May 6, 1918

QUESTIONS PASSED AS ORDERS FOR RETURNS.

UNION

Mr. SUTHERLAND:

Unionist

1. What was the amount paid for sending cablegrams by each department of the Government for the year ending March 31, 1918?

2. What has been paid by each of the several departments for sending telegrams and telephone messages ?

31. Does the Government or any department thereof receive a special rate, or is the full commercial rate paid in connection with sending cablegrams, telegrams and telephone messages ?

4. If not, is it the intention of the Government to endeavour to arrange for a special rate?

* Mr. MURPHY:

Referring to the item "Composition, Stereotype Mats shipping charges, etc., $2'0,3 60.34," contained1 in the return of amounts paid for Victory Loan advertising,-

1. To whom was the said sum of $20,360.34 paid?

2. Was the said sum or any portion thereof paid under contract?

3. If so, with whom was the contract made, and what are the particulars thereof?

Mr. READ (Prince)-:

1. What amount has been paid by the Government to each of the following newspapers: Charlottetown Guardian, Charlottetown Examiner, Island Patriot, Summerside Journal Agriculturist, Pioneer and Farmer, Charlottetown Herald, Charlottetown Watchman, from the 1st of August, 1914, to the 1st of January, 1018| '

2. What portion of the amount so paid was for advertising in connection with the war?

Topic:   QUESTIONS PASSED AS ORDERS FOR RETURNS.
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L LIB

Henri-Edgar Lavigueur

Laurier Liberal

Mr. LAVIGUEUR:

What were the gross earnings of the National Transcontinental Railway for the year ending 31st March, 1918 ; how much was earned between Moncton and Quebec, between Quebec and Cochrane Junction, between Cochrane Junction and Winnipeg, and between Lake Superior Junction and Fort William, and what amount has been paid by that railway to the Canadian Pacific for terminal charges at Quebec?

* Mr. LEMIEUX:

1. Has the Government notified the civil servants who have enlisted with the first contingent with the understanding that they would receive their salary besides their soldier's pay, that they would now only receive their soldier's pay?

2. How many civil servants enlisted under that agreement?

3. What is the total amount involved by the proposed reduction?

Topic:   QUESTIONS PASSED AS ORDERS FOR RETURNS.
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THE BUDGET.


The House resumed the debate on the motion of Hon. A. K. Maclean (Acting Minister of Finance) that Mr. Speaker do now leave the -Chair for the House to go into Committee of Ways and Means (resumed from May 3.) Lieut.-General Sir SAM HUGHES (Victoria): Mr. Speaker, I ask the indulgence of the House owing to the fact that I am -suffering from a rather severe cold, but it may turn out for the best, after all, in *that my remarks will necessarily be curtailed. At the outset I wish to compliment the Acting Minister of Finance (Hon. A. K. Maclean) on the plain, unadulterated, and modest financial statement which he has -submitted. On t'he occasion of its delivery I remarked that it was the first intelligible Budget speech that I had heard for a good many years. Those of us who were members of the last Parliament will remember that about a year ago I felt called upon to express in the House my views of the hon. gentleman (Mr. A. K. Maclean) as financial critic of the Opposition. I have pleasure now in saying that his co-nstruct-iveness in formulating an intelligible Budget has been very successful. The plain, simple manner in which the financial state- ment was presented has satisfied the House and, I think, the country as a whole. I therefore have pleasure in expressing my appreciation of the work of the Acting Minister of Finance. If I may be permitted, 'Sir, I should like to place on Hansard a few ideas concerning democracy and the right of Parliament and the public to free speech, as far as that is consistent with the carrying on of this war to a successful issue. Undoubtedly the liberties of England, which have spread to other lands, are largely due to the fact that from time immemorial Englishmen have claimed the right of free speech in Parliament and in the press. True democracy is open, frank, free trust in the people, bogus democracy, or autocracy, fears the people, suppresses the facts and suppresses the people as far as it may. Autocracy is mistrustful; autocracy imposes restrictions and repression. Chloroform is a .splendid anesthetic, but it is a mighty poor food, and even as an anesthetic it must- be carefully administered. I therefore deprecate anything-like the imposition of chloroform methods in connection with public affairs, whether those of the country generally or those pertaining more particularly to the war. We hear over and over again in the press the cry of the autocrat, or the imbecile- for the two are very often the same-that in war democracy fails; that democracy cannot meet the situation caused by war. I have been a careful reader of history and a student of matters connected with the war, and I have yet to see the situation presented during this conflict, whether in Britain, Canada or France, that could not be successfully met by the application of the old methods of responsible government to which we have so long been accustomed. No situation can arise that calls for autocratic methods which are not in harmony with the principle of responsible government. We have had a recent illustration in Canada. On a. certain occasion a certain gentleman in a certain place wanted to give utterance to certain ideas. Every restriction that gentle autocracy could devise was placed upon him, without success. Free speech and free action have settled and calmed the great Dominion of Canada to a greater degree than any one could believe possible, and they have most successfully alleviated the situation. Repression is always the policy and the practice of weak and incompetent men. The freedom of the press must be maintained; the press must be given the opportunity of 94* selling itself, or not, as it chooses. The press must be left free. As the poet says: If the ways to hell are free, We leave them free to Heaven. I think, therefore, that the press should be left absolutely free and untrammelled, each newspaper being allowed to conduct itself in its own way, as far as possible consistent with the rights of the people in this great war. Recently it has been my privilege again and again to see some censored articles that have been prevented from going before the people. Really, one would scarcely believe it possible that men of such narrow vision could be found as to repress and cut out section after section of articles that have been published again and again in England. If you talk with any one coming from England you will find that things are known there concerning our forces and concerning everything that is going on which are religiously suppressed: in this great Dominion. I do not know who the censors are; I assume that they are men of great breadth of judgment, soundness' of conception, and so on. I do not know whether they are inspired by some of the.se new councils and committees that are being formed; I know nothing about that, and care less; but I do say that the repression and censoring of articles that should find their way into the public press should he stopped. We knew that we got a trimming at Cambrai; what was the us© of trying to hide it? We knew that we got a trimming at St. Quentin; what was the use of trying to hide it? Let us, like men, roll up our sleeves and say to the enemy: It was your turn then; we will meet the situation and in a very short time the tables will be turned; our boys will 'be on the attack and the German hordes will be rolling back over the very ground on which' they advanced a short time ago. That is the spirit that should prevail among the people. We had a secret session of Parliament here; I ask every bon. gentleman who was present at that secret session whether one word was uttered which might not fairly and squaiely have been published broadcast in the newspapers the day before or the day after the meeting? Not a word. To miy mind, this eternal fear of trusting the people is laughable. Who are the people? Who are we? Who are the Government, that they seek for one instant to muffle public sentiment or prevent the people from knowing what is going on? The Government is composed of magnificent honour-



able gentlemen; I have not a word to say against them, but I do think that two or three good Cabinets could Ibe formed ont of the material found in the members of Parliament gathered around this Government. There is scarcely a township or county council in Canada could not furnish material just as good-I say this with all due respect-as that which is found in those who are carrying on the affairs of this country. There is method in my madness ; what I want to impress on the House is that we should trust the people. If some of the people I have mentioned could not make a better showing than some members of the Government, Hod pity them. Let us, therefore, be careful that, in seeking to establish democracy in Germany, we do not establish autocracy in Canada. Some few months ago a general election was held in Canada. In the election campaign the one great issue that was set before the people was: " Strain every effort to win the war and to preserve the priceless gem of liberty, and do it quickly." We supported the Government and der-manded prompt action with efficiency rather than slow deliberate action without full efficiency. That was seven months, ago. In 1915, within seven months from the organization of the first Canadian expeditionary force, 33,000 men from Canada had crossed over to Great Britain, and between 15,000 and 20,000 of them had crossed to France and Belgium, and had immortalized themselves by winning one of the greatest victories in the world. These men, who were termed by gentlemen of repressive tendencies as untrained, .undiiscfplinedi soldiers, when they Were confronted in that battle with from ten to twenty times their number of Germans, .showed the world what democracy could do. It is my prayer and, I believe, it is the prayer of the Allied forces, that the remnant of that gallant band shall yet tread the soil ol Germany as conquerors and victors in this great struggle. Seven months ago the Military Service Act was brought in. Comment is needless. This is a new House, composed of new men, independent thinkers, men not yet circumscribed by so-called party - discipline. True discipline in educational as well as in .military matters, means, as I have always maintained, freedom of thought and action, instruction, development, polish, capability, strength of character, and resolution. These are the characteristics of discipline, according to the proper interpretation, of the term. The so-called discipline is merely repression. The members of this House are not yet influenced as the party whips mildly crack the lash, but they are strong, capable men, resolute of purpose to help this Government and if necessary, to compel this Government to live up to its preelection promises in regard to winning the war, and to go as far and as fast in that regard as the Government chooses to go. We are behind the Government's back until the finish. The people at large impel hon. members, while they in turn, in firm, kindly ways, will inspire the Government to action. The aim which actuates this House is to help to win the war; to help to smash the enemy; to help to maintain pure and unsullied the freedom our ancestors won and which they have handed down to us; to help to overthrow and root out every vestige of tyranny to be found in Germany, aye, or in Canada,-and, let it be done quickly. Action is- the word. I know I voice the sentiments of my colleagues when I urge the Government to full, energetic, effective and whole-hearted action, and I have said, we are behind them as far and as fast as they choo<se to go. along those lines. The true people of Canada, worthy of the fullest trust and confidence, stand behind us and them. Let chloroform methods, therefore, disappear from the public life of this country, and let true democratic principles prevail. There are immediately before the people of Canada four great problems. There is another problem which I look on as an after-the-war problem, of which my hon. friend from Moosejaw (Mr. Calder) has charge, and which I regard as only second in importance to the furnishing of men. These four problems are food, money, inspiration, and men, and in these the problems of producing and saving in producing and of spending and saving in spending, are simple. With the production of food I shall not detain the House, as that matter is in good hands. Production has been hampered by the cost of agricultural implements, not so much on account of the duty as on account of the long term notes and high cost of financing these articles. As regards the saving of food, it may be noted that at the beginning of the war, it cost a great deal of money to dispose of camp refuse. We set to work, however, and turned what had formerly been a great source of expense into a source of revenue, and I have every reason to believe that the Minister of Militia has been carrying out the plan laid down in the early days of the war. All the garbage of the camps was turned into a source of revenue. Hundreds of hogs, and in some camps, thousands of hogs were fed and sold, and in that way the country reaped large sums of money. I would respectfully suggest that if1 the Food Controller wants some simple lines upon which to act, he might consult General Langton, who is now Paymaster General at headquarters, and Colonel Mullin, of Winnipeg, who has had a good deal of experience in this matter. At the start, the quantity of rations issued to the men was here and there a little too great. This excess was claimed by those people as their own property and was disposed of in ways which we did not consider to be to advantage of the people of Canada who were footing the bills. Accordingly, we formed plans which we put into operation, and I have it on the authority of the Paymaster General who has recently retired, that up to that period we had saved upwards of $2,000,000 on little odds and ends in connection with rationing alone. The same policy was carried out on the other side, and by saving in little things in our food production, we saved very large sums of money to the Dominion of Canada. I believe all these plans, perhaps with improvements, are being carried on by my successor. Let us next take up the question of raising money, and saving it while we are raising it. I regret exceedingly that the Minister of Finance (Sir Thomas White) is absent. We miss his genial smile and presence. I regret his illness very much, but there are conflicting reports regarding it. The House was one day officially informed that the Minister of Finance was ill. The next day the press agencies of California offered to the press of Canada a message of a thousand words comprising an interview which had supposedly taken place with the Minister of Finance and (proving that he was not ill, but that he was in the best of health. That report was confirmed by travellers and others who had the pleasure of meeting the Minister of Finance in California. The House was subsequently informed that it was the purpose of the Minister of Finance to return to Canada, but he was importuned not to return to this country until his health was fully restored, but to go to Washington. There has been considerable comment , throughout the country on these statements. I do not wish to enter into them, but there is nothing that the public like more than to be fully trusted, and nothing that they dislike more than to find themselves sidetracked. I shall not use any stronger terms. One is impelled to ask this question: Is the real aim in this regard to help the boys at the front to win the war, or to help certain directors to retain peaceful possession and control of munitions and money raised by this Government? At the outbreak of the war in 1914, times were hard; depression was found on every side; dinner pails were empty, and'poverty stalked through the homes of the land. The Minister of Finance declared that he could not finance for more than 20,000 men, and objected to sending 33,000 men overseas. He was reasoned with and urged to raise sufficient revenue, and finally we got the 33,000 men across. I shall not enter into the details of this, because they are all [DOT]well known to hon. members and to the people of this country. Lord Kitchener, early in the war, cabled me for 200,000 [DOT]shells, asking me to get them made in the United States of America. I shall not enter into this matter further than to point out that at once the idea of raising revenue and making the country prosperous presented itself to us, and the shells were accordingly made in Canada. The only member of the Government whom I consulted on this matter was the Prime Minister, and in all fairness to him I must say that on that and every other ' occasion I got every assistance and backing from him. It was impossible to get these two hundred thousand shells made in Canada at first, because our manufacturers and financiers lacked confidence, and it took a week or more to get the thing under way. But I knew that if once the thing were started, money would come into this country; we should have plenty of money in the banks for carrying on the war and for any other purposes for which we might require it, and the dinner pails would be filled. The plan was that I was to act as Lord Kitchener's direct agent. The Shell Committee was set up, who were to make contracts for shells with me, as the representative of the British Government. Several questions came up; for instance, whether we should use basic or acid steel; then there were the questions of copper and zinc and explosives and of procuring fish and other supplies in this country. But these are all old stories. Suffice it to say that in a very short period thereafter we had money in Canada in every bank, and in the pocket of every man and woman throughout the length and breadth of this land. We had a period of prosperity such as we had never experienced before. Upwards of one billion and a half of money was deposited in the



banks in this country at three per cent or less. . A good deal has been said about profiteering in connection with the manufacture of munitions. I have made a careful analysis, but other hon. gentlemen in this House are better posted, having gone into the matter more in detail. Briefly, the record is as follows: Twenty-five per cent of those who entered into the manufacture of munitions completely failed and lost their money, and I have yet to find any person express the slightest bit of sympathy for any of these poor beggars who put up their own money-not the Government's money as was done in Great Britain and *the United States, but their own money- and then failed in the manufacture of munitions. Fifty per cent came out -a little more than even, and about twenty-five per cent, owing in some instances to good work and in others to slight encouragement from the Munitions Board and elsewhere, succeeded in making money. Upwards of a year ago the United States entered the war. Then they wanted shells, and our own industries not being very buoyant at the time, I personally took steps with a view to having the United States get a proportion of their shells and other munitions of war made in Canada, but the Chairman of the Imperial Munitions Board declined at that time to permit American [DOT]munitions to be made in this country. I had this in view: We were making munitions for Great Britain; large sums of money were being raised in Canada for making munitions, not for the Canadian Government alone, but for the British Government as well. The British Government could have had these supplies made in England, but so long as we could raise the money in this country they turned the work over to us. At that time we had an adverse trade balance against the United States, we owing them, roughly, four hundred million dollars, and I felt that we could pay that off and restore the equilibrium of exchange, and make money for Canada, if we could make shells and munitions of war for the American Government; and I still hold that view. But as I have said, Canadian manufacturers were not permitted at that time to manufacture munitions for the United States. Later on, it is true that after considerable agitation arrangements were made whereby these munitions were made in Canada, but in the meantime a number of our fellows, wearying of doing nothing in Canada and despairing of this arrangement ever being brought about, established their plants in the United States, and to-day our manufacturers have plants in the United States at Buffalo, Batavia, and twenty other places I could name, where Canadian capital is being employed in making munitions for the United States Government. In my opinion, these munitions should have been made by the factories of our own country. Then the balance of trade would have been in our favour, and we should not have had to pay from two to two and a quarter peT cent exchange when sending money to the United States. I am not saddling responsibility for this directly on the Government, but I say it would have been money saved for this country. So much for that. Money has been lost or wasted in Canada in the following, among other, ways: The National Service Commission was time and money frittered away and wasted. I have discussed that matter before in other sessions, and shall not take it up again to-day. The Canadian Home Defence Force was also time and money frittered away. The Military Service Act has cost the individuals of this country affected by it many many hundreds of thousands of dollars. I know one young man who has had to spend upwards of fifty dollars, through no fault of his own, in running back and forth to tribunals and for medical examinations. The Act has not only been an annoyance to the people of Canada, but a tremendous bill of expense as well. I might interject here that when the Act was introduced I appealed to the Government, both privately and on the floor of the House, to enforce the Militia Act, as it would much better fill the bill. We could have called out three or four hundred thousand men for training in Canada, and out of that number who would have been training in Canada last fall we could have secured at least .two hundred thousand volunteers for the front; and if they would not volunteer, we could have, sent them to the front under the Militia Act just as we are sending them to-day. Under that Act we could also have conscripted other men for any useful employment in the Dominion. I am satisfied that if that Act had been applied, there would have been no trouble and everything would have gone on harmoniously. Many of these boys object to being called conscripts, but after a week or two they are just as keen as the lads who volunteered early in the war, and I am satisfied that with a few amendments to the Militia Act, and a few regulations here and there, we could easily have got two hundred thousand men more than we have to-day, and I know they would have been much better trained. However, that is past, and I do not want to raise ghosts. I am sorry the Minister of Justice is not present, because another place where I .think a great deal of money has been wasted is on the so-called Dominion Police officers running up and down the country, riding on the trains, and arresting everybody except the men they should arrest. I have again and again submitted a list of the people in the county I have the honour to represent who should he taken, but hot one of them has been approached yet. On the other hand, I could name fifty decent fellows whom the Act does not affect at all who have been bagged and put to all sorts of inconvenience and trouble, kept waiting hours and sometimes days by the so-called Dominion Police officers rambling up and down the country. These officers should be put to some useful occupation; sawing wood would be very congenial. Another place where money has been deliberately wasted, in my opinion, is on the War Lecture Bureau. I do not know yet what its purpose is, or how it is composed, or who was responsible for selecting its head. But I realize this, that ninety-nine per eent of the people in the county I represent can deliver just as good lectures as the men who are sent there to lecture to them.


L LIB
UNION

Samuel Hughes

Unionist

Sir SAM HUGHES:

I believe that the

Bureau has been established, not to educate the people on great national subjects, or to maintain the spirit of our people, but along lines congenial to the hon. gentleman who has been instrumental in setting this thing up, and he has certainly added insult to injury so far as I am concerned by placing at the head of the Bureau a man who year in and year out has persistently blackguarded, maligned and lied about me in every imaginable way.

If the hon,. gentleman thinks I am going to permit any fiddling concern like that to go up and down the country robbing the people, all I can say is that he is reckoning without his host. I shall expose them on every occasion. I look upon it merely as a four-flushing performance and as un-der-estim,ading the intelligence of the people. There is not a line they send out in these circulars that cannot be sent out by the newspapers, and the information can be better placed before the people through the medium of the Press than by these lecture bureaus which are performing

up and down the country. I am sorry to think that the Government could bo so hoodwinked and I cannot understand what was the strange, unseen, hidden hand pressure that these gentlemen were able to put upon the Government of the day to induce them to permit this sort of thing and to impose upon the people and on the treasury of the country. There is nothing like talking out in meeting and having the facts put clearly. I know what the sentiment of the country is and I feel satisfied that in what I have said I have only expressed the sentiments of the people, ^ Furthermore, we are to have a Registration Board, or something of that kind, the only difference between the registration now proposed and under the National Service Board being that whereas this is compulsory the other was not. In a widely scattered country like the Dominion of Canada any such registration as that which is proposed is doomed to a miserable failure. The records will show in a very short titne that the whole thing is a farce, that it cannot accomplish any useful purpose that might not be accomplished by taking up the voter's lists or consulting the assessment rolls in any township or municipality in Canada. It can all be done in that way, but, if we are only to get lists of men and little girls who are willing to go out on a farm-why it's piffle. In a great country like this, thousands of miles in extent, you are going to ask a man who saws wood here if he will go and work some place else and you are. going Lo get some little girl in the Civil Service to give up her job, go some place else, put on a pair of breeches and pick berries. The thing is ridiculous and I wonder that any man with an ounce of common sense in his head ever thought of such a thing or allowed it to be undertaken. What is the malign influence, what is the hidden hand which this gentleman seems to exercise in connection with this war lecture bureau and this registration business?

Another waste of money is in having two Militia Departments. We have one Militia Department here presided over by a mighty good fellow. We have in England another Militia Department. I asked a question in this House last year and I received a deliberate mis-statement- in reply, regarding the number of people employed at Argyle House. I knew it was a falsehood at the time, hut I let it pass.

Topic:   THE BUDGET.
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UNION

Edgar Nelson Rhodes (Speaker of the House of Commons)

Unionist

Mr. SPEAKER:

Order. The hon. gentleman is not in order in saying that the Government furnished him with a deliberate

mis-statement and that remark should be withdrawn.

Topic:   THE BUDGET.
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UNION

Samuel Hughes

Unionist

Sir SAM HUGHES:

Did I say that the Government ifurnis'hed me with a deliberate mis-statement?

Topic:   THE BUDGET.
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UNION
UNION
UNION
UNION

Samuel Hughes

Unionist

Sir SAM HUGHES:

I did not say. At all events, the facts were not made public, and I a.m in a position to say now that two weeks before the answer, such as it was, was given in the House there was a great cleaning out. There was a hurried clearing out of the fellows in order to reduce the number of men who had been hanging around Argyle House and kindred places at that time. The quibble-I can say that- and I do not charge any one here with being guilty of quibbling-was this : they limited the answer to a number of people employed in Argyle House, but it should have included the number employed in four or five other buildings, I understand, in the immediate locality. If half of that army of employees had been behind Gough when the line broke ah St. Quentin the German attack might have been checked. We have a great many men in England, some hundred odd thousands, and, according to the returns which we get, there are only fifteen thousand or sixteen thousand

fit to keep up the strength of the men in the trenches. The money is going to pay for the service of 'the hundred thousand men we have in England and ifor those who are (doing very little work, whereas the same work is being done and duplicated here. This work should be and could be done here. Under the old system General Carson and thirty men did the work in England which is now being done by hundreds of imen and minister surrounded by his retinue. I shall not say anything with regard to the way in which the work was done in those times, .but if a comparison be made between then and now it will be entirely in favour of the old system.

I desire to say a word about that magnificent young officer, General Turner, who was put in command in England. When that happened I wrote him and warned him that he was committing military suicide.

I pointed out to him that it would he utterly impossible for any man to carry on the

work of his command circumscribed as he was and with such a minister a< he had. There was loaded upon him without his c ,nsent an officer who had no more conception of a democratic army than a hen has of logic. That is the way that p^oi Turner has been driven from pillar to post. General Turner was one of the best officers that ever entered the field and one who always kept in view the necessity of saving the lives of his men. He would carry out his plans in such a way as to minimize the loss of life. He first looked after the lives of his boys. He would not send his men up against machine guns as some officers do with reckless disregard for life. No body of men can stand up against machine gun fire; it will mow them down by thousands.. Two machine guns brought down eighteen hundred British soldiers at the Battle of Neuve Chapelle before the position was finally captured. The idea of rushing men up against machine guns may look nice in the papers hut General Turner had too much regard for his men to have them butchered in that way. I notified the British Government when I was Minister of Militia and Defence protesting against sending our Canadian boys up against machine gun positions without any protection in the way of shields and I said that if they continued to do so it would be my duty to provide them with a bunch of Texas steers because they would afford the German machine gunners the same amusement and practice as our gallant lads would, and would make just as good targets for the machine guns as would our men. General Turner would have made a magnificent corps commander in the field if he had been put in command of one or two Corps when the Dominion had the honour and credit of sending her brave boys to the front. But, he is held in London and as a result the career of a gallant soldier is blighted. The minister, under whom this has been going on has no reputation of his own to blight.

There is another reason why a great deal of money was lost last winter and that was because of the absence of motive power on our railways. The whole trouble last winter was not the want of coal but the want of motive power to haul the coal. The daily consumption of coal per locomotive on our railways is usually about four or five tons, but last winter they burned double that quantity and they could not haul more than half a train. If they had spent money to get motive power on the railways traffic would have moved more quickly over the

different lines. The Government should get the advanced idea rather than the repressive idea.

The question of loans is a very interesting subject of discjission. In this matter not only millions but tens of millions of the money of the people of Canada might have been saved. With your permission, Sir, I shall read an extract published, I think it was in 1915, in The Courier, a standard publication in the city of Toronto, and I shall assume responsibility for the statements in it because I have the whole thing in detail. However, I shall not weary the House with those statements to a greater extent than is set forth in the article in the Courier, although I have an analysis of all the loans. This refers, to the best loan of the lot, one for $46,000,000, made in the United States in 1915, I think:

Did1 the Hon. Mr. Wihite Succeed in Wall Street ?

The Story of the Getting of Forty-five Million Dollars from Shrewd United States Investors.

Did Mr. White score a triumph, or was the triumph scored by Morgans and their associates? Will Canada lose ten million dollars by this transaction?

When the 'Canadian Government borrows money and agrees to pay a certain rate of interest, that transaction affects every borrower, public or private, in the Dominion. For example, if the Canadian Government will .pay only 3.J per cent., the Provinces will probably toe able to borrow at 3| or 4 per cent., the municipalities at 4 or 4$ per cent., and private borrowers at 4 k or 5 per cent. The Dominion Government, according to history, can always borrow a lit/tle more cheaply than the Provinces, while the Provinces borrow a little cheaper than the cities, and the cities a little less than the private borrower.

Incidentally I may say that I took up a paper the other day and saw where the city of Victoria, B.C., is to-day paying seven per cent interest, and some other city more than seven per cent interest, on loans.

Hence, every transaction toy the Dominion Government affects 'the Provinces, the municipalities and the private borrowers. Tire Canadian Minister of Finance sets the rate at which all borrowers shall pay. If the minister is careless or extravagant, and pays an excessive rate of interest, he forces all other. borrowers to pay a higher rate. If he is frugal and a good borrower, he helps all other borrowers to get money cheaply.

To take an extreme case. Supposing we had a lazy, small-headed bungling Minister of Finance at Ottawa who borrowed money on a large scale at seven per cent interest. The Provinces would be compelled to compete with him, and might have to pay 7i per cent. Then the municipalities would, have to compete with the Dominion and the Provinces in the money markets, and would have to pay 8 per cent. Private borrowers, say railways, traction companies, manufacturers, and so on, would be

forced toy competition to pay 9 per cent. Thus we see that every loan of a big nature must be made on terms which are set by the Dominion Minister of Finance.

Why We Went to New York.

With these circumstances in mind, let us examine the latest exploit of the Hon. Thomas White, .Canadian Minister of Finance. He is getting all the money for war expenditures from London. The British Government has agreed to help him in this respect. He has no difficulties so far as war expenditures are concerned. But if he has not enough money to pay for other expenditures, such as canals, post-offices, armouries, docks, dredging and other public services. He must borrow elsewhere.

Now, Hon. Thomas White needed forty-five million dollars to meet the deficit of the year 1915. Whether there ought to toe a deficit or whether there ought not to be a deficit is not a matter to be discussed here. There is a deficit and that deficit must be met. Therefore the Hon. Thomas White arranged with the Bank of Montreal, J. P. Morgan & Co., Brown Brothers & Co., First National Bank and National City Bank of New York to raise the necessary forty-five million.

There can be no objection to our going to New York to borrow. It is practically the only market open to us, though the Dominion had never gone there before. The Provinces and the municipalities have been going there since the war broke out. They have borrowed over a hundred millions in that city during the past twelve months, and they also got their money at reasonable rates. Moreover, Canada is buying so much more from the United States than we are selling to that country that it was difficult to pay for all we wanted. The rate of exchange was therefore against us. A big borowing like Mr. White contemplated would help to restore the balance. That is, the Dominion Government would get Its money not in cash, but in credits due American firms by Canadian creditors. Thus it would be beneficial all around -and prevent the necessity of sending $45,000,000 in 'gold to New York to pay our debts there.

How the Rate was Decided.

So far so good. The next point for Hon. Thomas White to consider was "What rate of interest shall I offer the New York bankers?" In deciding this he had several points to keep in mind. In the first place, the New Y'ork bankers were anxious to see Mr. White borrow there. They iwere willing to make the loan. They are interested in seeing United States firms continue to sell largely in Canada, which they could not do if .Canada has no money to pay for goods. It was just as vital to the United States to lend us that money as it was for Canada to get that money. Each party to the bargain was interested. Hence Mr. White must have known that the situation favoured a low rate of interest.

In the second place, Mr. White knew that the Ontario Government was borowing there at five per cent, interest, and that the city of Toronto had got money there at five per cent. He would know, therefore, that he should be able to borrow in New York at 4| or 43 per cent.

In the third place he had to consider what other countries were doing. Great .Britain has just raised over three billions of dollars at 4J per cent. But this interest is subject to in-

Topic:   THE BUDGET.
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UNION
UNION
UNION

Alexander Kenneth Maclean (Minister Without Portfolio)

Unionist

Mr. A. K. MACLEAN:

That is right.

*Sir SAM HUGHEiS: These, of course,

are not included in that $400,000,000?

Topic:   THE BUDGET.
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UNION
UNION

Samuel Hughes

Unionist

Sir SAM HUGHES:

Nevertheless these

,$150,000,000 were former issues of bonds that were transferred and came in under the higher rate of interest and better term? of the Victory Loan. Am I right there?

Topic:   THE BUDGET.
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May 6, 1918