the taxation period of the company goes back of that date.


James Layton Ralston: As I understand it, the
statute stops the fiscal period of the company at the beginning of the year 1934. By virtue of subsection 2 of section 35 the fiscal year of the company is made to coincide with the year in which the fiscal period ends. Does that not make the increase in tax stop at January 1, 1934?


Edgar Nelson Rhodes: My hon. friend is usually very lucid but I do not think he has made the proper deduction from section 35.


James Layton Ralston: I do not know why it
was cited if it was not for the purpose of making that clear.


Edgar Nelson Rhodes: It differentiates clearly
from the calendar year.
Mr. iRALSTON: No.


Edgar Nelson Rhodes: Oh, yes.


James Layton Ralston: It states that the tax shall be computed as if the said fiscal year coincided with the calendar year.


Edgar Nelson Rhodes: It states specifically that
if the fiscal year of the corporation does not coincide with the calendar year, it shall make a return within four months from the close of its fiscal year.


James Layton Ralston: The next phrase is important.


Edgar Nelson Rhodes: And the tax shall be computed as if the said fiscal year coincided with the calendar year.


James Layton Ralston: I was misled, I know
unintentionally, by the citation of that section. If that section means that only the rate applies for the portion of the calendar year, then I take it that the increased rate would only apply to January 1, 1934, in the case I mentioned.


Edgar Nelson Rhodes: No, it applies to the end
of the fiscal year of the corporation.


James Layton Ralston: I submit that that is
unfair and that the changes in taxation, if they apply to the 1934 fiscal period, should apply only to that portion of the fiscal period of the company which is within the calendar

Income War Tax Act
year 1934. It means that one company, if it is unfortunate enough to have a fiscal year ending March 31, 1934, will have to pay increased taxation for a period of nine months longer than the company whose fiscal year ends on December 31, 1934.


Edgar Nelson Rhodes: There is no change in that respect; that feature has been there for some time.


James Layton Ralston: I know that the minister is not the kind of man to take that attitude. Simply because an injustice has existed is no reason why it should continue. If it is unjust he should be prepared to make the change.


Edgar Nelson Rhodes: I should like to have the
privilege of being instrumental in making the change, but it is one thing to desire to do something and another thing to be able to do it. If I were Minister of Finance under other conditions I can assure my hon. friend that he would not have to make that plea.


William Daum Euler: I must protest. I am very
much surprised that the minister should take that attitude. In effect he admits that it is unjust, and the only reason he gives is the necessities of the revenue. I do not believe that either the house or the minister will suggest that it is fair to exact from one company something that is not exacted from another. There is a discrimination there. In the one case the company pays for the full year and in the other case the increase goes back over a period of more than twelve months. Merely because it provides a very slight addition to the revenue is, I respectfully submit, not a sufficient reason why it should be done. If it is unjust it should be remedied, and it is no excuse for its continuance to say that it has been done before. It is no excuse to say that you are following a wrong principle which has been in force before. If the minister will give that point cool reflection I think he will make the change. The amendment could be made very simply and it would bring about justice.


Edgar Nelson Rhodes: I wish to take decided
exception to one deduction of my hon. friend. He suggests that this method of application makes a discrimination as between companies.


James Layton Ralston: Taxpayers.


Edgar Nelson Rhodes: If what my hon. friend
suggests were done there would be a very marked discrimination. One company would pay for a portion of the year and another company would pay for the full year. All we do with respect to the tax is to make it applicable to a year. It is for the company to determine its fiscal year. We must tax for the full company year as laid down 92582-212
by law, and if it happens by reason of the circumstances that one company's fiscal year ends at a different period, which would make it pay a larger tax than another company, then it is to be regretted. But I know of no method of general application of the law which leaves it in the company's hands to have its fiscal year conform either to the calendar year or to a general scheme applicable to all companies. It is the company's lookout and I do not see how we can remedy that phase of it.


James Layton Ralston: It cannot be the company's lookout if it is taxed after the year has been fixed. The year has been fixed first and the government comes in and says, "You having fixed that fiscal year, not knowing that there was to be an increase, will have to pay nine months more of taxation than another company doing business in competition with you, because your year ends March 31, 1934, and the other company's December 31, 1934."


Edgar Nelson Rhodes: The principle is common not only to companies but to individuals.


William Daum Euler: If the principle is wrong, why retain it?


Edgar Nelson Rhodes: I have indicated as plainly as I possibly can why that has been done. The reason is that we cannot forego revenue at the moment. I have already said that the principle would not apply in happier circumstances.


William Daum Euler: That is not a good excuse.


Edgar Nelson Rhodes: It is a perfectly fair statement of my position and I do not know that I can add anything to it.


Mr. LUCAS:: Has the minister been able to make an estimate of the additional amount of revenue under the amendments made this year to the Income War Tax Act?


Edgar Nelson Rhodes: The estimate is $12,500,000.


[Stage Direction]
Section agreed to.
On section 3-Earned income.
James Layton Ralston: I want to congratulate the minister on the compliment he has paid members of parliament by including their indemnities in the definition of "earned income." It did not appear in the resolution but it is in the bill. May I now refer to a matter mentioned to me a good many times. Members of parliament do not generally legislate for themselves, but this does seem to be a matter which should have the attention of the minister-I refer to the living expenses of members in Ottawa. Income tax is paid

Income War Tax Act

on the full indemnity notwithstanding that the member in Ottawa has to spend a certain amount of money to earn that indemnity. It seems proper that an allowance should be made-the country would not criticize it in the slightest-to members of parliament who actually spend money for living expenses in Ottawa to become entitled to the indemnity.


Edgar Nelson Rhodes: I accede to the view expressed by my hon. friend. As a matter of fact an indemnity is not an income at all, otherwise it is not an indemnity. 1 can speak with some knowledge going back more particularly to the years when 1 was first in the house, when we received $2,500. I never took a cent back to my constituency, and the demands upon the member at that time were as heavy as they are to-day and as numerous. I will go further. I think the question of living expenses in Ottawa ought to be taken into consideration. It is grossly unjust to regard the indemnity of members as income for purposes of income tax, and I commend to the incoming parliament-


William Daum Euler: Why not now?


Edgar Nelson Rhodes: I would have done it willingly myself but for the fact that my motives would have been misconstrued.


William Daum Euler: Oh no.


Edgar Nelson Rhodes: The new parliament is the body to take action of that kind, and so far as I am concerned, wherever I may be, I will subscribe to it fully. I do not hesitate to say frankly that I believe the Income Tax Act should be amended to exempt the indemnities of senators and members of parliament, because if they are not income they are not subject to taxation. Indemnities are what the name implies: they are merely intended to indemnify members for the sacrifice they make in expenditure and in time and in giving up their income to come to Ottawa. I make that statement with the greatest satisfaction, and I do hope that the new parliament will be much wiser and kinder to its members than this parliament and the preceding ones have been.


Ernest Lapointe: The minister will find
in the Department of Justice an opinion of Sir Allen Aylesworth, a distinguished lawyer, who in strong language claims that this imposition of a tax on the indemnities of members and of senators is ultra vires the powers of this parliament and is unconstitutional.


Edgar Nelson Rhodes: Whether it is or not, I
have no hesitation in saying that it is unjust. I do not think it should be continued.


George Gibson Coote: I would direct the attention of the minister to expenses which we are allowed to deduct in determining our net income. For the last five years there has been a distinct difference of opinion between myself and the inspector as to whether or not I should receive an allowance at all for the fact that I require the use of an automobile. I use it both in my business, in carrying on my farm, and in earning my indemnity. I have a large constituency and I do not think I am exaggerating when I say that in carrying out my duty as I am expected by my constituents to do it, I must cover at least 5,000 or 6,000 miles of country roads every year. In addition to that, I do a good deal of travelling back and forth to my farm. I am using my car in carrying on my farming operations part of the time and on other occasions I am using it in earning my indemnity. I have been consistently opposed in that view by the inspector of income tax. I really think that right and justice would be on the side of any man in my position, that is in using a car either in the superintending of his farming operations or in earning his indemnity in visiting his constituents. As I have been unable to get any redress through the inspector of income tax, I want to give the matter a little publicity while we have the minister and the commissioner of income tax here. I think I am justly and legally entitled to an allowance for the use of my car, because men in almost every other occupation are getting an allowance for that; they are being allowed to deduct the expenses incurred in running their cars, and certainly a similar allowance in this connection should be made to members.


Mr. NEILL:: I would like to endorse the
remarks of the last speaker. It is well known we incur expenses solely and entirely in connection with being members of parliament, and yet we are not allowed to deduct as part of our expenses, for instance, the hire of stenographic help and payment of travelling expenses. Like my hon. friend, I have endeavoured to charge this up and have not been allowed to do so. I understand some yeare ago an amendment was inserted in the act which allowed a commercial traveller when he was away from home, to make a charge for his expenses thus incurred. At that time it was expected' that members of parliament would qualify under that section for exemption, but some wiseacres in the customs or excise decided that being a member of parliament is not an occupation or a busi-

Income War Tax Act
ness-they did not define what it was; a recreation, I presume-and' on that ground the application failed.
I just want to make this suggestion in regard to the remarks of the Minister of Finance; he says that he thoroughly appreciates the situation and he himself would be glad to make the reform that is asked for, but for the fact that it would look as if he were legislating for himself or as if we were legislating for ourselves, and he commended! the reform to the next parliament. But I suggest that now is the correct and precise moment for him to take action and to have it not take effect until the following parliament. That would relieve him and us of the suggestion that we were legislating for ourselves. If it takes effect then, heaven knows who will be here to constitute the next parliament. It is the custom, when any increase in salary for the members of a legislative body is being made, for the outgoing legislature to take the action, because that takes away the reflection of men legislating for themselves. The Minister of Finance evidently has the support of the house in this reform; he is in favour of it; why not pass it now with the condition that it shall not take effect until the next parliament?
Mr. RHODES; I shall be pleased to consider the suggestion made by the hon. member for Comox-Alberni (Mr. Neill), but I would have to confer with my colleagues before I could take any action. My suggestion, if it is agreeable to the committee, is that we pass this bill, and if my colleagues concur in the idea, which appeals to me personally, I would ask that an amendment be made to the bill in the upper house. So far as I am concerned I am quite prepared to support the idea, but my hon. friend will understand that I cannot take action without conferring with my colleagues.


Alan Webster Neill: There is a precedent for this. In British Columbia such a deduction is allowed by the provincial income tax department. It used to be $2,000; now they have reduced it to $1,000.


Edgar Nelson Rhodes: That is because it is a matter of law, and that is the difficulty the commissioner of income tax has at the moment with respect to the situation referred to by the hon. member for Macleod in regard to the use of an automobile. The deductions for travelling expenses are laid down specifically in paragraph (f) of section 5 of the Income War Tax Act, which reads: 92582-2124
Travelling expenses, including the entire amount expended for meals and lodging, while away from home in the pursuit of a trade or business.
It is obvious that it would be hard to construe that language to cover a member of parliament as pursuing a trade or conducting a business.


William Lyon Mackenzie King: It is the noblest of all callings.


Edward James Young: If a man has a business.


Edgar Nelson Rhodes: If a member of parliament
has a business which he conducts, that is quite another matter, but my hon. friend was referring to the circumstance that as a member of parliament he requires the use of a motor car in going about and doing government business, and that there should be a deduction on this account. May I say this: If we do have the law amended deleting the indemnity from being taken into account in the income tax, we shall have gone a reasonable distance. I think under those circumstances a member cannot keep a proper check in respect to the use of a motor car on government business.


George Gibson Coote: My complaint was chiefly in regard to the fact that no allowance is made for my expenses in travelling to my farm and back. That certainly was my business as distinct from being a member of parliament and the indemnity one receives therefor. The reply was: If you used this car exclusively for that purpose, the allowance would be made. But as I used it for other purposes I could not seem to convince the inspector of income tax that I should get any allowance for that. I just felt that the act was not being administered fairly in that regard.


James Layton Ralston: May I call the attention of the minister to section 6 (a) of the act which I presume he has 'before him. This gives him additional latitude. It provides that:
In computing the amount of the profits or gains to be assessed, a deduction shall not be allowed in respect of

(a) disbursements or expenses not wholly-
This is where they get the hon. member for Macleod, I presume:
-exclusively and necessarily laid out or expended for the purpose of earning the
income.
There the words "trade or business" are not used, and "income" is defined by the statute as including indemnity. I have felt indirectly that can mean that an allowance
Income War Tax Act

could be made where the disbursements were made wholly for the purpose of earning the indemnity; that is to say, expenses for living in Ottawa which are made for no other purpose than earning the sessional indemnity.


Edgar Nelson Rhodes: That would be true no
doubt, if the condition continued to obtain that the indemnity was regarded as income.


[Stage Direction]
Section agreed to.
Section 4 agreed to.
On section 5-Alternative exemptions from surtax.
Mr. GERSHAW:: I would like to submit
to the minister that in the explanation given of paragraph (c) of clause S there are enumerated the relatives for whom an exemption is allowed. I would point out that this is interpreted very strictly, held to blood relatives. There are men who probably have under their own roofs people whom they are keeping and for whom they can get no allowance. Take the case of a man supporting his foster parents, his stepmother or stepfather. There seems to be an injustice in some cases such as these.


Edgar Nelson Rhodes: That matter has been up
in the house and discussed and considered many times. In an act of this kind, while it is true that if you do not widen the exemptions, you will do an injustice in an individual case, on the other hand, having regard to the necessity of protecting the revenue, the less opportunity one gives to the taxpayer to evade the tax by enlarging his exemption, the better. For my part I can see no good reason why we should go farther than we have gone at present.


[Stage Direction]
Section agreed to.
On section 6-Expenses payable to controlling company abroad.
James Layton Ralston: I want to ask a question
on subsection (j). Section 6 as a whole, as I understand, provides that certain items enumerated there are not to be allowed as deductions from net income. Paragraph (j) refers to net losses sustained in the 1934 or any subsequent taxation period in the United Kingdom of Great Britain and Northern Ireland, et cetera. But I note that insurance companies other than life are exempt from that liability. Would the minister tell us why that exemption is made?


Edgar Nelson Rhodes: The answer is that insurance companies doing a world wide business are subject to conditions which do not obtain

in ordinary business, for example conflagration loss. That is the reason that this exemption appears.


James Layton Ralston: In respect to clause (k)
I spoke to one of the officers of the department; is there an amendment?


Edgar Nelson Rhodes: Yes, I am quite prepared
to move an amendment conforming to the suggestion made by my hon. friend, which amendment does not change the section as it was intended to be applied, but would make it clear 'beyond question that it bears that interpretation. I therefore move:
That paragraph (k) of section 6 of Bill 80 be amended by inserting after the word "issued" in the eleventh line, the words "or the income provisions thereof have been adopted" and by inserting after the word "corporation" in the eighteenth line of the said paragraph, the words "or its predecessor."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 7 and 8 agreed to.
On section 9-payments in respect of certain copyrights and copyrighted works.
James Layton Ralston: Does the minister expect to get any increased revenue out of the change? I understand that under this section a uniform rate of five per cent is imposed instead of twelve and a half per cent which was contingent on returns being made.


Edgar Nelson Rhodes: No, we do not expect any increase.


James Layton Ralston: Or any decrease?


Edgar Nelson Rhodes: No, I do not expect there will be any change.


[Stage Direction]
Section agreed to.
On section 10-Proviso against evasion.
James Layton Ralston: Will the minister consider my remarks in regard to the retroactive provisions of this act applicable to this section? I have not any particular company in mind, so I can speak very freely. What is being done here is to provide that dividends payable to a non-resident company shall be taxable if that company has been incorporated since April 1,
1933.	What appears to have been done, as would appear from the note, is that Canadian companies have been paying dividends to parent companies outside. The practice has grown up of establishing parent companies outside in order that these dividends might be received by them free of tax. It was per-

Income War Tax Act
fectly legal and proper; there was no statutory provision or legal objection to it. Then suddenly this bill comes in to say that if the company was incorporated since April 1, 1933, that remittance from the Canadian company to the parent company is to be taxable. It is simply the retroactive feature over again, which I submit is unfair in principle.


Edgar Nelson Rhodes: This section was designed purely for the purpose of preventing evasion, not for the purpose of imposing any injustice or any new taxation. It is to prevent the incorporation of a company in order to permit escape from taxes.


James Layton Ralston: It is all right to prevent evasion from this time on, but this is what judicial decisions call avoidance, not evasion. It is perfectly proper to avoid taxation but not to evade it.


[Stage Direction]
Section agreed to.
On section 11-Payments on income bonds or income debentures.
James Layton Ralston: This is a section which goes along with subsection (k) of section 6. One of the provisions of section 6 was that interest on income bonds was not to be deducted as an expense of the company. The circumstances under which income bonds are usually issued, as the minister knows, are these; a bondholder has a bond bearing a fixed rate of interest. The company gets into difficulty, and he is approached and told: "If you do not give up your bond, forego your rights and take something less, the company is going into liquidation." The bondholder agrees to some scheme of reorganization under which instead of getting a fixed rate. of interest he gets an income bond, the interest on which is payable only if earned. The bondholder gives up something, makes a contribution in order that a Canadian company may continue operations instead of going into bankruptcy. The minister has inserted in subsection (k) of section 6 a proviso that if income bonds are created under those conditions, under a reorganization in respect of which relief has been given to the debtor corporation, then the interest payable on that income bond is a proper deduction to be made by the company from its operating expenses. I submit that the same principle should apply to section 11, which as it is drawn provides that:
. .. any annual amount received' in respect of an income bond or income debenture shall be deemed to be a dividend.
In other words the bondholder who had his right under his fixed interest bond was getting bond interest, not a dividend, but
having agreed to take something else from the company he now finds it converted into a dividend, which makes it subject to a five per cent deduction under section 9B; so the bondholder is being penalized for having been accommodating and having given up his rights against the company and accepted something less. Therefore I want to ask the minister- I feel sure that he will agree in principle- if he will agree that a man who has consented to a reorganization under the circumstances stated in subsection (k), that is a forced reorganization brought about by financial difficulties, and who has agreed not to exact his pound of flesh, will be treated at least as generously as far as taxation is concerned as he would be if he had retained his rights under his fixed interest bond. That could be done if the minister would insert the proviso of subsection (k) as a proviso of section 11. Although the minister may agree to carry out the idea by way of administration, I think it would be better for certainty if the minister would insert the proviso of subsection (k) in section 11.


Edgar Nelson Rhodes: I prefer not to make an
amendment, because it would provide an exemption for all time for non-residents. But I will say that it is the intention that this section 11 shall be administered in precisely the same way as the preceding section 6, in a bona fide case such as has been instanced by my hon. friend.


James Layton Ralston: That is the only kind
for which it is asked.


Edgar Nelson Rhodes: It is quite competent, and
it has been quite competent, to deal with the matter by way of exemption by order in council. Having regard to the danger there would be in widening the provision I think perhaps that is the better method of dealing with it.


James Layton Ralston: Then the minister would
give that assurance, that the principle of subsection (k) will be applied by order in council?


Edgar Nelson Rhodes: Certainly. The desire
would be to see any bona fide cases, such as the one instanced by my hon. friend, fully protected.


[Stage Direction]
Section agreed to.
On section 12-Exemption from 121 per cent deduction.
James Layton Ralston: Is that subsection (e)
lettered correctly? If the minister will just check it up, I cannot find any subsection (e) in the act or the amendment?

Income War Tax Act


Edgar Nelson Rhodes: It is properly included
here, because it has reference to an amendment made last year.


[Stage Direction]
Section agreed to.
Section 13 agreed to.
On section 14-Tax on gifts.
George Gibson Coote: With regard to subsection
8, paragraph (a), which reads:
... gifts or donations made by any individual the aggregate value of which in any year does not exceed four thousand dollars;
I should like to appeal to the minister to raise that exemption somewhat. It seems to me that gifts somewhat in excess of $4,000 really should be exempt. I have in mind the case of a man who feels that he would like to give the home in which he is living to his wife; I think in many cases there is ample justification for such an act. In many instances he would be compelled to pay a tax on a gift of that kind, because often the home would be valued at more than $4,000. The rate of taxation increases progressively with the size of the gift until the sum of $1,000,000 is reached and it does seem to me that the exemption .might be raised higher than $4,000. It may be that I am taking the wTrong view, because I have not been informed as to the particulars of the gift tax in any other, country where it has been imposed. I presume the minister has made some study of this matter as it works in other countries. Could he tell us whether, in any other country where the tax is in operation, the exemption stops at $4,000? My whole point is that the tax is imposed at too low a point, and that the exemption should be more than $4,000. I believe in many cases this might be regarded as something of a hardship.


Edgar Nelson Rhodes: Mr. Chairman, we did make inquiry with respect to this tax, which is in operation in other countries. The nearest example is to be found in the United States. The object of the tax is obvious; it is to prevent an individual with an income which would bear a very heavy income tax from escaping that tax by handing over to certain relatives, perhaps to his immediate family, a physical volume of securities, for instance, which would have the effect of dividing his income among five or six persons. These, paying individual income tax, would come under a lower bracket, being in receipt of a smaller income, and in the aggregate the income tax payable by these individuals would

be nothing like the income tax that would be paid by the man under the higher bracket. It was to prevent that sort of thing, without the state securing some compensation by way of revenue, that this gift tax was imposed. The figure originally mentioned in the resolution was $1,000. That was raised, because we did not want to include in the category of gifts which were intended to be taxed, for the reasons I have just indicated, certain bona fide gifts by individuals to members of their families by way of an annual income, for example. There were certain cases of that. Inasmuch as the individual who gives, we will say, an annuity of $4,000 to a member of his family has paid an income tax upon that, the exchequer is not cheated. Possibly $5,000 might be a fairer figure; that is the figure set in the United States. I should be quite content to have it raised to $5,000, but I doubt if we would be wise in increasing the exemption beyond that figure. In that regard I am entirely in the judgment of the committee.


George Gibson Coote: I was under the impression that the bill contained the figure of $1,000.


Edgar Nelson Rhodes: The resolution did mention that amount., but we have made it $4,000 in the bill.


George Gibson Coote: So far as I am concerned I can see why gifts of this size should not be allowed every year, but the gifts I had in mind were those made once or twice in a man's lifetime. He may never have made any gift of the kind before that would assist him in any way by reducing his income tax. I do not want to labour the point, but it did seem to me that the exemption might very well be raised to the point mentioned by the minister, $5,000 or $6 000. However, I am willing to accept the minister's judgment if he thinks $4,000 is the proper amount.


Edgar Nelson Rhodes: I think it is fair.


George Gibson Coote: In certain cases it is liable to be regarded as a hardship.


[Stage Direction]
Section agreed to.
Sections 15 to 17 inclusive agreed to.
Title agreed to.
Bill reported, read the third time and passed.
At six o'clock the house adjourned without question put, pursuant to standing order.

Grade Crossings
Thursday, June 6, 1935