April 22, 1952

SC

Solon Earl Low

Social Credit

Mr. Low:

I just read exactly the words the minister used.

In other words, the average taxpayer will pay 6 per cent less than he would otherwise have done under the income tax law as it now stands.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Sinclair (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. Sinclair:

Quite right.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

Not less than he paid in 1951.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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SC

Solon Earl Low

Social Credit

Mr. Low:

Mr. Speaker, what the taxpayers of this country want to know and what they are entitled to know is exactly, in dollars, what they have to pay in income tax in 1952, and by how many dollars that sum is greater or less than what they actually paid in 1951. That is exactly what the people want to know and that is exactly what the minister did not tell them. In fact, he told them something from which they simply could not get those figures and it left them completely up in the air.

An examination of the two schedules which I have already placed before the house reveals the fact that the picture presented by the minister is a far different one from the average or a 6 per cent decrease in personal income tax which was announced on budget night. There is no decrease, Mr. Speaker, in income tax from last year's payment by individuals. I repeat that there is no decrease. It is all increase all the way along the line. What the hon. member for Rosetown-Biggar (Mr. Coldwell) said is quite 55704-95J

The Budget-Mr. Low

true. The people in the lower income categories are getting it in the neck far more heavily by way of increase than are those in the upper income groups; and so it is all the way along in this budget. It is not a poor man's budget at all. It is a rich man's budget.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. Knowles:

It is just a poor budget.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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SC

Solon Earl Low

Social Credit

Mr. Low:

Even when you exclude the old age security tax of one per cent of the taxable income, the individual taxpayers of Canada will pay more in 1952 than they did in 1951. I repeat that when you exclude this payment, they will pay even more in 1952 than they did in 1951. I say that no juggling of figures in schedules, and no parenthetical expressions slipped in in various places in his budget speech-in rather queer places, in my judgment-can change that fact. As a matter of fact, the taxpayers of Canada, I think, resent the misleading statement made by the minister on budget night more than they resent the actual increase in the taxes that they will have to pay. They were quite prepared to face the facts but they wanted the facts. Their resentment is therefore extremely strong. The people generally are fast waking up to the fact that the Liberal party have developed to a high degree the hidden tax complex. This is just another demonstration of it. Down the years since this government came into office, there has been a continuous increase in the number of hidden taxes imposed upon the people as well as in the volume of revenues that have been derived from hidden taxes. It continues, as any study of the budgets down the years will show.

I am sure that the Canadian people had every reason to expect that the minister would include in his budget a provision making it possible for taxpayers to deduct the total of their medical expenses from their net income in order to arrive at a taxable income. The hon. member for Rosetown-Biggar has dealt with that matter very well, and I agree entirely with what he says. Inasmuch as I agree, it follows that I shall support his subamendment.

In the light of the unanimous vote of this house on the resolution presented by the hon. member for Winnipeg North Centre (Mr. Knowles) and also, I might say, in the light of the encouraging statement made in this house on March 26 by the parliamentary assistant to the Minister of Finance, I think that we had every reason to expect something very different-

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Sinclair (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. Sinclair:

No; it was only a resolution to give the proposal consideration that we voted on.

The Budget-Mr. Low

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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SC

Solon Earl Low

Social Credit

Mr. Low:

Maybe that is another misleading statement.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. Knowles:

Quibble, quibble, quibble!

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Sinclair (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. Sinclair:

That is what we voted on.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. Knowles:

They voted for it that day; maybe they will vote for our subamendment.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Louis-René Beaudoin (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order. The hon. member for Peace River has the floor.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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SC

Solon Earl Low

Social Credit

Mr. Low:

I repeat that, in the light of things that went on here on March 26, we had every reason to expect something very different from these meagre concessions that were granted in the field of medical expenses. What the Minister of Finance (Mr. Abbott) did in the budget will certainly be of little or no use to the taxpayers in the lower income brackets. They are not getting anything beyond what they have now. Considerable relief, of course, is there for those in the upper crust of income. As the hon. member for Rosetown-Biggar (Mr. Coldwell) said, it is quite evident that the minister is not prepared to take any direction from the members of this house who represent the sovereign people of Canada.

I am justified in wondering whether the present Minister of Finance is not following in the wake of his predecessor who told this house in no uncertain terms that the cabinet of this country derived their powers from the king and not from this sovereign parliament. It is about time that that issue was settled. I maintain that the sovereign power of this country is the people of Canada, and that the elected representatives in this house must be obeyed by the executive council in any matter where a majority vote or a unanimous vote is taken from the members in this house.

I should like to have something to commend the minister on. I would not like to criticize him all the way along. I want to commend him for taking off the 15 per cent tax on washing machines, electric stoves and refrigerators; but I have to remind him that when this tax was imposed last year we of the opposition-I think perhaps every speaker on the opposition side who spoke- protested vigorously on the ground that the tax struck unfairly at young married couples, as well as established householders in the lower income brackets.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. Knowles:

It stank.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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SC

Solon Earl Low

Social Credit

Mr. Low:

Yes, it stank. The minister at that time s-coffed at us, just as he scoffed at our suggestion that his tobacco tax had passed the point of diminishing returns and would likely cause him trouble. A year later the

minister says that we were right in both cases, but I suspect that he would not have taken off the 15 per cent special excise on household appliances if the work of the opposition in this house had not aroused the people to a tax consciousness, the like of which they have never had before-and I say that advisedly. I have met it everywhere in Canada more strongly than I have ever before, and I say the opposition in this house has justified itself and its existence on that one point alone of arousing the people from one end of Canada to the other to a tax consciousness. I think it is high time. That is the main reason I think for that concession being found in this budget. Public resentment is making itself felt, and when the taxpayers become more fully aware of what the government's hidden sales tax is doing to them by way of enhanced prices and by way of placing an unequal or uneven burden on them, particularly those in the lower income brackets, as was so well said by the hon. member for Rosetown-Biggar, I think they will show such displeasure that even the most callous minister of finance will be forced to reduce the rate or abolish the tax altogether. And believe me, I am going to try to get that done. I think that every hon. member in this house who understands anything at all about the ill effects of the imposition of the sales tax will go out with the same idea. Let us get that thing out of the way just as soon as we possibly can. I have dedicated my efforts for some years to achieve no less than the complete abolition of the sales tax, because I believe it is a vicious tax. I believe that it bears most heavily upon the poor. I believe it pyramids prices for all consumers, and it has within it a shadow tax, a substantial shadow tax that the government does not get at all. It goes to inflate profits where perhaps they should not be inflated. I think the minister should be censured for neglecting something very important in connection with his removal of the 15 per cent excise tax on household appliances and the reduction in excise on automobiles, soft drinks and some other things. I think he should have made the reductions conditional upon the manufacturers handing on to the consumers a corresponding reduction in price, and he failed. It is quite clear now that the purchasers of automobiles are not receiving the full benefit of the reduction from 25 per cent to 15 per cent in excise tax on cars and trucks. It looks as if industry is taking advantage of the leeway that the minister has given them to enhance their prices. I did have some sympathy for the soft drink manufacturers when they put on a real clamour some time ago for the return of the five-cent

bottle of pop for the kiddies, and I believe on that occasion I spoke of it here in this house. But when the minister cut the tax from 30 per cent to 15 per cent on the soft drinks themselves and also reduced substantially, I believe by 50 per cent, the tax on carbonic acid gas, and the soft drinks people decided to hold consumer prices at the seven-cent level, I am afraid I lost a great deal of my sympathy for their cause. I am afraid they will have a hard time convincing members of the House of Commons in the future that they are sincere when they go out for the nickel bottle of pop for the kiddies. I do think the minister acted wisely when he put competitive products like soft drink powders on the same tax basis as the soft drinks themselves. That was only fair, and perhaps it should have been done some time ago.

In the spring of 1951, Mr. Speaker, I appealed to the minister on behalf of thousands of sick people who have to buy quantities of certain drugs and medicines in order to live. I asked at that time especially that the minister place di-alpha tocopherol on the sales tax and duty-free list along with such things as cortisone and ACTH. Alpha tocopherol is at the present time very widely used by Canadians in the treatment of heart and vascular illnesses. I personally in the past year have seen remarkable results from its use by patients suffering from such diseases as phlebitis, varicose ulcers and various forms of heart ailments. The trouble is that there is only one manufacturer of the base product in America, and that is at Rochester in the state of New York. When the substance is brought into Canada it is subject to a heavy customs duty and sales tax of 10 per cent. As a consequence, the sick who need the substance have to pay greatly enhanced prices for it, prices they simply cannot afford to pay in so many cases. It would not be serious for them to have to pay duty and sales tax, plus the high price that they do have to pay, if they had to be treated only for a short time with it, but if deterioration of the heart and the vascular system has gone to the point where di-alpha tocopherol is needed, the patient as a rule must take heroic doses of it every day for the remainder of his life, and that is the special circumstance, Mr. Speaker, which would justify the minister in placing the remedy on the tax-free and duty-free list. I want to hasten to say that if di-alpha tocopherol were placed on the duty-free and sales-tax-free list the loss of revenue to the government would be negligible, but the benefit to the thousands of heart and vascular sufferers who are getting relief from the use of the concentrated vitamin "E" would be tremendous.

The Budget-Mr. Low

I am convinced that more good results are being derived from the direct use of di-alpha tocopherol in heart cases and in preventing thrombosis than can be demonstrated from the use of cortisone in the treatment of arthritis, and that is going a long way. There is certainly at least just as much justification for putting di-alpha tocopherol on the free list as there was for putting ACTH and cortisone on. I am appealing to the ministers concerned on behalf of the 1,500 members of the vitamin, E society of Canada, and the many more thousands of heart sufferers who are not members of the society, to make provision in their budget resolutions for the free entry of vitamin E concentrates under the tariff, and for remission of the sales tax on the same substance.

The Minister of Finance appears to think, because Canada's gross national product was high last year-$21.2 billion, I think he said in his budget-and because it is expected to rise to more than $22 billion this year, and also because prices have remained very high, that our Canadian people are exceedingly prosperous and have few if any worries. I should like to spend a few minutes of time to present the whole picture.

I think it does us good occasionally to take a look at all sides of the case. It may prove enlightening to some of us to learn, and it is a tribute to our enterprise in Canada, that we were able to produce $21.2 billion worth of goods and services in 1951. The efficiency and capacity of our machine power are particularly evident in that achievement. And it is all the more challenging, to my mind, when we remember that fairly large numbers of Canadians were unemployed for substantial periods during the year. The minister himself admitted that there were certain areas of unemployment. I have heard the numbers variously estimated up to 400,000 in Canada. I say that achievement is all the more remarkable in the light of those unemployment figures, and it does bear vocal testimony to the efficiency and capacity of our productive powers here in this country.

The minister seems to take great comfort from the fact that the cost of living index has shown infinitesimal declines over the last three months, and that the index is now back to the August 1951 level. Well, he is optimistic about inflationary pressures, too, and their having been brought under control at least for the time being. I must say that his optimism certainly could not have arisen from the amount of the decline in the cost of living index. I would be surprised if that were the case. Perhaps the registering of any

The Budget-Mr. Low

decline at all is considered remarkable; I think so. Maybe that is what caused the minister to be somewhat optimistic.

This question arises: What has happened to the purchasing power of the dollar since the cost of living began its steady climb back in 1939? It will do us good to take a look at it. The purchasing power today of the Canadian dollar is only about 52 cents, as1 compared with the 1939 dollar. But the value of the dollar today depends upon what one wants to buy.

For instance, the food dollar is worth only 40 cents in terms of the 1939 dollar. And if one wishes to build a house his dollar is worth only 39 cents. A dollar spent in home furnishings will buy only 50 cents' worth, and' the clothing dollar is worth only 47 cents. The rent dollar is higher, having a value of 70 cents in terms of the 1939 dollar.

Of course the minister or his parliamentary assistant will reply immediately to me, and I hasten to take it up right now because I know they will reply, by stating that although the purchasing power of the dollar has shrunk to the levels I have indicated, the average Canadian is earning considerably more dollars in 1952 than he did in 1939. I hasten to say that that is true. The figures show that the per capita income in the fiscal year 1938-39 was only $381, while in 1951 it was more than $1,000. So, while the value of the dollar has shrunk by nearly a half in twelve years, on the other hand the per capita income has increased 2J times since 1939.

I imagine the minister would think he had us by the scruff of the neck in the light of those figures. It would appear, then, that Canadians generally are financially better off now than they were at any other time. And they probably would be, all right, if it were not for taxation.

Let us take a look at what happened to tax rates since 1939-and this is the third factor we must take into consideration. In the financial year 1938-39 the federal government taxed the average Canadian $39.12. Let that figure sink in, because it is important. Provincial and municipal governments taxed him another $30; so that the total for 1939 by municipal, provincial and federal taxation was $69.12.

By 1951 federal taxes alone amounted to $260 for every man, woman and child in Canada. When one adds to that what the provincial and municipal governments took by way of taxation-another $100-it appears that the total tax load carried last year by the average Canadian was $360. That figure is more than five times what it was in 1939.

So that when we consider all three of the factors-that is, the decline in the value of the Canadian dollar, the increase in the average earnings of the Canadian people, and the terrific increase in the tax load that has been imposed upon each citizen-there is only one conclusion that can possibly be drawn, and that is that the average Canadian is certainly very little, if any, better off today than he was thirteen years ago, in spite of the great progress our country is supposed to have made since the beginning of world war II.

So what good does it do us to boast to the world of an expected $22.5 billion of production this year? If this is going to go on, what good does it do us?

I have to ask this question: Why is it that on the average our people are little if any better off than they were thirteen years ago, while we boast of the wonderful progress our nation has made, our tremendously increased productive power, our new and expanded factories and machinery, and our new skills? But our citizens are not getting the advantages that these things should bring.

We Social Crediters make the claim that failure to hand on to the average run of Canadians the results of our technological progress flows mainly from an outmoded financial system which is incapable of reflecting in a financial way the abundance of real wealth which our people are capable of producing, and which they are willing and anxious to produce.

The financial policy which the minister persists in following produces, in the main, a ghastly fear of over-production. That fear grips the farmers of Canada today; and they dare not produce to the extent of their capacity because they fear-and quite rightly so -that the present situation would destroy their market. It certainly would.

Fear of overproduction is beginning to manifest itself not only in the farming industry but also in many fields, in spite of the world's need for food, and other necessities of life, and in spite of hunger and suffering in many lands. Did anyone ever hear of anything more paradoxical than that? Did anyone ever hear of anything crazier than that? And so long as the present financial policy governs Canada, that fear of overproduction will constantly be present to overshadow any short periods of prosperity that we may experience.

Back in the early thirties the low prices of farm produce made it almost impossible for even the most efficient farmer of that day to stay in business, and keep his head above water. The situation then was very largely

the result of a large-scale withdrawal of purchasing power from circulation and, I might say, out of existence, coupled with a rigid restriction of credit.

These two things were then, as they are today, the only methods which orthodox financiers recognized to correct inflation. They will not recognize anything else. The inflation of the years immediately prior to 1929 was a direct result of the financial policy in effect during the first world war, and those years especially between 1924 and 1928.

Today farm prices, it is true, are relatively more fair in relation to taxes and interest rates; but the general price level is so high that there is widespread fear that the present abundant situation will come to a sudden collapse. This fear I am sure will prevent continued steady progress in our economic development unless something very different by way of a financial policy is laid out and followed in this country. Consequently the financial interests are doing their best today to convince the people that the remedy lies in heavier taxation and restricted credit. That is exactly the policy that did so much to bring on the depression of the hungry thirties. How are we going to change the end result by applying the same policies today?

When people begin to fear a business recession or depression some of them stop buying because they think prices are too high and probably will soon be lower. Others think that now is the time to make their hay and so they help to boost the inflationary spiral by charging all the traffic will bear by way of prices. The Minister of Finance and his advisers think that they can improve things by confiscating more of the people's purchasing power through heavier taxes, especially commodity taxes; but instead of helping the situation they succeed only in increasing prices.

It must be apparent to any thinking person who has delved into the mysteries of finance that all these distresses which I have mentioned, and more too, have been brought about by the mismanagement of Canada's financial policy. Inflation is the result of mismanagement in the issue and withdrawal of money purchasing power. Inflation is a man-made muddle and the only way it can be cured is by a man-made solution. The only solution that I know of, or anyone knows of, for inflation is the proper management of the financial policy of our country. I do not think there is any other way it can be done.

The government has blundered along for many years under the delusion that somehow money comes automatically into the consumer's hands in sufficient quantity to enable

The Budget-Mr. Low

him to buy back all the goods that are produced. This just is not so. I would like to have some of the people who think that this is so accept my challenge and in this debate lay bare all the facts concerning that proposition.

The proper management of financial policy of Canada demands that the money to buy goods as fast as they come on the market should be supplied to the consumers, either in the form of wages and salaries, price discounts or tax remissions, or dividend arrangements including family allowances, old age pensions and perhaps others. If wages and salaries are insufficient then other forms of income would make up the deficiency. In this way, if the goods are wanted they will find a ready sale.

If enough purchasing power is in circulation, just enough and no more, to buy the goods we produce at fair prices, then business in the country will be steady and a general confidence is bound to result. I see no real reason why prosperity cannot last just as long as production can continue at a high level, provided of course a realistic financial policy is laid down and followed. That realistic financial policy must be a kind that will encourage productive effort. It must impose only a minimum tax on the efforts of the primary producers so that they will feel that it will pay them well to produce to the limit. That is what we must have if we are to supply the world's needs. Taxes that discourage wage earners from putting in their full time must be avoided.

What we need in Canada is a financial program that will induce enthusiastic production without the fear of punitive taxation or unemployment and depression, which are the inevitable consequences of the present financial policy. I bear testimony to this fact: There is a school of economic thought that would and could change the present policy so that abundance would not carry the present threat of unemployment, and so that inflation would not arise to rob the people of a large percentage of their wages. I commend to hon. members of this house a study of the social credit financial policy which I am certain would do the job.

At six o'clock the house took recess.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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AFTER RECESS The house resumed at eight o'clock. PRIVATE BILLS


ROYAL CANADIAN ACADEMY OF ARTS

LIB

Alan John Patrick Cameron

Liberal

Mr. A. J. P. Cameron (High Park) moved

the second reading of Bill No. 143, respecting the Royal Canadian Academy of Arts.

Private Bills

Topic:   ROYAL CANADIAN ACADEMY OF ARTS
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?

Some hon. Members:

Explain.

Topic:   ROYAL CANADIAN ACADEMY OF ARTS
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LIB

Alan John Patrick Cameron

Liberal

Mr. Cameron:

The purpose of this bill is very well set out in the explanatory note, which reads as follows:

The principal purposes of this bill are to increase the number of academicians and to grant the associate members a larger voice in the affairs of the academy.

It is proposed also to clarify the language of sections 2, 3, 4, 5 and 10 of this act.

A short historical review of the academy may be in order. The Royal Canadian Academy of Arts is the oldest official art institution in Canada. It was founded by the Marquis of Lome, Governor General of Canada, in 1879, and was chartered by act of parliament on May 17, 1882. A new charter was granted in 1913. Its objects were and are:

The encouragement of design as applied to painting, sculpture, architecture, engraving and the industrial arts, and the promotion and support of education leading to the production of beautiful and excellent work in manufactures.

Among its earlier achievements was the founding of the national gallery, and for a long time it was the only organization which sponsored regular art schools or classes in Canada. For 50 years it was the prime influence in promoting progress and taste in architecture.

Times have changed, and many of the original purposes for which the academy was established have been fulfilled or superseded by new purposes suited to modern needs. But its principal function remains that of "encouraging, improving and cultivating all the arts of painting, et cetera." Its present membership includes about 40 academicians and about 75 associate members, architects, painters, sculptors and designers in the graphic and decorative arts, leaders in their profession.

The 1913 charter is now found to be an impediment to development of the primary aims. The new constitution proposes changes in the construction and operation of the academy which will permit a more liberal approach to modern conditions and make its membership more inclusive and its management more elastic and democratic. These purposes it hopes to accomplish by increasing the number of academicians and by granting the associate members a larger voice in the affairs of the academy. The proposed bill also is intended to clarify the language of certain sections of the present act.

Topic:   ROYAL CANADIAN ACADEMY OF ARTS
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April 22, 1952